Scotiabank digital transformation emphasizes 'one-bank' customer experience

Banking stands at a crossroads of the future and the past. Digital and mobile commerce has changed the way consumers do their banking, but many still rely on the traditional brick-and-mortar branch with tellers ready to assist them.

Bridging that gap requires a well orchestrated approach that considers disparate customer preferences. Scotiabank — with 9.4 million customers in Canada, 956 branches organized into 56 districts and gross sales over $58 billion — began tackling the challenge in 2015 and plans to have multiple physical formats in place by 2020.

Pouria Tehrani, director of physical distribution strategy at Scotiabank, offered an inside look at how Scotiabank is addressing the disparate customer needs and how it is reorganizing its operations during the recent Diebold Nixdorf International Management Seminar in Lisbon, Portugal.

A presentation by Scotiabank offered a view of the bank's future plans.

While multifaceted, the transformation activities are organized under a unified vision to advance the digital experience, Tehrani said. A primary goal is to make customers comfortable using digital communication and encourage adoption of mobile tools.

By transforming the physical network to a digital experience, Scotiabank believes it will have a more flexible market presence, improved customer service and reduced overhead costs. The digital network that connects customers to their banking experience will deliver what Tehrani called a "one bank experience."

Tehrani acknowledged that the traditionally siloed operations that the company has relied on are a challenge it is working to overcome. He said operations must be simplified "drastically."

Shaping customer behavior

The company has invested in analytics and continuously seeks ways to use data to make better informed customer interactions, he noted. It also focuses on encouraging cross channel customer feedback. This includes proactive emails and automatic enrollment opportunities across all digital channels.

"We also have to adopt a 'digital first' mindset," Tehrani said, articulating one of the three pillars of the company's operational goals, along with working to embed insight everywhere and radically simplify company operations.

A changing customer that is more comfortable with self-service and digital communication makes the transformation both necessary and possible. One of the most challenging aspects of this shift, however, is that customers are still relying on human interaction. Hence, the bank has to provide the right blend of digital and human interaction.

Those customers who do visit a branch first do research using digital channels. Fifty-eight percent of U.S. customers of financial products are "cross channel" shoppers, according to Forrester research Tehrani presented, compared to 50 percent of Canadian shoppers.

A new physical presence

While Scotiabank envisions a more digital future, the company has invested in revamping its physical presence over the last two years. The company is "optimizing" its physical networks. In 2015, the branches contained uniform features. By 2020, in-store features will be more tailored to specific market segments. The formats will include fully automated centers, "express" centers with automated machines and limited assistance located near full service branches, full service branches, advice centers and "flagship" sites. The "Scotiabank Solutions" facilities will offer self-service, assisted self service, private rooms, semi private rooms and team rooms.

"We still see new branches as a front man and personality of the bank," Tehrani said.

On the digital side, the company will send push notifications about bills coming due and suggestions such as setting up overdraft protection when necessary. The notifications will be targeted to individual customer needs.

Challenges ahead

During the question and answer session, Tehrani emphasized the need to test new concepts. Removing tellers from branches has not been well received in every market, he said. Between 30 to 40 percent of the markets where the concept has been tested have not embraced it. The company is working to determine the best ways to service its rural markets.

While the company will continue to invest in wall-mounted touchscreens, Tehrani noted that customers have not embraced digital video screens in banks, and that acceptance of "learning lounges" — which several companies have introduced — has not been universal. 

Nor can strategies be designed based on assumptions about customer preferences, such as a widespread belief that millennials are more accepting of self-service solutions, he said.

Scotiabank's "digital first" mindset offers a helpful roadmap as it adjusts its physical presence across a customer base whose needs are in flux.