By Deb Stewart
Not all banking channels are created equal. Each has distinct strengths and weaknesses. So rather than working to create parity across channels, forward thinkers are focusing on optimizing each one. “Look at mobile and what it brings with biometrics, a camera and others,” said Mark Schwanhausser, director of omni-channel financial services at Javelin. “Online is optimal for research, gaining insight, and evaluating. And the branch is king for one-on-one, connected conversations.”
That desire for one-on-one conversations doesn’t appear to be changing. The J.D. Power 2016 U.S. Retail Banking Satisfaction Study took a closer look at Gen Z, a group that accounts for about one-quarter of the U.S. population. The study found that 66% of Gen Z customers had visited a branch in the past twelve months, compared to 67% of Gen Y and 66% of Gen X. Gen Z customers visit a branch an average of 12 times per year.
In a recent interview with the Charlotte Observer, Thong Nguyen, co-head of consumer banking for Bank of America talked about the role of their branches. “You used to come to a branch to make a deposit, a withdrawal or payments. Now you’re going to use the branch to go in and open a credit card, an auto loan, a mortgage, investments, or have customer service because you have a death in the family or you just moved.” Bank of America is responding to this shift by reducing the number of employees related to transactions, but then reinvesting in the sales force. Nguyen said, “Just to give you an idea, the salespeople used to be 5% of our employee base. Today, it’s 30%.”
So when you assess your branches in this light, what are the key initiatives that will optimize the one-on-one connection, the sales role, and the overall banking experience? In the past few years banks have spent time and resources using technology to reduce branch costs and streamline transactions. Video ATMs, kiosks, advanced function ATMs, cash dispensers—they have all been widely accepted by consumers and bankers and there is still room for wider implementation. But what are they doing about that key advisory role? What technology investments are needed, and what must technology accomplish in order to make that role work?
Break down the silos.
Because many transactions have moved to self-service technology, most customers today walk into a branch when they need help with a specific need. And it’s likely they’ve already explored how to address that need through other channels, such as online research.
But bank legacy systems are commonly built in silos. So when a customer comes into the branch after an online or mobile experience, the branch associate is often completely unaware of what the customer has already been through.
Branch technology needs to access those mobile and online interactions and use them to help the branch associate anticipate the customer’s needs—allowing staff to become proactive rather than reactive. “You fail if the only thing you can say when a customer walks into the branch is, ‘How are you?’” Schwanhausser said.
Connect the dots.
“All banks are trying to fix a lot of disconnects from a customer-facing perspective. Online and mobile were all built separately so they have rarely been available to branch associates,” said Paul Wiggins, solutions specialist at Jack Henry. “But that transformation is happening right now in a few different ways.”
The first step, according to Wiggins, is to mobilize the core platform on tablets, freeing branch associates to do business anywhere. This would accomplish two things. First, it would free bankers from their desks allowing, them to engage with the customer in the branch, at a workplace, or anywhere else. The second benefit is more subtle. Use of tablets in-branch provides a familiar experience to the customer. It signals to them that all of the pieces are working together—common tools and common interfaces.
Whether on a tablet or on another device, customers expect their branch banker to know everything they have been doing with the bank. Shelba Murphy, solutions specialist manager at Jack Henry, explained, “Banks are providing access to online and mobile activity to their branch bankers in a number of ways. This provides the banker with relevant information about the customer and meets the customer’s expectation that the bank has a complete understanding of their relationship and interactions.”
Integrating channels means that banks may also need to rethink their approach to compensation. “We need to change the game from competition between channels to recognition that it’s about the bank winning not the channel. Digital account opening is a great example of how this can play out,” Schwanhausser said. “The customer has done their research on mobile or online. They start opening the account online or on mobile by scanning documents or completing forms. Then they want to talk to a person in middle of application and wind up in the branch. If your compensation scheme is channel-specific that branch associate may go back to the beginning with the customer even if they do have access to the online or mobile information. So you need to look at integration from a complete workflow perspective to anticipate potential barriers to doing what’s right for the customer. “
Use all that data to personalize the experience.
Much has been written about how big data and analytics are essential to delivering enhanced customer relationships through digital channels. But what does it mean to the branch?
As interactions shift to digital channels, banks have slowly lost out on valuable customer insights, which were traditionally garnered through face-to-face interactions. However, with technological advancements and the shift in the role of the branch from being transaction-oriented to advice-oriented, we will see more and more banks taking initiatives to improve their knowledge of the customer by leveraging analytics to build/enhance customer relationships. Using these advanced analytics, banks will better analyze personal financial patterns from a broad set of unstructured internal and external data to generate a 360-degree view of the customer. This will enable financial institutions to acquire new customers, effectively cross-sell to existing customers, and proactively identify risky portfolios/accounts to prevent bank fraud.
Kartik Ramakrishnan, senior vice president at CapGemini describes the change in this way: “The old paradigm with a branch network was that branch staff knew their customers and what life stage they were in. So they could offer relevant products and customize solutions. As banks became transactional many have shut down branches and deskilled the branch in the interest of cost control. Now, banks are realizing that branches are still a good sales channel but need the right people and the right tools.”
So what are the right tools?
At the macro level, even today banks use static data like accounts and transactional behavior. But a few are beginning to gather external data—including Twitter feeds and Facebook behavior. This practice of combining static data with social media and other online behavior to create a more relevant customer profile is part of an emerging field called social physics.
“We work with our clients to first collect data that is easier to access—Twitter and Facebook—maturing the models with more data over time,” Ramakrishnan explained. “Some banks are already well into the collection process and we predict rapid evolution and adoption of these techniques over the next 18 to 24 months. This isn’t demographic segmentation. This is distilling data down to create social segments. These are then used for creating products and services. Fintechs are already using this approach.”
What does this mean for branches? Your associates will have information previously available only through establishing personal relationships. For instance, data may show that a customer is spending a lot of time on Zillow and therefore may be ready to move into home ownership or a new home. By anticipating that need, the bank can provide the customer with what they need when they need it. And that is what consumers have grown to expect.
How does it all come together?
Investments in transactional technology will continue as banks work to improve efficiencies and meet customer expectations for speed and flexibility. But as the branch moves more sharply toward an advisory role, that investment focus will need to shift.
Omni-channel access and big data leverage are just two of the potential solutions for enhancing the branch advisory experience. Other potential tools include video access into centers of expertise. This addresses the requirement that banks meet customers’ needs at the moment they come into the branch—even if an expert isn’t available. More robust non-video call center access can also provide that immediate gratification in another format.
Common interfaces across channels and simple Wi-Fi access in branches can facilitate a seamless move from home to branch for customers on their own devices. The banker and customer can quickly “pick up where the customer left off” on the device the customer is comfortable with.
And more opportunities will present themselves every day. Looking at any technology development as having potential to impact every channel, including the branch, requires a new way of looking at things—an exciting new way.
Deb Stewart of Charlotte, N.C., is an independent consultant working for the financial services industry. Email: firstname.lastname@example.org.