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Rose-colored glasses won't help vision

Are emerging ATM capabilities yet another case of technology nearsightedness? Speer & Associates Executive Vice President Chuck Bruney sure hopes not. He offers a list of questions to help ATM managers sharpen their strategies.

June 25, 2002

The longer I work in the financial services industry, the more I come to realize that we bankers frequently repeat costly mistakes. Painfully, we are predisposed to a myopic view favoring emerging technologies. 

Chuck Bruney

Now, please don't get me wrong. For the most part technology can present a tremendous boon for many financial organizations -- by streamlining complex processes, creating more efficient operations and making possible lucrative revenue generation opportunities.

Then again, in the implementation, things often go wrong.

For instance, consider our recent experience with online banking. Several years ago groundbreaking Internet technology burst onto the scene, and bankers engaged in a gold rush of sorts to launch compelling Web sites.

At first, most sites were nothing more than online brochures. Then, later on as customers began to use the Internet, bank Web sites virtually mimicked the capabilities of ATMs.
In recent times, the trend has been to offer a plethora of personalization and transactional capabilities.

And now, many banks are finding themselves in a quandary as they have increased the number of customer interactions and transactions (and the total cost of delivery) without a commensurate increase in profitability.

Sorry to say, many astute delivery channel managers are desperately seeking inventive ways to leverage their Internet investments. In fact, many are looking to other industries for the lead.

Regrettably, the solution is too often mechanical. Many leading banks have expanded the Internet channel's technical capabilities with costly bells and whistles offered through alliances and partnerships, such as third-party content providers and mobile device access.
Yet most of these features go far beyond the interests of core bank site users.

As a result, many online banking managers are seeking to balance the cost of expanding personalization and transactional capabilities with the compelling need to improve financial or market performance.

Similarly, consider the recent bank history with the Customer Relationship Management (CRM) wave that materialized in the late 1990s. Advanced data storage and knowledge-discovery tools flooded the market.

And the financial services industry responded by rushing to replace steadfast MCIFs (Marketing Customer Information File) with very expensive data warehouses. Now, after several years of development, most of these investments are sub-optimized and the CRM is typically deployed as nothing more than a costly direct marketing campaign manager. 

In a similar fashion to the Internet, emerging relational database technologies were sold into banking organizations by technology managers rather than by way of a true, customer-centric, user-driven business model.

This brings my line of reasoning around to the current mood with ATMs. Alas, many banks are repeating this precedent through the escalation of a wide range of new ATM features -- made possible as banks migrate away from antiquated OS/2 platforms to the Windows NT environment. As such, a multitude of Web-enabled features have come forward.

The trade press is full of announcements of new ATM initiatives that enable customers to do such things as: obtain stamps, telephone time and movie passes; sign up for loans, cards and overdraft protection; learn about bank services and submit an application; cash checks to the penny and transfer money; review weather conditions, lottery winners and stock prices; get travel directions; and buy products over the Internet.

Déjà vu? As they have in the past, bankers are responding prematurely without adequate consideration to the market demand, the customer experience or the business case.

Much of this hoopla is based on a desire to squeeze more revenue and efficiency out of the technology and to provide a jazzy means of differentiation. Again, I ask, is this a case of thoughtful strategic business planning and execution or another example of technology myopia?

The distinction is important -- as costly mistakes are often made in the name of innovation.
I have found a few insightful questions can be quite helpful to detect ATM "technology nearsightedness." 

• Is my bank taking a "market-driven" approach to ATM development, or is the launch of new capabilities driven by a technology orientation? 
• Are ATM decisions being made in a narrow, shortsighted attempt to increase revenue or reduce costs, or is it motivated by a workable, longer-term intent to satisfy real customer needs?
• Is an integrated, strategic delivery system strategy driving ATM development? Does the new ATM feature/functionality align with a high priority market segment opportunity? Or is new functionality being rolled out to a large, undifferentiated marketplace? Has research been effectively employed to test new features and the likelihood of user acceptance and demand?
• Does an overall ATM strategic business plan exist, and, even more importantly, has it been effectively orchestrated with other channels to maximize the investments in the overall high-tech as well as high-touch delivery alternatives?

The answers to these questions can be highly revealing. 

Unfortunately, many managers are not stepping back and taking the time to adequately address these key issues upfront. Instead, they are relying on the ATM and software vendors to provide the answers. This is a dangerous game to play as we bankers have seen time and time again.

Hopefully we're paying attention to lessons learned and doing it right this time.

Since 1980,Speer & Associates, Inc.has been preparing financial institutions worldwide for the challenges of a rapidly changing and increasingly electronic financial services world. Headquartered in Atlanta, S&A is a recognized consulting leader possessing competencies in all vital aspects of the financial services environment.

Chuck Bruney is an executive vice president of S&A, focusing on financial services strategies and the application of marketing sciences in the evolving e-financial services marketplace. He has more than 22 years of combined banking and consulting experience in the development and implementation of strategic initiatives throughout North America, the Caribbean and Latin America. Bruney has particularly focused on the collection and analysis of behavioral data and how it can interact with market segmentation to yield higher returns from marketing investments.