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WHITE PAPER

© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

Human vs. digital banking This white paper examines the role and added value provided by the branch in the context of digital banking channels. It stresses the need for FIs to focus on the end-user’s perspective and explains that the idea of “one size fits all” banking services no longer applies in an omnichannel banking era.

When the retail financial services industry talks about branch transforma-tion and omnichannel banking, it mostly focuses on “anytime, anywhere” — the concept of customers being able to use any channel at any time to conduct any banking services.

However, the notion that the same services, transaction types and prod-ucts must be available on every channel is not consistent with consumer requirements, preferences and use patterns. The reality is that consumers use different channels for different purposes.

Consumers typically use a smartphone for quick and simple transactions — e.g., balance inquiries, money transfers or mobile cash withdrawals — that they can carry out while on the move. Because tablets have larger screens, they typically are used for more complex transactions — e.g., researching banking products, opening an account or conducting online video consultations.

In the omnichannel context, branches remain highly relevant as a place where customers can have in-depth face-to-face conversations with finan-cial advisers and receive assistance in performing complex self-service transactions.

“The branch continues to be valued by all segments of the market,” interna-tional retail banking consultant David Cavell wrote in an ATM Marketplace article. “This includes the much-vaunted millennials.”

Financial institutions need to view branch transformation from the perspective of specific consumer segments’ requirements and preferences and in the context of digital banking channels.

The Customer’s Journey: Transforming the Branch Network

By Robin Arnfield | Contributing writer, ATMmarketplace.com

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The Customer’s Journey: Transforming the Branch Network

2© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

Different segments use channels differentlyDifferent consumer segments — baby boomers, Generation X, Generation Y (millennials) and Generation Z (digital natives) — use banking channels in different ways. In response, banks need to move away from traditional branch models to new ways of providing banking services.

Confident, self-reliant baby boomers, age 55–65According to the Trends Active trends interpretation agency, this generation is not only the largest generational cohort, but also the wealthiest, having lived through an extraordinary period of economic growth. The main mar-kets for baby boomers are Europe, Japan and North America, according to United Nations data.

Baby boomers continue to dominate today’s banking industry in developed nations, and are open to both traditional banking services and face-to-face in-branch consulting. Similar to their shopping behavior, baby boomers use online and self-service banking channels, and look at and compare prod-ucts, features and prices online. However, in the end they prefer to make their actual product purchases in retail stores and bank branches.

From long queues and routine transactions to greater efficiency and richer conversationsThe quality of service and personal relationships at physical branches are important to baby boomers. To better serve this demographic, FIs can redesign their branch processes and transform branch staff from tellers to sales-, service- and relationship-oriented “universal bankers.”

Tablet-based applications enable staff to freely roam open-plan branches and focus on customer conversations and consultancy.”The idea of a tablet-based assisted teller solution is to bring banking staff closer to customers”, according to U.K.-based research firm Ovum. “Tablets can increase the effectiveness of face-to-face interactions in branches, which can translate into stronger customer loyalty in the longer term.”

Enhancing the roles of branch staff, placing them directly in front of cus-tomers and enabling them to provide personal guidance and assistance requires a significant change in mindset and culture, as well as fully auto-mated and efficient branch processes. Customers with simple transactions must be able to conduct them seamlessly via digital channels — including self-service — while branch staff must be able to focus on serving custom-ers with more complex needs.

“If FIs deploy ‘meeters and greeters’ or concierge staff equipped with

The Customer’s Journey: Transforming the Branch Network

3© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

tablets to help customers use self-service devices and educate them about digital banking, they can really speed up adoption of digital banking — for example, tablet banking — among baby boomers,” said Ed O’Brien, direc-tor of the banking channels advisory service at Maynard, Massachusetts-based Mercator Advisory Group. “We’re seeing older customers — for ex-ample, people in their 40s through their 50s — adopt assisted self-service in branches. So branches have an educational role in encouraging migra-tion to digital banking among this segment.”

One major trend is the movement toward counterless branches. In this model, the role of the staff has changed totally as, instead of handling routine teller transactions, employees are free to roam the branch, get closer to customers, and offer higher-level service on demand. Tablet-based solutions support and speed up the transformation from a transactional setting to one that is sales- and service-oriented — and significantly more cost efficient.

One crucial aspect of the counterless branch is that customers using in-branch ATMs and branch staff are in closer proximity, enhancing the customer experience and service.

