Branch automation creates differentiation for banks with an omnichannel digital vision

By Danilo Rivalta | 8 December 2016

The increasing popularity of digital banking over the past several years has impacted traditional and virtual banks like never before, creating great opportunity for each institution to rethink the way they approach customers, their offering of services and their presence in regions served.

Traditional banks are facing challenges in reducing operational costs while simultaneously improving branch productivity. Many are choosing to close branches and forecasts show 30 to 40 per cent of physical branches in Western Europe will be closed over the next few years. Meanwhile, some virtual banks are considering opening or adding mini branches in selected locations to give customers a point of direct contact in highly convenient places, like in and around retail stores. 

Banks are now realising the need for transformation to create an environment that offers transaction automation, focuses on customer satisfaction and enables higher value sales strategies. They must reposition their traditional branch model. However, closing branches can result in poor outcomes, leaving gaps for competitors to seize market share. Adding insult to injury, brand equity can be compromised leading customers to lose confidence and transfer their accounts to another bank.

How can banks handle this conundrum?

Viable options for banks to reduce operating costs while increasing revenue generation opportunities are becoming more relevant through technological advances. By taking advantage of digital innovation, banks can transform their branch network to offer services that are more personalised to customers and pertinent in their role as an innovative bank.

Banks will also need to adopt enhanced monitoring systems. Traditional monitoring models provide banks with limited reports and tools to understand performance and manage the required cash refilling. The unattended branch will require a new monitoring approach with an event-driven incident management system overseeing critical information from self-service devices.

The new branch will use real-time diagnostics from any self-service device determining a resolution plan, automatically prioritised and dispatched to the correct service provider based on customised configurations of business rules. There is a clear need for monitoring tools designed to make management of large innovative branches networks easier and simpler in real-time.

Customer expectations are the biggest initial driver for bank transformation; however, as branches evolve, customers continue to expect more – to become more immersed in the convenience of an omnichannel experience. For example, already we see market feedback from end consumers wanting more interaction from their mobile devices directly with their financial institutions, not only in a fully remote use case but also in an onsite scenario at the branch. This will certainly continue to grow as the number of people using the mobile devices grows by a little over 4 per cent year over year.

Call centres will also need to accelerate their transformation to handle these new expectations, instead of focusing on just incoming and outgoing voice calls. In essence, they need to transition from simple call centres to integrated contact centres able to better serve and manage customers with both voice calls and data applications like email, web-based chat and instant messaging.

Banks must be prepared to provide a response to the increasing demand for omnichannel interaction without sacrificing relationship building. The transformative omnichannel solutions help institutions build contact centers capable of supporting one-to-one relationships between a service person in a remote, centralised location and individual customers, wherever the customer may be at a particular moment.

The automation and digital innovation of branch services is also leading to the concept ‘branch everywhere’ – encouraging the introduction of multitasking ATMs to brick-and-mortar retailers resulting in an increase in point-of-service banking and the decrease in costs required for setup and management as well as the number of physical branches. These savings allow more and more transition to unattended service models. The bank’s customers benefit from additional convenience since non-cash transaction services will no longer be pinned directly to branch, gaining more hours of access to available services at locations in and around their daily working and shopping activities.

Innovative new ‘branch everywhere’ models consist of mini ATM kiosks coupled with small ‘cash recycling’ machines. Multiple kiosks can be connected to one cash recycling unit, separating the cash dispensing task from other services that do not involve cash, such as bill pay, balance transfers, prepaid card or phone recharging, etc. Not only are the kiosks and cash units less expensive than traditional ATMs, this model provides opportunity to serve more customers simultaneously, reducing additional teller queues and wait times for non-cash transactions. Overall, banks can realise reductions to branch operational costs in estimation of 50 per cent, or possibly more.

ATM features will evolve further with new contactless and cardless services. Consumers will be able to use their card or smartphone with just a tap to initiate a transaction at an ATM. Cardless services, the ultimate innovation, allow consumers to get money and services by using a virtual token without having to take out their payment card.  Branch automation incorporating an omnichannel approach with the new multifunctional ATMs creates an enhanced and enriched user experience.

Cash usage is still holding strong, even in the face of new e-payment methods. This alone continues to highlight the key need for ATMs now and in the future. With additional functionality, like video teller technology, the ATM is also a way to maintain customer engagement on a 24/7 basis. The ATM channel is rightly at the heart of any strategy to improve the offering of banks that are most sensitive to the evolution in the market.

By Danilo Rivalta, EVP of EasyBranch, TAS Group

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