The banking industry has pioneered self-service in South Africa for the past two and a half decades, and is now reaping significant benefits from mature self-service strategies as a result.
Kevin Meltzer, co-founder of Consology, says that banks first seized upon the idea of self-service when they started rolling out ATMs. They were also among the first companies in South Africa to roll out online self-service offerings, in the form of Internet banking during the 1990s, and now have mature offerings in place.
“Banks have long understood that their branch infrastructure and call centres represented a massive cost and that they have the opportunity to save significant amounts of money by getting customers to help themselves," says Meltzer.
“In addition, banks offer a product that is mostly informational (or virtual), which means they are well positioned to leverage self-service for customer acquisition and support. It is not surprising, then, that banks have been the most aggressive and innovative in developing multiple self-service channels over the past twenty years such as ATM, telephone banking, IVRs, online banking and more recently cellphone banking.”
Banks have also noticed that online self-service has changed customers’ perceptions of financial services institutions for the better over the years. This shows how online services can help organisations to strengthen their relationships with customers by giving them what they want: transparency, convenience and simplicity.
Innovation in the online banking space is set to continue in the next few years. Meltzer says that banks are under pressure to innovate in a market where they have had to tighten their lending criteria and extend services to poorer parts of the population.
With tighter margins and limited scope for revenue growth, most banks are now focusing on relentless improvement of their cost-to-income ratios. Self-service – which helps to deflect customers from their costly contact centres and physical branch infrastructure to low-cost electronic channels – is central to most banks’ strategies to contain costs, Meltzer adds.
The most recent Self-Service Strategies survey (2010), conducted on Consology’s behalf by World Wide Worx, indicates that banks see self-service as more important than ever before for call centre deflection, customer service and satisfaction, speeding up payments and ensuring consistency of customer experience.
Meltzer says that the survey also shows that banks and companies in other industries are regarding self-service as a channel strategy rather than a product strategy. Online banking was initially seen as a feature or product within the banking portfolio. It is now seen as an important channel in much the same way that branches are viewed as a channel to interact with the bank.
Online banking started out by allowing customers to conveniently check statements and balances. Once customers became comfortable with simple banking tasks online they moved on to make online payments and more complex transactions.
In future, Meltzer believes banks will be able to offer their clients richer personalisation options through their online banking portals as well as use self-service to cross and up-sell products more effectively.
This is the same evolutionary path that online self-service will take in other industries, from basic tasks and low user trust in the technology to complex transactions and absolute confidence in self-service solutions.
“Self-service has changed the way banks and customers interact, from the first ATMs to online banking. Banks can be expected to build on these channels in the future with the goal of offering clients more convenient and consistent service while achieving internal cost-savings,” concludes Meltzer.