High Costs, Consumer Demands Drive Fresh Approaches to Branch Tech

DENVER — As banks make investment decisions about their channels, there are no either/or decisions. There are only ands.

Even with consumers increasingly transacting in digital mode and branch floor traffic suffering as a consequence, brick-and-mortar locations continue to get use. Financial institutions are pressured to redesign their branches to satisfy customer expectations for a price that makes sense on a channel losing volume.

The evolving branch was the electric topic discussed by bank vendors and financial institutions alike during packed presentations and panels at BAI's Retail Delivery conference on Wednesday. New models discussed varied, but the common theme was obvious: adios traditional teller lines and hello hiring personable staff to help show off new branch technology.

Now considered an alternative channel by some industry analysts, the branch is still the number one sales and engagement channel among banks across the globe, according to a report published by Celent. In other words, branches will continue to exist, which is why banks worldwide are testing new concepts that offer face time if needed and self-service kiosks for more simple transactions to offset personnel costs.

"The footprint of the branch will change," said John O'Malley, chief executive of Digital Insight, during a panel moderated by BTN's Penny Crosman. "It's the most profound change coming."

The question that remains to be answered is how to refine the physical model so that the customer experience is just as fluid inside the branch as it is in digital banking.

There's plenty of work to be done on that front. "When you go to the branch, you sort of go back in time in a lot of ways," said William (Bill) Neville, president of Davis + Henderson Corp USA. (Read: paper work needs to get digitized within the branch).

That's changing — slowly. "The demand will be for a consistent experience that [someone] would receive elsewhere," said Neville.

Certainly, banks recognize the need to transform their brick-and-mortar locations.

"You have to assume things are changing," said James Anthos, senior vice president, director of strategic planning and IT finance at BB&T Corp, during a separate panel. "We don't know what will happen in five years. …You can't do the same things over and over again."

To that end, anything that goes into a BB&T branch will have an expected shelf life of five years or less, he said.

University Federal Credit Union in Austin has rolled out five so-called interactive financial centers (IFC) that come stocked with self-service software and a handful of personnel. Inspired by Apple stores and airport kiosks, the credit union's centers come equipped with technology built by Diebold.

When a customer enters a center, a staff member will welcome him, find out what he needs, and lead him to the right location (maybe a pod, maybe a kiosk, maybe a collaborative workstation or something else) to get the task done. The staffers are meant to help guide people to use the technologies so they feel confident to also use the machines available at the drive-through. The new UFCU tellers' base salaries start at $40,000. Steve Kubala, senior vice president of virtual retail at UFCU, identifies the IFC personnel as crucial to making the model work and scouts for a personality type that others would seek out at a cocktail hour. "You can train on anything else," Kubala said.

These branches can't do everything the credit union's traditional ones can. A small business owner, for example, may need to visit another location due to limitations on deposits.

The credit union introduced the centers in 2012, and Kubala told attendees he was ready to lose the job over the decision. (The credit union had in the past experienced bad reactions to a video teller branch concept it introduced.)

However, so far, so good.

The credit union wants to let members have a choice of where they bank — digitally or in-person. "However people want to transact with us, we are OK with that," said Kubala. "But it has to be cost effective."

UFCU has plans for a number of tech enhancements to these centers by yearend, including letting members select the denominations they wish to withdraw, receive email and text receipts and make loan payments.

Branch redesign needs to harmonize with digital channel redesigns — continuously.

"You have to give people what they want," said BB&T's Anthos. That includes designing software that lets customers channel-hop without a hitch — something banks have been working toward for years but have yet to deliver, due to legacy technology and budgeting constraints, made tighter by an onslaught of compliance demands post credit crisis.

Tests are under way.

BB&T, for one, is testing a feature that lets people start filling out a mortgage app online and then set up a call with a loan officer who will know where the applicant left off.

Financial institutions nationwide have been testing new branch concepts designed to reduce costs from traditional branch set-ups. Instead of using traditional teller lines, some banks are equipping a leaner team of associates with tablets running bank software. Some are investing in ATMs that do more things like allow patrons to video chat with a teller located at a centralized location and get instant-issue debit cards — all the while, designing their shrinking real estate to include somewhat private rooms. 

All such efforts are a reminder for banks nationwide to modernize all their channels — old and new — to meet customer expectations. "You can plan for the bank of the future but you must also plan for the bank of the present," said Sumit Deshpande, vice president of mobile channel and online account opening services at BB&T.