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Teller automation key to facilitating branch transformation

January 5, 2011 by Dominic Hirsch — manager, Retail Banking Research

Teller automation is inextricably linked to the wider process of branch transformation. This is both good and bad news for the teller automation industry – good because teller assist units and other forms of teller automation are increasingly needed to facilitate new branch formats, bad because the pace of branch transformation can end up governing the rate of adoption of new solutions.

It should be pointed out that there are still many banks that use teller automation primarily to improve efficiency within more traditional branch formats, but the movement to more modern layouts does now seem to be gathering pace.

This trend is not restricted to specific regions, but is a worldwide phenomenon. What is more, retail banks are not just re-developing a small number of flagship branches, but increasingly rolling out key elements from these flagship locations across their networks.

This investment in branch transformation is a signal that banks once again believe in the value of their branch networks – this may seem obvious today, but for the past decade, many were unsure. It has become clear that alternative channels, such as self-service, telephone and the internet are complimentary to the branch rather than a replacement for them – evidence of this comes, not least, from the number of pure internet banks that now operate branch networks.

The business case for teller automation in these new branch formats is complicated. The benefit of new equipment does not really come from immediate cost savings, but comes indirectly from the fact that this equipment facilitates the new format, which itself improves both staff and customer satisfaction.

Banks do of course ultimately expect to see a P&L improvement – not so much from reduced costs, but instead from higher revenues, which they hope will come from recruitment of new customers and increased customer retention. In the short term this may well be the case, but in the long term banks may not really have a choice.

Reprinted from Banking Automation Bulletin (see www.rbrlondon.com/bulletin for more information)

About Dominic Hirsch

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