Future Branch Strategies: Enabling the Digitally Driven Service Model

Virginie Hollebecque, Head of Enterprise and Public Sector, EMEA, at Ciena

Disruptive technologies and a drive towards digitally driven services haven’t left many industries untouched, and retail banking is no exception. Today, the banking model is being shaped by customers’expectationsof other retail and online experiences.The result isBranch 2.0, a new generation of retail banking that places an emphasis on ‘service creativity’ andimproving customer interactions with technology. This shift is also influenced by new regulations, the Banking Reform Actin the UK, for example, has opened up competition between institutions, creating more flexibility and better options for consumers[1]. In other words, banks will need to step up and compete to remain relevant.

Digital reality

In this increasingly competitive and digital world, retail banks cannot afford to miss out on any opportunity to make the most of every customer engagement. However, a bank’s primary point of contact with the customer is no longer at the retail branch – branch visits to RBS and NatWest alone have reduced by 30% in the last four years[2] and the British Bankers’ Association (BBA) reported that about 1,800 transactions take place each minute on smartphones[3]. Customers no longer expect a strictly transactionalinteraction; they now require an ‘Apple store experience’ where value-added consultation is delivered in-store, supplemented with online, mobile and phone support. We are seeing evidence of this already: Barclays is moving 6,500 traditional cashiers to roles more focused on customer advice[4], making headway with video, announcing new one-to-one video services for premier account holders[5] and trialling cheque deposits by phone by allowing customers tosubmit images of the cheques via a mobile banking app[6].

As a result the in-branch experience will be reserved for significant milestones, such as applying for a mortgage, but also largely enabling convenience, guidance and dealing with complaints that will dependon instantly accessible services beyond simply referencing customer data. There will be heavy use of video for telepresence consultation or training seminars, apps and access to the bank’s websites, all of which will lead to a greater dependence on online and digital services. Customers will also need a high degree of security, delivered through an assured network infrastructure and offered as a valued reason to conduct business at the branch. In addition, branches will need to ensure resiliency, disaster recoveryand high availability, at all times at all points of contact -in-branch, online or at ATM’s.

Future network strategies

Branch 2.0 sets to deliver greater benefits to retail banks with improved customer service byintegrating multiple resources into one, seamless in-store experience. The network is a crucial component of this ecosystem; supporting voice, video and data, scaling for small local branches and large head offices, ensuring consistent data centre connectivity, and enabling advanced business applications such as surface computing, information and transaction terminals, interactive media and multifunctional ATMs. The network also needs to be flexible and scalableenough to accommodate peaks in demand, say the lunchtime rush.

It is crucial that the network can deliver these services with improved profitability and productivity. This will mean improving agility by removing technology hurdles imposed by legacy circuits andbest-effort IP networks, and move instead to Carrier Ethernet services. Carrier Ethernet enables the speed, security, price and flexibility ‘Branch 2.0’ requires. Flexiblenetwork services mean banks can deliver new on-demand services and bring them to market faster to ensure a competitive advantage.Carrier Ethernet also enables banks to minimise costs and ensure business processes can scale effectively, while maintaining security and control over critical network functions. New applications can be quickly introduced without network redesigns and a single, familiar Ethernet interface enables convergence of all services over a common network infrastructure, simplifying operations. Sophisticated Ethernet-based architectures can transform the abilities of the network to effectively, efficiently and safely connect branches to branches, branches to customers and customers to content.

Future strategies will see this evolve to another level, with the introduction of network function virtualisation (NFV).NFV is the concept of replacing proprietary, single-purpose hardware appliances – such as encryption and firewalls – with software-based versions that run on low-cost server hardware and can be flexibly chained together to form unique services. This promises to enable branches to serve business and customer needs more quickly and cost-effectively and mitigate application performance and information security concerns.Overall, NFV will simplify the infrastructure needs at the branch, lowering operating costs while enabling the introduction of new applications and sources of revenue. Integrating these technologies into Branch 2.0 will be a crucial part of keeping the local branch relevant for customers.

Standing up to the pressure

Retail banks are facing immense pressure to transform their traditional, full-service retail branches while simultaneously offering online digital services to maintain a competitive edge with today’s consumers. To successfully deploy both initiatives, banks will need to invest in branch infrastructure to ensure their networks can support the plethora of new services.

While investment in networks remains steady for the majority of the industry, the investment in branch networks has to be in the right pace to ensure the network supports the bank’s move towards Branch 2.0. With the stakes this high, failure to invest in the right network architecture could result in our recognisable high-street institutions falling by the wayside as innovative, nimble banks take their place. Focusing on agile, flexible, yet secure network resources is the key to delivering the digitally driven service model.

[1]https://www.gov.uk/government/policies/creating-stronger-and-safer-banks

[2]http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/10733432/Banking-technology-brings-seismic-decline-in-branch-transactions.html

[3]https://www.bba.org.uk/news/bba-brief/bba-brief-31-march-2014/#.VGTmnXZFCCg

[4]http://www.newsroom.barclays.com/Press-releases/6-500-Barclays-branch-staff-promoted-to-reflect-changing-nature-of-banking-b93.aspx

[5]http://www.bbc.co.uk/news/business-30260765Customers

[6]http://www.barclays.co.uk/MobileBankingservices/MobileChequeDeposit/P1242668620764