Banks Look to Multimedia Technology to Grow Branches

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 The perception of the branch as out of date and pedestrian has been taking shape since Web banking first gained popularity in the late 1990s.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.

Beaming In a Better Experience

Like First National Bank of Omaha, Umpqua Bank also has grasped the branch-as-experience concept. One area it has jumped on, according to Umpqua's Hayward, is video. Umpqua uses telepresence technology from Cisco to power its Ask An Expert service, which connects customers with product specialists when needed. "People can have a conversation with a specialist who's off-site," Hayward explains. "They get things done faster, it's better for sales, there's no travel involved [for the bank] and you have happy customers because their needs were met immediately."

Chris Gill, a senior manager with New York-based Deloitte, specifically points to videoconferencing as an opportunity for banks today. "Videoconferencing can be the killer app for branch sales productivity," he opines. "It addresses the fundamental issue involved in specialized product sales -- that an expert might not always be on duty to help customers. Customers have to leave their names and numbers and hope to hear back from someone. This affects the bank's credibility."

With videoconferencing, however, someone is immediately available to assist customers. Not only will the customers be happy, the bank saves on travel expenses and salary by having these experts beamed in from a central location, Gill notes.

Accenture's Redding says deploying telepresence technology is the logical solution for banks that can't always guarantee an in-branch specialist because they want to cut costs and don't wish to overstaff. "Broadband in branches is spreading because the price is making it more possible. Plus, with unified communications platforms being deployed more at banks, we're poised for rapid adoption of telepresence," he predicts. "You can beam in an expert for customers at the branch or even over Web cams in their own homes."

David Luff, global bank and finance practice leader with Oslo-based Tandberg, a provider of video solutions, says that video is more critical to banks today than ever. "Even when it's used internally, it can eliminate confusion and anxiety among staff," he states.

But while First National uses video technology from Tandberg internally for its quarterly town hall meetings with staff, telepresence does not currently meet First National's four-pillars requirements, according to the bank's Johri. "It's not well distributed among customers," he explains. "You have Apple and Microsoft, but they don't always talk to each other. It will get better, but ... I'm not sure if customers are ready to spend time in a public area or in a vestibule talking about private things."

Tandberg's Luff disagrees. "The technology has gotten better. It's high-definition, DVD-quality sound, and the price points are better," he says. "People are more comfortable using this technology, too. It's more robust and scalable."

Probably the most commonly deployed multimedia technology in branches today is the flat-screen TV. But this technology can do much more than play CNN while customers wait in line, according to Jeff Collard, president of Omnivex, an Ontario-based provider of software and services around digital signage. "This is a visual communications medium," he explains. "The more you can make the data valuable and real time, the more functions you'll have. It's something to facilitate decision making for customers."

And these are no dumb terminals. According to Collard, the digital signage technology available today can provide banks with information on service levels in the branch, the number of customers and peak times. And with the right message, "This is something that will prime the customer for a sale once he gets to the teller," Collard maintains.

These screens can be monitored from a central IT location where the content can be controlled, adds NEC's Mike Zmuda, director of business development for the Japanese company's Itasca, Ill.-based display solutions division. "You can set up playlists and duty lists of when you want the monitors on and off," he relates. "The branch people don't have to become IT experts because problems can be diagnosed remotely." The displays manufactured by NEC, Zmuda adds, aren't consumer-grade TV sets but commercial-grade equipment designed to operate for hours a day in excess of five years.

According to Zmuda, adoption of displays by banks is growing quite a bit. "A lot of the banks I talk to are tuned in to digital signage," he explains. "They know what's going on in the retail industry about conveying messages to customers when they have some kind of dwell time."

These steps can help banks migrate to a retail model. "This is all done on the premise of being a retailer of products and services," states Umpqua's Hayward. "We use the notion of people coming in and shopping, maybe impulse buying. What are we introducing that's relevant, entertaining, educational and plain helpful?"

New York-based Citi ($2.1 trillion in assets) is heavily leveraging this type of technology, especially in its operations in Asia, according to Christopher Kay, SVP, Citi Innovation. One thing Citibank Singapore has done was develop a highly automated branch model designed to fit in with the local transit stations. "We are deploying multimedia technology throughout different channels to create a superior retail experience," he says. "We are also leveraging digital information as a way to attract, engage and sell through a marketing wall, which showcases Citi products and services alongside pertinent local information, such as top news stories, traffic reports and weather forecasts."

The Banking Lifestyle

Frankfurt-based Deutsche Bank ($1.3 trillion in assets) has taken this concept to the extreme in its experimental branch. According to Accenture's Lowell, the idea is to promote banking as a lifestyle. "They put banking products in boxes and placed them on shelves so that people can browse them like they would in a retail store," he explains. But the bank also supplies staff in the lab with multimedia tablets so they can "sit with a customer on a couch over a cup of coffee and discuss financial products," Lowell notes. "This gets staff out from behind a desk or screen -- it's high-touch but still high-tech."

Umpqua's Hayward emphasizes that the people who staff bank branches are just as important to making the new branch concept work as is the technology. This is what drives customer acceptance of such technologies, she says. "Part of this has to deal with how your people interact with the customers," Hayward asserts. "How do you make it look inviting to encourage a person to use the technology? You want to compel people to use these time and again, so your employees have to be on board." For instance, with the bank's Ask An Expert video service, someone from the branch is there to explain the service to customers and show them how to use it.

Citi's Kay emphasizes the importance of using the technology to create new experiences for the customer and to enhance the relationship. "The mix and purpose for technology differs based on the context in which it is used," he says. "Technology can enable high automation of quick transactions, and technology can also enable deep understanding and trust building for high-touch transactions."

As always, banks must use care when deploying any kind of new customer-facing technology. "You don't want customers to come into Times Square when they walk into a bank," comments NEC's Zmuda. "In most areas, banks are looked at as being more tasteful. So be selective with how you locate displays and the way you deploy your messages. It's a balancing act not to inundate your customers."

The Branch Can Wait?

Balancing other investments with investment in multimedia bank technology also can be a challenge. In the face of a global financial crisis, will banks invest in multimedia branches?

"Branch infrastructure is expensive," acknowledges Bob Meara, senior analyst with Boston-based Celent. The firm conducted a survey of banks asking about their branch investments. According to Meara, very few banks were looking at high-end technology investments. "We don't see this as a big trend [right now]," he relates. "It makes sense to do this little by little. You want to invest in the branch in a way that makes financial sense."

But Accenture's Redding thinks the economic situation may actually prompt many banks to consider such investments. "Over the next six to 12 months, you're going to see an inverse opportunity for banks," he claims. "Some of the big guys left standing will be inheriting whole new networks from acquisitions. As they go through the transaction, how will they change the experience and create a new customer base at a different scale?"

Proper testing will be the key to winning any dollars for any such investment, says Deloitte's Gill. "Given the economic situation, there will be more of a focus on testing concepts first and using the ones that will drive greater revenue or lower cost at branches," he notes. "They must be deployed relatively easily without major capital outlays."

For Citi's Kay, the multimedia branch isn't the be-all and end-all -- rather, it's just a part of a larger customer service strategy. "The important thing to figure out is how to change the branch network to create the best customer experience and franchise efficiency as the lines between physical, virtual, online and digital become increasingly blurred," he says. "Banks need to provide mobility solutions that support nomadic behavior while creating new and sustainable value for customers who want an in-person interaction."