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Douglas Hartung, Director-Research & Development Incubation, Diebold, Incorporated
To retain and grow their businesses, financial institutions are increasingly forced to address the needs of a more mobile-centric customer. Today, most institutions have deployed mobile banking applications and continue to seek ways to exploit their digital channels to drive transaction growth. At the same time, numerous futurists and industry pundits point toward a future featuring fully digital banks driven by the needs of the tech-savvy Millennial customer demographic.In speaking with financial institutions around the globe, two trends are becoming increasingly evident: 1) Institutions speak of their branch transformation plans and Omni channel strategies, but 2) Very few institutions are able to articulate specifically what they plan to do and what they plan to achieve through these initiatives. The challenge in identifying the appropriate strategy frequently comes down to a fundamental strategic tension: While financial institutions can envision a future in which more customer interactions migrate to digital channels, institutions’ retail footprints remain an important asset. After all, more than 70 percent of new account and product sales activities still take place at the branch. Furthermore, it is also generally agreed upon that accounts opened in the branch tend to be more profitable. Given this tension, how do institutions implement branch transformation and Omni channel strategies that are meaningful over the intermediate term and still future-proof them for an increasingly digital future? A number of financial institutions, especially in Western Europe, have aggressively transformed their branch operations—some to the point where branches literally have no cash present in the branch or any teller stations. If consumers want cash, they use a self-service device at the branch. However, many of these transformations are now being reimagined as institutions seek to enable more effective sales and support capabilities within the branch environment. Branch transformation may initially be about migrating transactions away from the higher-cost teller window to the lower-cost self-service channel, but focusing solely on this transaction migration won’t grow the business. Branch transformation must be about more than this and include strategies for enhanced customer engagement that drives sales. Similar issues are evident within financial institutions’ now ever-present Omni channel strategy statements. In most cases, institutions speak about Omni channel in one of two ways: either it refers to delivering the same look, feel and product capabilities across all channels, or it refers to delivering similar experiences to all customers across all channels. These definitions miss the mark. Consumers choose to interact through different channels for various reasons. At the ATM, they generally want to complete a quick interaction. Consumers likely visit a branch because they have an issue to resolve or information to gather, and they feel the need for direct interaction. On their tablets, consumers “lean back” to manage transactions and track their finances. On their PCs and laptop devices, they “lean forward” to search, evaluate and analyze options. Each of these channels offers a different means of interaction and depth of engagement.