Emerging Technologies in Retail Banking: The Long Road to Customer Centricity

by Bob Meara, August 17, 2012
North America


After years of more talk than action, North American retail financial services has reached a tipping point in the use of technology. Legacy branch-centric operating models are giving way to multichannel, customer-centric initiatives.

In the report, Emerging Technologies in Retail Banking: The Long Road to Customer Centricity, Celent updates and expands upon a previous report, Branch Banking in a Multichannel World: What Ever Happened to the Branch of the Future? August 2010. The report draws upon interviews among financial institutions and solution providers as well as a survey administered among 132 North American financial institutions during May and June 2012.

The previous research, conducted in July 2010, found that, despite the rapidly growing popularity of self-service channels, the branch network constituted financial institutions’ highest channel priority among a growing array of alternatives. Financial institutions had been investing in the branch channel, but the changes were baby steps toward a more substantial transformation. The 2012 survey suggests that the branch of the future may finally be in sight.

More significantly, the survey reveals that, for a growing number of financial institutions, the long journey towards customer centricity has begun. In Celent’s view, the events of the past several years have pushed a number of FIs past a tipping point, leading to significant, measurable changes in attitudes, organization, and technology deployments since Celent’s last survey in June 2010. Specifically:

  • Online rules. The online channel is now considered more strategically important than the branch channel by a majority of FIs. This reflects a dramatic change in thinking.
  • Branch of the future may be emerging. While substantive branch transformation remains a rarity in North America, there appears to be a growing consensus that the status quo is unsustainable. Importantly, this sentiment has been accompanied by action—significant investments in technologies to improve sales and service effectiveness, such as: CRM, customer analytics, and campaign management systems over the past three years.
  • Platform systems get modern. Two years ago, the bulk of branch channel technology spending had been check imaging. With check imaging projects largely completed, banks turned toward removing the remaining paper in the branch in the form of automated deposit account origination systems.
  • Even cores may be changing. Aging core banking systems present an impediment to delivering the customer centricity more banks seek. Yet few FIs have had the courage to change cores. That may be changing, albeit slowly.

“Perhaps the only thing more depressing than the current retail banking business and regulatory climate is the prodigious effort needed to equip retail financial institutions to thrive in our increasingly multichannel world,” says Bob Meara, Senior Analyst with Celent’s Banking Group and author of the report. “A significant majority of financial institutions are ill prepared for what is upon them. A minority have begun a complex journey, but there is a long way to go. No one has yet arrived.”

This report begins with an analysis of surveyed retail banking strategic priorities, the changing role of distribution channels, and the importance of technology in realizing key priorities. The report then examines the current and likely future trends in branch, online, mobile and social media channel platforms. Then, the report similarly examines the growing array of back office systems relied upon to integrate multiple channels, segment customers, and equip front line sales teams to realize increasingly elusive profitable revenue growth. Appendices provide research methodology and detailed technology adoption information for branch channel and back office systems.

This 66-page report contains 76 figures and three tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Tylor Tourville
Tel.: +1 617 424 3284

Europe (London)

Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary





Strategic Priorities



Role of Technology


What a Difference a Year (or Two) Makes



What Hasn’t Changed


Branch Channel Systems



Current State



Future State—Technology



Future State—Physical and Organizational Design


Online and Mobile Channel Systems



Online Systems



Mobile Systems


Social Media Systems


Back Office Systems



Current State



Future State




Appendix I: Survey Methodology


Appendix II: Technology Adoption Detail



Back Office Systems



Branch Automation Systems


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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