“ATMs and omni-channel strategy” …in retail banking
David Cavell FCIB
2017
1 David Cavell …www.davidcavell.com
. Senior retail banker in lending, network management & delivery channel development
. Successful senior executive in retailing
. UK financial services industry contributor
. Now working with clients across the World on delivery channel strategy …and implementation!
. Please feel free to mail me with any follow up questions or observations at ([email protected])
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Workshop scope and objectives …plan of approach
. The ATM has been the subject of much research, major developments by market leaders and a wide variation in the types and sophistication of current models.
. We’ll look at case studies, market developments, key issues, research and other insights.
. And then suggest a framework for a rational approach to the development and implementation of an ATM strategy… in an omni-channel operating environment.
3 The agenda …plus our discussions!
. Background
. Some ATM heroes and signposts to the future
. Some other developments
. Differing delivery models, different roles
. Organising and managing successful strategies
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Suggested corporate challenges …for retail banking delivery
1. The profitable development of key target retail segments – called in this workshop middle, mass affluent (eg: top 15%) and small business…
2. Cost effective servicing of the low value mass market
3. The profitable provision of payment and other financial services to the un(der)banked
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Nearly three quarters of US customers and two thirds in Canada considered their relationship with their bank…
“merely transactional”!
(Accenture 2014)
6 Objective: To represent and project the brand…
Standard of presentation
Standard of service/functionality
Corporate imagery
Corporate messages
Community outreach
Environmental issues
Etc
7 Objective: To protect and develop the existing customer base…
Competitive presentation and facilities, convenient
Personalised transaction handling
Recognition of and reward for customer value
Sensitive efforts to upsell
Checking for continuing satisfaction/discontent
Reinforcement of brand attributes
8 Objective: To acquire new customers…
Deploy machines/functionality convenient to the target market
Offer third party users a competitive experience
Promote and incentivise usage and switching
Sell products to third party users or passing footfall
Promote differentiated brand values
9 Objective: To provide service critical to that location …
A no-brainer!!!!!!!!!!!!!!
10 Key access issues up front! …a landmark document
These guidelines are still in play and cover: . Access and site . Location/layout of operating features . Operating instructions . Screen design . Keypads . Card swipe, insertion and withdrawal . Outputs . Security and privacy
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Access issues today (and tomorrow) …some key points
Recent ATMIA research suggests the following: . The scale of the issue is growing . There is a need to understand all aspects of customer needs – and current inhibitors . This must be matched by an appreciation of the solutions available to maximise accessibility . Board-level interest should be managed by a well resourced accountable senior executive . The search for further improvements should continue – including monitoring new developments 12
The agenda …plus our discussions!
. Background
. Some ATM hero banks and signposts to the future
. Some other developments
. Differing delivery models, different roles
. Organising and managing successful strategies
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In the 1990’s - custom sub-branded self-service branches - high function ATMs (nothing else) - specially trained staff (courtesy of Standard Bank of South Africa)
In the 2000’s - ATM led self-service configuration - customer space dominates - smart customer facing staff (courtesy of the German Sparkassen and Wincor Nixdorf)
In the 2010’s - thoughtful branch redesign - ATMs can also work with tablets and staff - staff are ‘on stage’ assisting and selling (courtesy of Wells Fargo Bank)
14 CaixaBank, Spain …scale and innovation
. Asset base of Euros 353 billion . #1 in Spain: 13.8 million customers . 5,027 branches and 9,479 ATMs . ATMs have absorbed 77% of branch transactions . 610 million ATM transactions pa. . 7.5 million users of which 20% are not customers . Internet and mobile handle 55% of all transactions . Operates its “A” Flagship branch as a ‘Living Lab’ . Biometrics, Google Glass, NFC, next gen ATMs, etc . Plus imaginBank! 15
ATM redevelopment …and leadership? Probably a world-leader, CaixaBank completely redeveloped its ATM in-house… . Redeveloped customer interface . Extensive high quality functionality… +250 . Personalised and CRM driven . Provision for biometrics
. World first in contact less (Courtesy of CaixaBank) . +90% are branch located . Euros 500 million for 8,500 new ATMs by 2024
16 Wells Fargo Bank, USA …customer-led channel strategy
An asset base of US$1.9 Trillion
6,100+ retail branches
13,000 ATMs (3,000 off-site)
Over 70 million customers
27 million digi-active including - 18 million on mobile
A smart approach to studying customers and channels has revealed some valuable insights – more later…