Commonwealth Bank of Australia and UK-based Barclays are among FIs testing the counterless branch and assisted self-service concepts. Two U.S. banks are due to deploy Wincor Nixdorf’s tablet-based assisted self-service solution as part of their branch transformation programs. Several other banks are considering similar implementations.

In his “Best Practice in Branch Transformation” report for the ATM Industry Association, Cavell said that a critical success factor is the deployment of staff with the appropriate levels of skill and motivation to assist customers with self-service devices.

“Best practice requires specific staff behaviors and mastery in the use of equipment as the basis for promoting customer engagement,” Cavell wrote. “Staff should be motivated and managed to achieve targeted levels of cus-tomer engagement … The appointment of a digital ambassador for each branch has proven effective in assisting staff to become more competent and confident in their use of technology. Digital ambassador policies have also been implemented to deliberately deploy young, digitally literate staff in support of older team members.”

Implementing new branch-based technologies allows FIs to migrate routine transactions to self-service channels and improve customer service. Ac-cording to IDC Financial Insights, customers and FIs can expect to enjoy benefits such as:

“The way people control their finances is changing. Digital technologies are providing alternative customer access channels, which means that the branch – the oldest banking channel – must evolve and transform if it is to remain a core part of the banking mix.” — Anna Friedrich, Wincor Nixdorf, Business Development Lead Branch Network Transformation

The Customer’s Journey: Transforming the Branch Network

4© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

• double-digit increases in operational efficiency (approximately 30-plus percent);

• double-digit increases in the number of sophisticated, integrated cus-tomer touchpoints (approximately 25-plus percent);

• round-the-clock availability of services for maximum customer engage-ment and a more satisfying user experience; and

• full automation of transactional and cash services, leading to higher efficiency, tighter security and reduced costs.

Combining tablet-based assisted self-service with cash automation technol-ogy such as cash-recycling systems and automated teller safes and teller assist units frees up staff to engage in higher-value conversations with customers and also reduces cash management costs by up to 30 percent, IDC Financial Insights says.Russia’s Leto Bank cut its cash management costs in half after installing 377 Wincor Nixdorf cash-recycling devices. The project’s return on invest-ment is expected to be achieved within 12 months.

BarclaysWorking with Wincor Nixdorf, Barclays developed its assisted service counter with the aim of offering customers the convenience and speed of multiple functions in one device — the CINEO C4090. Although its role is changing, the branch is still important to customers who depend upon it for cash and check transactions as well as answers to com-plex queries. The goal of the new assisted technology is to provide essen-tial everyday banking transactions in a customer-friendly and efficient way through a single solution that integrates seamlessly into the overall concept of Barclays’ modernized branches. The bank’s customers can request help at the CINEO C4090 with the touch of a button. Branch staff receive the request via iPad and are available im-mediately to provide support as needed. Development of this solution required Wincor Nixdorf and Barclays to inte-grate staff iPads and design user-friendly interfaces that complement the look and feel of Barclays’ digital channels. Barclays already has equipped 40 branches with several hundred ASCs, and the rollout is ongoing. Where this solution has been implemented, ap-proximately 60 percent of counter transactions already have been migrated to the ASCs.

In a fully automated, cashless and counterless branch, staff roam the branch and serve customers. Source: Wincor Nixdorf

The Customer’s Journey: Transforming the Branch Network

5© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

Seamless experience Independent and individualist Generation X, age 35–55Gen Xers have a strong affinity for self-service and online banking, includ-ing tablets and smartphones. They require seamless service through all channels, including branch services that are linked closely to digital chan-nels — for example, end-to-end online account opening or video advisory services on tablets. According to the ATM Marketplace white paper, “ProFlex4: The Fast-est Way to an Omnichannel Customer Experience,” which is sponsored by Wincor Nixdorf, updating ATM user interfaces to offer a look and feel consistent with a bank’s Web and mobile channels is key to enhancing the customer experience. By using omnichannel multivendor ATM software such as Wincor Nixdorf’s ProFlex4, banks can replace outdated ATM user interfaces with smartphone- and tablet-style screens that respond to swip-ing, touch and gestures.“Consistency is an important element in today’s omnichannel banking environment,” Mercator’s O’Brien wrote in a Payments Journal blog. “This includes consistent user interfaces and experiences that meet the expec-tations of bank customers and credit union members. And while the [user interface] of each device will determine what can and should be displayed, the overall experience should be intuitive for the user and consistent across devices to meet and exceed the needs of banking customers.”Comdirect, a leading German direct bank, allows customers to open ac-counts using a mobile app and authenticate themselves using video identifi-cation technology on their smartphone. By implementing digital signatures on tablets and smartphones, FIs can mi-grate product sales more effectively to digital channels. Nevertheless, trust and personal relationships are crucial for a perfect combination of digital and human channels. The critical issue for the Gen X customer is the ability to shift seamlessly to the most convenient channel for a specific requirement.New formats, such as compact express branches that use advanced tech-nologies to offer enhanced interaction, especially target the Gen X cus-tomer. These branches are located in places where customers live, work or shop — e.g., shopping malls, city centers and peripheral areas. They provide a balanced mix of 24/7 self-service combined with face-to-face as-sistance from branch staff and video conferencing with remote experts (also available via tablet or desktop PC from the customer’s home). By 2020, approximately 40 percent of an FI’s branch network will be fo-

