According to a new report from independent market analyst Datamonitor (DTM.L), U.S. banks are set to transform their branches in an effort to “turn them into financial centers for high-value sales and advice.”
The objectives are to leverage the face-to-face nature of interactions in the branch to improve customer satisfaction.
The push could improve business relations here on Kaua’i.
“There definitely is a push to make them (the branches) more customer friendly,” said Wayne Miyao, the Senior Vice President of Citi Bank. “Personal interaction is very important to us.”
According to the report, not only will U.S. banks transform the role and layout of branches, they will also replace legacy and obsolete technologies.
Self service stations will be made available for customers to process simple transactions.
Wireless technologies will become an increasingly important part of the branch infrastructure and layout, giving staff the ability to move freely within the branch to service customers.
The changes will be implemented to dramatically transform the traditional banking experience.
The report estimates that approximately 30,000 (26 percent) U.S. bank branches will be renewed by 2006.
The branch takes center stage once more
Only a few years ago, the advent of the Internet and other, fully automated channels was widely believed to spell the end of branches.
Once familiar with these new channels, many customers favored the convenience and cheaper products they offered and anytime access to the bank.
Consequently, as banks poured vast amounts of money into the development of new channels, such as the Internet, many Bank branches were neglected.
Currently, the emerging picture is decidedly different.
Not only are branches still widely used by customers. Banks are also realizing the Internet may not lend itself to selling high-value or complex products.
“It’s a careful balance of keeping up with the latest technology and still having the personal interaction with our customers,” said Miyao. “We always love the opportunity to meet face-to-face with our customers and know them on a first-name basis.”
Many believe that branches are optimally positioned to do so.
To optimize the use of branches, banks will aim to leverage the face-to-face nature of interactions in the branch by turning them into sales and services centers, while automating the greatest possible amount of simple transactions.
Renewed focus on the branch will have technology implications
In order to achieve their aim of turning branches into sales and services centers, banks will have to overcome significant legacy technology issues in the branch. In particular, banks will have to replacing antiquated networks in order to be able to re-engineer the core teller application.
The teller platform is at the core of U.S. banks’ branch renewal efforts.
Datamonitor believes that banks are focused on browser-enabling the teller front end and allowing for greater process automation, notably through automated product origination and check imaging.
That said, banks’ aim of turning branches into sales centers is also leading to increased investment in CRM for the tellers giving them access to all relevant sales and servicing tools, as well as to all customer data and product information.
In the long-term, Datamonitor expects to see shift in banks’ focus away from the teller platform, with banks focusing more heavily on straight through processing-enabling core processes and the introduction of self-service devices.
Overall, Datamonitor expects branch renewal to be a key driver for U.S. retail banking spending going forward, with branch renewal related IT spend reaching $1.4 billion by 2006, and growing at a compound annual growth rate of 21 percent between 2003 and 2006.
“This year will be a turning point in terms of branch renewal, with banks beginning to execute on their branch strategies,” said Christine Skouenborg, financial services technology analyst at Datamonitor.
“However it is important to understand that branch renewal is a long-term undertaking. Not only are there important technology implications, which will leave banks taking a step-by-step approach to branch technology investment, but there are also significant operational issues with respect to branch renewal.
“Banks will need to tackle low skill-sets in branches and optimize branch staff productivity while focusing on how to deliver the best retail experience to the customer.”
