With the changes of business environment, banking industry also evolves overtime. The relationship between bank and retail customer also change. Previously when we heard about bank we picture a local bank or the ATM near our office or home. With the IT advancement, people are now communicating with the bank through different methods such as online, mobile, ATM with camera and social media in addition to visit to bank branches. The use of mobile banking via mobile Web online and downloadable mobile apps is on the increase although branches remain the main banking communication method for consumers. Consumers choose to bank in many ways at different times for different purposes. They expect their banks to provide the unified services in any channel they use. In addition current consumers are more demanding, they expect banks to understand their needs and want personalized services.

The new characteristics of the consumer require banking industry to response appropriately unless the bank is willing to lose their consumers. The new buzz world in the banking and financial industry is omnichannel. What is omnichannel? There are many definitions available try to describe precisely the meaning of omnichannel. One definition is a seamless and consistent interaction between customers and their financial institutions across multiple channels. The main different between omnichannel and multichannel is that multichannel focuses on transactions while omnichannel focuses interaction which leads to collaboration. As consumer requires personalized services for their needs, bank can not only fulfill consumers'€™ explicit needs, but banks need to anticipate their wants and likes. Omnichannel looks bank services from the consumers'€™ point of view instead of banks'€™ point of view as currently happen.

Omnichannel has been first been adopted by other service industries such as in retail and airlines. One of the examples is Amazon, online retail, which makes relevant purchase suggestions based on established shopping habits regardless of the device in use. Another example is airline where frequent flyers expect airlines to know their seating and route preferences. Banking consumers are the same.

Evolution from monochannel to omnichannel in the banking industry happened with the advancement of technology. In monochannel, consumer can only come to bank branches to conduct their transactions such as cashing in or withdraw their money. With the introduction of ATM in 1967 consumers have an option to go either to the bank or ATM to do those activities. In 1980s bank opened its call centers which later on evolves into interactive voice response (IVR) systems. Furthermore, banks provide online services in the mid-1990s and mobile services in the early 2000s. This development provides consumers with multichannel services.

However consumers are frequently disappointed with banks services through this multichannel because they often have to provide the same information when they use different channels or they receive promotion and information which are not relevant to their needs. For example, one consumer files her complaint to the call center and they ask her to file their complaint through e-mail and since the call center and e-mail are not connected then she has to provide the same information once again. Another example is when a bank has a promotion distributed through flyers or TV-ad and when consumer call the call center and asking about the program, the call center is not aware of such promotion because they are not informed and their system is not directly connected to the promotion.

With omnichannel, bank provides seamless, consistent and unified information on different channels, therefore consumer will experience the same services regardless their selected channels. In addition, bank can manage consumers'€™ data and information on their transaction habits so consumer will be offered personalized services and promotion suited to their needs. To be able to do this, bank should integrate their channels, core and back-office system so any information collected from each channel can be processed in the back-office system to provide personalized services for the consumers.

However the migration from multichannel to omnichannel is not easy. It is considered as an expensive and long term process even in the developed countries. Indonesian banking industry faces some challenges to adopt complete omnichannel such as an old and silo system currently adopted by the banking industry. Since the improvement of banking services happened in several phases then the system which support that services were also built separately and in different phases. Therefore the integration of old and silo system requires large resources both in terms of money, human resource and time. It is easier for new established bank to provide omnichannel than the well-established bank since they can plan to build an integrated system from the beginning.

Another challenge is the management of big data, referring to the use of large volumes of data outside the usual systems. With the integration of data and system from different channels, bank now has a big resourceful data which need to be managed properly. Related to this is the security concern. Recent security breaches and media commentary about cyber-attacks have generated fear and uncertainty, further eroding stakeholder trust. There are now higher expectations about security of information and privacy among clients, employees, suppliers, and regulators. Risks range from internal misuse of social media to organized cyber-crime.

With the increasing demand of more convenience services, reassurance on security and privacy, more transparency, greater speed and no barriers to cross border payments, omnichannel is surely a future for Indonesian banking although there are some challenges should be resolved not only by the industry but also by the regulators and other stakeholders.
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The writer is an economist and head of Mandiri Institute.

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