To paraphrase Mark Twain, reports of the demise of bank branches are greatly exaggerated.
The continued growth of branches over the last decade, despite the introduction of alternative delivery channels, is testimony to their importance in the distribution chain. At the same time, the need to raise efficiency and enable effective cross-selling in branches has led to a spike in branch automation technology.
Two main drivers account for renewed attention on branch technology. In the short term, obsolescent OS/2 operating systems and monochrome teller workstations, as well as phasing out of technical support, create an immediate need for change. In the long term, re-conceptualization of the branch within an overall strategy will continue to drive investment in branch automation technology.
Banks must invest in innovative branch delivery strategies. New technologies enable banks to introduce new types of branches that are truly customer-centric, and the move to convert branches into financial advisory centers has prompted vendors to incorporate CRM capabilities.
Banks are also seeking to expand their branch networks. In-store branches, franchising, and perhaps, in the future, shared branches, will decrease deployment and operating costs and simultaneously increase banks' ability to expand their national presence.
Financial institutions that don't seek to transform bank branches into financial advisory centers will find themselves at a disadvantage. In order to maintain, let alone increase, market share, banks must provide multichannel delivery within the branch, as well as implement network strategies that expand their geographic footprint.
Until recently, some banks had taken a best-of-breed approach in selecting platform workstations, call center applications, and other components of a retail delivery system. Others, such as banks undergoing mergers, typically made their selection based on what was in use at one of the merging entities. What's emerging as an alternative to these approaches and to in-house development is a multichannel delivery architecture.
A multichannel solution is provided by a single vendor and includes functionality for all areas of the branch, as well as for other channels. In general, the key channels supported are the branch, call center and the Internet. An important aspect of such systems is their ability to keep track of transactions and route them from multiple delivery channels (e.g., branch, call center, etc.) to the appropriate core system at the institution. The system's auditing capability provides complete, up-to-date information on the customer's accounts and transaction history.
A multichannel delivery system functions as more than just an intermediary between end-user or customer touchpoints and back-office core systems. It also facilitates interaction between customer touchpoints and three major types of data systems: core systems (core deposit accounting system, credit card processing systems, etc.); customer interaction databases (databases that store potentially enormous quantities and types of data, including business rules, product information and customer profiles); and CRM and knowledge systems (which analyze customer behavior).
Branch automation not only increases efficiency for branch operations, but also frees branch employees to attend to the individual needs of each customer, as well as to educate and sell customers a broad range of financial services. While the need to upgrade branch automation systems is clear and immediate, gaining and maintaining competitive advantage is the more significant reason for branch automation, which explains why many banks are focusing on branch innovation rather than simply retooling their traditional branches.
This article was adapted from a report, Branch Automation in North America, published by Celent Communications (www.celent.com)