The promise of lower transaction costs, increased sales productivity, and more convenient service has lured banks into setting up new electronic and product-specific channels. But they have quickly found that their delivery capabilities are outstripping the traditional branch-centered model they use to manage them. As a result, they face stubbornly high efficiency ratios, expected revenues that never materialize, and channel managers at odds with the standards by which they are measured and rewarded.

To resolve these problems, banks must adopt a new approach to the management of multiple channels. In particular, they must address four issues:

• Who owns the customer?
• How are operational issues resolved?
• How are managers measured and rewarded?
• Where does each business t?

Customer ownership

"By all means add the new channels, but book the revenues with the branch network, where they belong."

The notion that customers can be "owned" is championed by branch managers seeking to preserve a branch-centered organization. They maintain that the branch remains the prime point of contact for sales, service, and relationship management. But their argument does not stand up to close scrutiny.

Far from staying loyal to a branch, most customers today use a number of channels (Exhibit 1). They...