The Customer’s Journey: Transforming the Branch Network

6© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

cused on delivering enhanced interaction through such express branches, according to IDC Financial Insights.Ambitious, demanding Generation Y (millennials), age 21–35Gen Y customers require 24/7 availability and accessibility, and are smart-phone- and tablet-focused. This segment wants proof of the value of prod-uct features and relies strongly on word of mouth. To attract Gen Y consumers, FIs need to cultivate a strong brand and im-prove the speed and ease of access offered by their banking services.For the smartphone-dependent, 24/7 Gen Y segment, miniature branch formats characterized by round-the-clock availability, extensive self-service offerings and video links to remote staff are ideal complements to digital offerings. By 2020, approximately 25 percent of an FI’s branch network will be focused on delivering continuous presence through miniature branches, according to IDC Financial Insights.FIs should play an educational role for the younger customer segments. Mercator’s O’Brien says FIs that provide in-branch advisory services to younger customers — for example, helping them with a first mortgage or financing for a startup business — are likely to win their long-term loyalty.

The smart way to cash: cardless ATM accessA number of innovative banks are offering mobile banking customers the ability to withdraw cash from their ATMs by smartphone, without using a card. Austria’s BAWAG has become one of the first banks in Europe to offer its customers mobile cardless cash access at all branches. The service is driven by Wincor Nixdorf’s PC/E omnichannel platform, which enables FIs to integrate their channels and provide seamless offerings across different channels. Advanced ATMs that can be used for cardless transactions provide differen-tiation that strengthens the FI’s brand. Wincor Nixdorf’s solution also enables smartphone-based cash withdrawals by a third party. A customer can send the recipient a QR or numeric code, which is valid for a specific timeframe. The recipient simply scans or enters this code at an ATM to withdraw the prestaged disbursement. For the end-user, this process means faster, more intuitive and more secure ways to handle the majority of transactions on smartphones and tablets, or in self-service branches.Digital natives (Generation Z), born after 1995Digital natives are well-informed about products and expect everything to be digital. They make extensive use of social media, move rapidly between channels and services, and take multitasking to a new level.

The Customer’s Journey: Transforming the Branch Network

7© 2015 Networld Media Group | Sponsored by Wincor Nixdorf

Over the next five to eight years, digital natives — with their expectations of seamless cross-channel customer service — will challenge FIs to change and innovate, prompting radical transformation within the banking industry. FIs need to play an educational role for Gen Z, establishing a strong rela-tionship with this segment. Otherwise, digital natives will switch to alterna-tive providers for transactional services. According to a U.S. survey by Raddon Financial Group, nontraditional digi-tal financial service providers are particularly attractive to younger consum-ers. The February 2015 survey found that 62 percent of Generation Xers and 66 percent of millennials and consumers born before 1999 are open to the idea of using nontraditional financial services providers.High-quality service and high-value financial products will distinguish FIs from nontraditional providers whose focus is on digital transactions. These differ-entiators will determine the customer’s engagement and loyalty to the bank.

Wincor Nixdorf is one of the world’s leading providers of IT solutions and services to retail banks and retailers. The company’s extensive portfolio focuses on optimizing business processes at banks and retail companies. Wincor Nixdorf has a presence in over 130 countries, with its own subsidiary companies in 42 of those. For more information, visit www.wincor-nixdorf.com, www.wincor-nixdorf.com/branchnetworktransformation, and http://www.atmmarketplace.com/companies/showcases/wincor-nixdorf-international/

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