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6 questions every FI should ask about branch transformation

April 30, 2014 by Terrina Rishel — CEO, ATM Authority, LLC

Over the last few decades, we have watched technology disrupt many industries — requiring them to change rapidly or risk becoming obsolete. When new technology is coupled with an effective go-to-market strategy and a great consumer experience, competitors within that business segment are forced to re-think how they deliver products and services. We have experienced this with retail stores, gas stations, airports, car rental companies and the like.

The banking industry has struggled for years to figure out how to get greater efficiency from its current branch networks. Their No. 1 one cost in many cases is labor, while expensive brick-and-mortar investments run a close second. Over the last decade, some innovative financial institutions have quietly set out to reinvent the way they approach retail delivery, and have an effective framework to do just that.

Branch transformations should begin with six questions. How can we …

leverage our workforce and decrease labor inefficiencies?
build smarter, smaller, less costly branches?
eliminate cumbersome cash processes?
offer extended service hours without the expense of leaving the branch open?
convert cost savings into competitive product offerings and grow market share?
engage consumers and promote customer loyalty?

While this might seem a tall order, it's exactly what many cutting-edge FIs have been able to achieve by implementing comprehensive branch transformation initiatives. These six questions are some of the filters by which technology should be analyzed, when deciding to invest in and implement.

Branch transformation cannot be fully realized simply by automating deposits or adding newly designed ATMs and teller cash recyclers. And while new, modern branch designs are certainly refreshing, if they can't deliver cost savings and eliminate inefficiencies, the "Apple Store" concept falls short of answering the six questions that serve as the foundation of transformative retail banking.

Today's financial transaction climate is complex and requires an omnichannel analysis, rooted in offering consumers what they want when they want it. We still live in a world that often requires a physical document or check to be viewed by a human being. Remote deposit capture with a mobile device is useful, but in many cases it's just not enough.

Additionally, some transactions are too complicated to be performed at an ATM. And many consumers simply refuse to use an ATM card or PIN. For these reasons, branch transformation cannot be fully achieved without a "video teller" alternative.

A teller-controlled video device answers all six transformation questions.

It allows a financial institution to centralize its workforce and leverage peak banking hours in a way that traditional branches can't.
It gives FIs the ability to build branches that are smaller, more efficient, and more sales and service focused.
It preserves traditional teller services while eliminating laborious cash counting and balancing, and offers drive-up services without the expense of pneumatic tubes.
It allows the branch to stay open up to 24 hours a day without the cost and security issues a traditional bank.
It eliminates antiquated processes and expenses — savings that can be turned into competitive products and increased revenue.
It can give customers the freedom to bank up to 24/7, and to complete up to 95 percent of transactions that used to require a branch visit during business hours.

A 1,000-square-foot branch, that doesn't require a teller line, bullet-proof glass, and other expensive investments, but does offer 24-hour service with video tellers and loan specialists, is not the branch of the future. It is the branch of today. Disruptive change has finally arrived in the banking sector!

FIs that want to avoid losing market share to more efficient competitors — and risk becoming obsolete — will embrace true branch transformation as today's reality, not tomorrow's potential threat.