17 Wells Fargo Bank, USA …and the ‘Neighborhood Bank’
18 ICICI Bank, India …the leading commercial bank
. An asset base of US$109 billion . 21 million savings account customers etc . 4,850 branches (6.1% of all transactions) . 14,000 ATMs (18.6% of all transactions) . 42% of customers use internet banking . 43% use mobile banking (with 150+ features) . An ongoing innovator in all channels…
(Footnote: Internet access in India has increased from 100m in 2010 to an estimated 500m in 2017)
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ICICI Bank, India …the role of the ATM
. The proximity of a branch and an ATM are still the top two factors influencing the choice of bank in India . The bank operates three categories of ATM - the conventional types of machines - a micro-ATM in its ‘digital villages’ project - a very lightweight machine in its new branch-on- wheels (less than a quarter of the usual weight) . Geospatial tools are used for ATM network planning as well as for branches
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ICICI Bank, India …the ‘Touch Banking’ branch
21 Bradesco Bank, Brazil …and biometrics
. Asset base Reals $1.3 trillion . 27 million checking account customers . 5,300 full and 4,800 sub branches . 36,000* owned ATMs (with 25,000 contactless) . Also access to 21,000* Banco24Horas . 11% of transactions go through branch ATMs . 4% of transactions go through remote ATMs . 77% go through mobile and internet (41/36%) . All 57,000* ATMs have had “Bradesco Security in the Palm of Your Hand” for over 8 years – no PIN 22
Signposts for the ATM’s future …which of these is it to be?
. Cash payments continue to grow and the ATM remains the key source… +ve . Increased functionality (+250) further enhances its ability to be a branch-substitute… +ve . The 4 million mark (per RBR) is reached but after that growth plateaus… ??? . The growth in digital payments accelerates and the demand for cash reduces materially… -ve . Branch closures accelerate and that also impacts the growth of ATM networks … -ve . It inhibits the capacity to renew old machines … -ve
23 The agenda …plus our discussions!
. Background
. Some ATM hero banks and signposts to the future
. Some other developments
. Differing delivery models, different roles
. Organising and managing successful strategies
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Key numbers …in the ecosystem
The global estate of ATMs is forecast to grow to 4 million by end 2021 (RBR)
Access to the internet is now 3.7 billion or 49% globally and growing - North America (88%) - Europe (77%) - Asia (45%) - Africa (28%) (Internetworldstats)
Mobile take-up is forecast to grow to 4.6 billion unique subscribers by 2020 - 361 million in 2000 - 3.6 billion in 2014 - Each subscriber now has an average of around 1.8 SIM cards (GSMA) 25
ATMs and the digital branch …eg: Commerzbank
Commerzbank is a major German player with many foreign interests including an innovative Polish subsidiary and a new commitment to retail at home. . Asset base of Euros 490 billion . 17.5 million customers – 11 million in Germany . 1,000 branches . A recent Euros 1 billion investment in products, services and technology included…
26 Commerzbank, Germany …flagship branches
Two major branches in Berlin and Stuttgart brought up to industry-leading standards…
27 And now, the return of the …pop-up branch!
28 Mobile banking units …on the move still! (Courtesy of GS-Mobile, Germany)
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Talking to the customer! …the value of video?
Albert Mehrabian is often quoted as saying in 1971 that… 55% of meaning is communicated by body language – including facial expression 38% by our tone or the way we say it 7% by the words
Agree or disagree?
30 Talking to the customer …beyond the cash transaction
. Early video teller machine benefits came from increased teller productivity, supporting customer use of self-service, extended hours . Standalone video also had much success through making specialist staff available by a remote link to the branch eg: mortgage sales . Both uses have seen success that justified its extension of into general customer service . How might this all work for the ATM?
31 The agenda …plus our discussions!
. Background
. Some ATM hero banks and signposts to the future
. Some other developments
. Differing delivery models, different roles
. Organising and managing successful strategies
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Principal business models …legacy and digital
. Branch-centric - the ATM extends reach and hours whilst also lifting work from the branch
. Call-centric – this model is increasingly digital and the role of the ATM is to provide local cash and non-cash transaction support
. Mobile-led – the ATM provides cash access although the model is seeking to build the proportion of payments that are non-cash 33
Disruptors and the ATM …access to cash
. New players are operating through mobile-led models but still have to provide access to cash . Evidence from the ATMIA and the USA continues to show high usage of cash even amongst the younger age groups . Leading providers of challenger banking are using the smartphone or card… and the ATM . ATMs also continue to work for beneficiaries of money transfer schemes eg: mPesa . But for how long do they need the ATM? 34
Disruption …digital lowers the barriers?
