Transforming service models in financial services: Insights for the future

Service model transformation, powered by tech, is critical for improving experience and cost-to-serve for the Individual market. Banks need to recognize the growing differentiation of customer profiles and align services & operating models to stay relevant.

The retail banking sector is currently navigating a period of significant challenges: saturated market, ageing population, polarization of wealth, and increased competitive pressure.

Customers increasingly prefer remote interactions (calls, emails, digital,…); in this new reality, differentiation is increasingly about relationships– and timely, personalized expertise and services – rather than geographical proximity.

Banks have been actively rethinking their service models, developing new routes to market & deliver services, improving cost to serve. Traditional service models based on a single advisor assigned to each customer are fading to glory, The reduction of physical branches, and boost of digital services are progressing full steam ahead.

Making new service models work in a remote interaction environment

However, banks are still “stuck in the middle”, with initial initiatives raising new challenges: ineffective omnichannel approaches are only increasing the number of channels and adding new costs, rather than growing revenues. Maturity levels are varied: some banks (Intesa San Paolo, ING, Caixa, Credit Agricole, to name a few), have made significant progress. Interesting moves include clearer value propositions (BNP Paribas Affinity vs Proximity), with improved omnichannel management and AI-augmented advisors.

Key levers to investigate include:

• Setting up pool of advisors managing a common portfolio rather than single advisors, for mass market clients, to improve reactivity in delivering services
• Strengthening and marketing of Mass Affluent value proposition, including upskilled advisors on Save & Invest
• Investing in demand and lead management workflows allowing for an improved routing and steering and ultimately cost to serve.

In future, remote interactions will continue to expand as access to centralized expertise platforms will spread and self- options for simple banking become generalized.

Call Centers & digital will increase notably their revenue contribution, while physical branches will remain essential to embody the brand image and culture of service.

Getting ready for the 2030 service models involves:

• Strategic choices: design & marketing of clear value propositions aligned with the bank’s core strategic assets and objectives for the individual market, translated in efficient resource allocation; there is no “One Size Fits All” model
• Holistic operationalization: combining smart tech investments, channel orchestration & augmentation
• Strong change management: All teams will be impacted: new objectives & KPIs, competences, organizations. Finding the right pace of change will be key to succeed.

At the end of the day, the question is not “will it happen”, rather “how can we make it happen faster”.