Over the past year, the hottest topic in the ATM industry arguably has been the bank branch of the future. (Except in the U.S., where it's been the hottest topic after EMV and ADA.) Generally it's agreed that the global financial crisis and its resulting economic pressures on banks have given rise to the current intense focus on the branch.
But other factors were at work even before the market crash of 2008: growing consumer acceptance of online banking, the rise of a millennial generation and its tech-driven style of personal interaction, and as always, the quest for greater efficiency and growing profits.
Some financial industry-watchers today have questioned the branch's viability and predict its eventual demise. But others have said that the future holds evolution, not extinction, for the branch concept.
"[Banks] still stick to the branch as one of the most important sales channels and service channels," said Uwe Krause, vice president of banking at Wincor Nixdorf, in an interview this fall with ATM Marketplace. He doesn't see that changing anytime soon.
London-based research and consulting firm RBR affirms this. A study released by RBR in December, "Branch Banking II: Case studies for the next generation," shows that the continuing strategic role of the branch has been recognized by banks around the world that continue to invest in its greater effectiveness.
Members of the ATM industry can read that as continued investment in more — and more sophisticated — ATMs and associated technologies.
Who's behind it
According to RBR, certain banks stand out for their longstanding commitment to innovative branches as a means to build customer loyalty and attract profitable new customers.
The RBR report includes case studies of two FIs with a history of branch reinvention: Barclays in the U.K. and ING Group in the Netherlands.
Case studies also profile banks that have more recently embraced change at the branch. Jyske Bank in Denmark and CUA in Australia have invested in branches in order to differentiate themselves from other FIs in highly competitive retail banking environments.
(Last year, ATM marketplace profiled University Federal Credit Union, an FI that has recast four of its branches in a differentiated approach that seeks to erase boundaries between customer and staff, eliminating teller windows and placing "universal personal financial representatives" within the customer space.)
Even new banks are investing heavily in their branch networks, RBR found. ICICI Bank — established less than two decades ago — is making a push in the rapidly expanding Indian retail banking market. An ICICI case study demonstrates how self-service can be deployed to support a branch-led strategy.
(ATM Marketplace explored the role of self-service in branch transformation with a story about Austria's BAWAG P.S.K., which last year undertook a major branch renovation. The bank's 520 branches now feature multi-function ATM lobbies — some with 24/7 access.)
Why it's inevitable
Traditionally, banks have operated by a universal customer strategy, i.e., one branch for all customers. But some are now trying a segmented approach for some locations.
The RBR report offers the example of UniCredit Bulbank in Bulgaria, which saw a need to accommodate an increasingly powerful and financially astute female demographic. The bank has opened a dedicated women's branch and established separate zones for women within other branches, all with their own distinct branding.
RBR found that DBS and OCBC in Singapore present some of the most interesting examples of customer segmentation. Both have launched initiatives to attract a huge and culturally influential demographic — young adults.
(Another example of a bank reaching out to younger customers — and tech-savvy older ones — is a Conestoga Bank branch in downtown Philadelphia, whose tech-driven new branch concept was featured last year in ATM Marketplace.)
Enabling it all, the evolving ATM
The RBR study addresses critical elements of branch evolution that include the location and design of branches, management of network assets and the skills and capabilities of staff. The new research also discusses how branding and integrated self-service help to create new branch models that are both appealing to customers and profitable for the FI.
The automated teller machine has played a pivotal role in enabling branch evolution. Advances in technology have added new capabilities — auto-deposit, video teller assistance, bill pay and money transfer, to name a few — that enable FIs to push transactions from teller to ATM and focus teller activities on personalized customer service and product sales.
Because branch reinvention is so reliant on customer-facing technology, it will have an ongoing — and growing — impact on not only FIs that are trying to revitalize and reposition the branch, but also the manufacturers, IADs, security and software companies and managed service providers that build and support this complex, interconnected infrastructure. Ultimately, transformation at the branch will have a transformative effect on the ATM industry as well.
The report, "Branch Banking II: Case studies for the next generation," is available at the RBR website.
For more on this topic, visit the trends/statistics research center.