. New players enter the market on a solus basis . Or as partners . Digital has lowered the barriers . The best defence is a strong brand and good well-focused customer propositions . Including a ‘best practice’ channels strategy . And there is also a need to stay competitive which usually means creative as well . What does this all mean for the ATM?
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The agenda …plus our discussions!
. Background
. Some ATM hero banks and signposts to the future
. Some other developments
. Differing delivery models, different roles
. Organising and managing successful strategies
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A definition of strategy!
“ the determination of the basic long term goals and objectives of an enterprise, and the adoption of courses of action, and the allocation of resources necessary for carrying out these goals”.
Prof. Alfred Chandler – Harvard Business School
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The objective? …why find the optimum mix
Target segment Product proposition Channel preference – customer Channel preference – bank Optimised mix
38 Customers and the ‘new’ channels …major underlying cost issues?
. New channels are not always taking over from old
. Customer like the multi channel offer but… - they don’t give up old channels (except call centres) - new channels grow transactions - and overall delivery costs can increase
. The experience of Wells Fargo Bank sheds light on the significance and value of a multi-channel proposition…
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Wells Fargo Bank, USA …and customer intensity
When talking customer profitability & channels (2016)…
Most customers prefer a mix along the continuum of self- service and personal service
Research shows customers are more engaged when their banking relationship (channels) matches their preferences
Aligning with customers’ preferences increases engagement and intensity
Customer Intensity = channels used and transaction types
Ultimately creating value for the customer and our business
High versus low intensity - 2.4x purchase rates - 24% higher retention - 1.7x profit per household 40
Customers say …it must be a joined-up process!
“Customers….. will no longer tolerate inconsistent experiences across a financial institution’s delivery channels” (Tower Group & NCR)
How does your approach across ATMs etc work?
41 Coordinated interface management …for maximum effectiveness If the value of the new technologies is to be maximised the time has come to over-ride the silos! The customer interface must now be managed on a coordinated basis for all the devices in the mix… . Legacy self-service including kiosks . Digital television and digital advertising . Mobile, tablets and pads and e-books . Social media access With a common… . Image . Brand . Navigation . Functionality (by device)
42 ‘Staff’ competences for the ATM …why not? The following is adapted from material for staff standards but could be used with the ATM? - Eye contact (where acceptable) - Recognition, smile and greeting! (why does eye contact come first?) - Courteous enquiry of the customer - Service fulfilment - The requirement beyond cash - Understanding the issue - Resolving the issue - Offering robo-advice, information and education - Sensitive cross-sell pitch (CRM driven) - Reconfirming that the customer’s business is valued - Discussing brand-related issues during the dialogue - Courteous and friendly parting - Care in the use of language
The customer-ATM dialogue justifies equal attention! 43
Knowledge of the options 1 – ATMs and other devices The ‘to-be’ model 2 – focuses plans and commitment Managed, coordinated action plans 3 – sub projects Monitoring of emerging developments 4 – R & D Introducing valuable new concepts 5 – when viable
44 Transactions will be originated/prestaged by many different devices, which will also have video links
This could also disintermediate many ATM non-cash transactions – and could take over the VTM link
A recycling, reconfigured in-branch ATM might do no more than handle physical fulfilment – in or out
Could it be that the TAU and next generation in- branch ATM merge to become the same machine?
45 Video sales and service
Avatars
Digital screens
Biometrics
Signature recognition
QR codes
Etc
46 Nearly three quarters of US customers and two thirds in Canada considered their relationship with their bank…
“merely transactional”!
(Accenture 2014)
47 Whatever the different scenarios …adopt ongoing best practice Whatever the fate of the ATM, ongoing professional monitoring and evaluation is required…
. To understand and apply best practice to ensure that the maximum benefits are derived from existing machines and any new locations
. To optimise the configuration of machines deployed
. To retain a knowledge of new developments and features that offer the opportunity for incremental improvements in delivering channel objectives
. To measure accurately and understand the drivers of the basis on which the ATM delivers benefits, whether financial or otherwise
. All through an objective management mechanism that will respond with remedial action to any shortcomings in performance including its withdrawal where existing and projected performance so merits 48
The agenda …plus our discussions!
. Background
. Some ATM heroes and signposts to the future
. Some other developments
. Differing delivery models, different roles
. Organising and managing successful strategies
49
“ATMs and omni-channel strategy” …in retail banking
David Cavell FCIB
2017
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Note: Unless otherwise indicated, the many illustrations used in this workshop have originated from the respective organisations and are gratefully acknowledged.
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