As the banking industry is challenged by changes in customer behaviour, how is the branch going to adapt?

As the banking industry is challenged by changes in customer behaviour, how is the branch going to adapt?

mutation en 2018

The way that consumers interact with their bank has undergone a fundamental shift in recent years. Mostly, this is due to the mass adoption of digital, the impact of which has been seen across a myriad of industries. It continues to transform the way that people bank, especially in-branch. But the media has been too quick to speculate that these new habits will lead to the extinction of the bank branch. In fact, what we may be witnessing is an accelerated evolution of how the branch fits into a new approach to delivering the best possible customer experience, leveraging automation and innovation.

The emergence of the hybrid branch
Last month, we were at Efma’s Innovation Summit 2017, exploring the use of artificial intelligence in banking. Something that stood out was that innovations in this field are only useful if they absolutely enhance the customer experience – a flashy chatty chatbot isn’t enough. As they innovate, banks need to have a deep understanding of their customers and how technology will deliver the experience that they want.
In response to changing consumer habits, we are witnessing the rise of a hybrid branch model, which embraces new technology while still maintaining the human touch that traditional banks offer. Technology isn’t going spell the end for bank branches. Instead, innovation is marking the beginning of an exciting period of change for the bank branch.  Branches are about to become a whole lot smarter for staff, customers and the machines they interact with.

ATMs and the hybrid model
At the core of the new model branch is a focus on delivering a superior in-branch digital customer experience. A greater variety of self-service technology will play a critical role in hybrid branches. Lower value transactions, such as cash deposits and withdrawals or money transfers, can be carried out via advanced ATMs, freeing up staff time to work with customers on more complex, high-value transactions. This will help to reduce queues, as customers can swiftly complete transactions via self-service or assisted self-service machines without having to wait in line to see a member of staff. The customer experience will be improved by not having to spend time waiting to receive expert advice.
For this to work, staff also need better digital tools that give them access to customer data, so that they can respond swiftly to queries.  The key step here is how well those digital experience management systems are integrated and enable staff to be proactive to customer requirements. A great example of how this should work is that when customers enter the branch, and use digital services via a machine, their presence is automatically alerted to bank staff on their own tablets. This allows a member of staff to be ready to engage with the customer if they come forward with any issues or choose to proactively approach the customer and have all of the data about that customer’s relationship with the bank at their fingertips.

Innovating and sharing
These new hybrid branches won’t just be about banking.
We are already seeing a trend for super-branches that comprise coffee shops and relaxation zones alongside a welcome desk and areas for financial consultations as well as self-service banking terminals. They could form “hubs”, sharing the space, and customers, with other related services.
The opportunity for banks to innovate with their branch real estate is considerable. For example, a bank could design their branch to include a space for customers to seek advice from insurers, travel agents or Forex traders. Some banks are even providing meeting rooms for community groups and thus reclaiming the community role that some banks used to have.

Striking the phygital balance
As consumer reliance on apps and technology increases, the banking industry is playing catch up and exploring how technology can transform the customer journey. Self-service technology in particular is set to be at the heart of new branches. However, this should not lead to dehumanised “robo-banks”, where customers are expected to do everything themselves. While it may be appropriate in some contexts it is important to carefully balance investment in technology like AI alongside other strategies to deliver a more responsive, personalised service.  Human advisors will always have a significant role to play in the branch experience, as customers value the “human touch”.
Innovation has always been at the heart of what we do – in the last three years alone, we have invested over 2.5 million euros into research and development. We are excited to be leading the way with innovative software that will drive customer service and help bank branches to stay relevant in this new era of banking.

 

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