“ATMs and omni-channel strategy” …in retail banking David Cavell FCIB 2017 ([email protected]) 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]) 2 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 4 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 5 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 11 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 13 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) 19 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 20 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 24 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) 29 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 32 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 .