At a time when the buzz is all about online and mobile banking, the physical branch has begun to take on a bit of an old-fashioned pallor. The perception of the branch as out of date and pedestrian has been taking shape since Web banking first gained popularity in the late 1990s.
But banks are striving to change the branch's image by reworking the channel to appeal to a wider array of customers. Terms such as "store" and "retail center" are replacing the "branch" label. And technology is playing a key role in this branch modernization as banks transform their retail outlets into efficient, automated, multimedia centers.
"Banks are looking for efficiencies where they can find them -- from paper, to FTEs [full-time employees], to travel -- so you want to try to deliver services in a different way," explains Lani Hayward, EVP, creative strategies, with Portland, Ore.-based Umpqua Bank ($8.3 billion in assets).
"The main event is to drive revenue in the physical store," adds James Greene, VP, global head of the financial services Internet business solutions group, with Cisco (San Jose, Calif.). "You want to find the most expedient ways to drive cost efficiencies and monetize every foot of physical space. But technology in the store isn't about being 'cool,'" he points out. "The technology has to be relevant in context."
One of the factors that is driving the reinvention of the branch is the combination of the Internet with the retail experience. "The Internet is driving customer preferences -- we have to keep up," notes Umpqua's Hayward. "It's instant information, and this drives the expectation of the same delivery in a face-to-face situation."
Consumers expect the same experience in the physical store that they have online, Cisco's Greene concurs. "The online environment has set the expectations of the physical environment," he says. "Online, people have an on-demand, relevant experience at the click of a mouse."
To respond to the trend, banks are creating a different customer experience in the branch. "Much of the potential here involves moving things to a self-service model," says Greg Lowell, a Reston, Va.-based senior manager with Accenture's financial services practice. "You need to provide convenience for the customers. Moving to self-service, particularly for low-value activities, is one way to go."
But experts agree that after years of trying to move customers to self-service channels such as ATMs and the Internet, relationship building has suffered. Now there is a renewed interest in rekindling the flames between bank and customer. Ironically, the same kind of self-service technologies that moved customers out of branches can be deployed in a manner to encourage more interaction within the branch.
Helping Customers Help Themselves
Such technology, however, needs to be deployed carefully in the branch. "Self-service is the grail here," says Michael Redding, director of development for Accenture Technology Labs, who is based in Chicago. "But the risk of doing this wrong is that you take away the customer's choice. The science is the technology, but the art is making it so attractive that it fits the customers' needs so they'll want to use it. But you must always give them a choice. That's why we still have branches -- people want to talk to someone when making product acquisitions."
This is where a multimedia-enabled branch can enter the picture. Some banks have been experimenting with deploying different types of customer-facing technologies in their branches. The technology can consist of a variety of solutions, such as self-service kiosks, image-enabled ATMs, videoconferencing solutions that bring in experts from anywhere to help meet customers' needs, and even digital displays to communicate messages to customers. The model usually consists of a combination of self-service technologies, sometimes coupled with human staff to provide assistance or handle higher-value transactions.
First National Bank of Omaha ($20 billion in assets) is among the banks that are creating a truly different branch experience. Of course technology takes center stage in helping the Omaha-based institution create this new environment, but Rajive Johri, the bank's president, explains that the goal is never about deploying technology for technology's sake.
"In this industry, the value of technology is its benefits to the consumer," Johri explains. When First National looks to deploy new consumer-facing technology, he continues, the bank asks four questions: Is it an enabler of a new experience for the customer? Does it make life easier for the customer? Is it secure? And is it fun and user-friendly?
These are the four pillars of First National's Destination Banking branch operating model. The company has opened a number of these branches in its footprint designed to make an impact on those who enter its doors.
The first such store, which Johri calls the bank's "Coffeehouse Branch," was opened in February 2008. It features a "virtual koi pond" built with IBM (Armonk, N.Y.) that uses virtual fish to direct customers to the appropriate interactive kiosks to complete transactions or receive product information. The branch also sports safe deposit boxes that are secured with iris-scanning biometrics, storewide wi-fi access, an image-enabled ATM, a concierge, flat-screen TVs and a children's play area with a coin counter designed to look like a wizard. And while people surf the Internet, they can sip a cup of coffee at the gourmet coffee bar.
"This creates an experience -- you're doing a lot more in the branch," says Johri. "We've gotten a good response from people. It shows in the number and size of the deposits and accounts opened," he adds, declining to cite specific figures.