NEW TECHNOLOGIES WILL HELP BANKS THRIVE, NO MATTER WHAT THEIR CUSTOMER EXPERIENCE MODEL
By Chris Nunn, Head of Architecture – Collaboration, Dimension Data UK
With the rise of mobile banking and proliferation of mobile devices, more consumers are opting to use easily-accessible online banking applications. This has impacted footfall to the established retail bank branches on the high street, with many banks, according to a recent report released by analyst house Celent, experiencing a decline in in-person customer visits. Many customers don’t want to spend time waiting in long queues to make a transaction that they can do online in minutes. As Brett King, an online banking entrepreneur and advocate of digital banking states; “Banking is no longer a place you go, it’s simply something you do.” Instead, the report predicted that in order to compete effectively in an increasingly growing retail banking industry, banks should adopt video conferencing tools.
While banks have received efficiency and cost saving benefits from mobile and online tools, the impact of driving consumers to an online portal has also cut the opportunities to cross-sell and up-sell services effectively. By cutting face-to-face contact, banks have accelerated an already diminishing relationship with their customers – a relationship that has previously been threatened by industry scandals such as LIBOR rigging, PPI mis-selling and insider trading. Customers who want to purchase important services, that require a high degree of trust such as mortgages, retirement and pension planning and insurance have therefore chosen to shop around or go to competitors.
In order to establish a closer relationship with their customers, banks need to create a more compelling customer experience. To do this, and retain the efficiency benefits bought by online services, they should blend the best aspects of an online experience with an in-person visit through technologies such as video conferencing. In the high street bank, this will cut queuing times and give the customer quicker access to experts. If offered via online services, it can give a more personal experience to an otherwise static and generic online transaction or banking decision.
Cutting local bank branches is not a silver bullet for growing and retaining profits
Selling additional, innovative and new services has never been more important for retail banks. According to AT Kearney analysts, the continued overall economic troubles are weighing on the industry. Total income for retail banks slightly declined in 2012, and costs remain in flux. According to Jonathan Rosenthal, Banking Editor at The Economist, a good number of bank executives would secretly love to ditch their branches, which generally account for more than half of their total costs.
Analyst house Gartner has heralded the rise of mobile devices that help banks to cut costs, improve efficiencies and boost profits. By driving consumers to an online portal, rather than a physical branch, banks could save costs on resource, inefficient paperwork and even on maintaining the physical branch itself. A recent study by Accenture also highlights that banks that enable customers to use mobile devices to check bank balances, transfer money and pay bills can achieve returns on investment (ROI) as high as 300%.
Yet while some celebrated mobile banking and the subsequent decline in footfall to branches, cutting local branches in favour of mobile and online tools is not a silver bullet for growing and retaining profits. A survey by Novarica in December 2012 found that 58% of respondents under 30 wouldn’t consider opening an account at a bank without a branch nearby.
As Mark Weil, Head of EMEA financial services at Oliver Wyman argues, many people do not want to make the complicated once-in-a-lifetime decisions – like buying a house, planning retirement or protecting the family in case of death – online.
The case for video banking
Bob Meara, report author and senior analyst, at Celent, agrees with Weil. Meara has stated in the past that there is no substitute to talking to customers when and where they need financial advice. According to Meara, video banking offers banks the ability to expand the reach and convenience of customer engagement in a relatively low-cost fashion.
Banks are facing a real challenge as many cannot afford to have full-time advisors available for each service offering in every branch. These specialists often have regional responsibilities, either moving from branch to branch on a regular schedule, or, especially when products of higher value are involved, making appointments with customers as needed.
Placing video conferencing technology in branches can offer many potential benefits to the retail banking industry. Firstly, it offers banks a way in which to better utilise specialist advisors, who can reduce their travelling time and consequently, conduct a greater number of customer meetings.Secondly, video conferencing offers greater flexibility by ensuring that customers are connected to precisely the right person, at a time that best suits their needs (often while they’re at the bank for a different reason).
As a result, banks will experience an increase in customer contact that can not only help to boost sales but customer satisfaction; reducing the chance of losing customers to a competitor.
Alternatively, banks can offer a complete virtual banking experience to support traditional services. Citibank and the Bank of America have both launched a new kind of ATM designed to help customers do virtually all their banking without visiting a branch. The Citibank Express ATM is equipped with online banking access, video conferencing and biometric identity authentication. Users can open accounts and apply for loans, cards and cashier’s cheques using the device; transactions can also be started on a computer or mobile device and completed on Citibank Express or vice versa.
If these types of ATMs are placed in frequently visited localities such as the Post Office or supermarket, consumers can have a similar type of “in-branch” experience, wherever suits them best. When consumers increasingly demand an ‘anywhere, anytime’ experience, this type of service will become increasingly important.
Finding the right technology to make the future, reality
This virtual banking future will only come to pass if it can offer the customer a seamless and easy-to-use experience. If the customer experiences network service disruption while discussing sensitive issues with their bank manager, they will be less likely to use the service again.
According to Chris Nunn, head of architechture, Collaboration, at Dimension Data, banks and other providers offering virtual banking from in-store locations need to ensure that they have location-independent, secure and robust IP voice infrastructure to support customer demand for the best network service. This will ensure maximum uptime for the network and a clean undisturbed connection.
Offering the customer the best of both worlds: the key to success
In the future, video banking and the network infrastructure that underpins it will play a crucial role in helping banks offer the best of both the physical and virtual experience. Nunn says, “The benefits of doing this will be twofold; the consumer will have better access to experts so that they can make informed purchase decisions. For the banks, re-establishing a strong relationship with their customer will provide them with the chance to sell more, compete and ultimately, grow profits.”