Academic journal article ABA Banking Journal

Customers Coming around to Kiosks?

Academic journal article ABA Banking Journal

Customers Coming around to Kiosks?

Article excerpt

Maybe the tipping point occurred when all the business travelers arriving at the airport made a beeline for the kiosks to obtain their boarding pass instead of waiting in the "slow lane" at baggage check-in, one ATM executive muses.

Perhaps it occurred when customers realized kiosks had the potential to give them back some control in the venue where they did their banking.

Americans aren't as tolerant of lines as Asians and Europeans, and anything that is a "line buster" has a chance of taking off, says one analyst. Self-service elsewhere did the hard work of making the concept known and acceptable.

However it occurred, the kiosk--heretofore a spotty and low-energy presence in the branches of a few pioneers-will get a higher profile in the near future.

Glen Fossella, vice-president of marketing, Source Technologies, Charlotte, N.C., says he noticed an increase in demand for information about kiosks over the last year. Several banks will have pilots staged this summer.

Community banks and credit unions have different ideas about what the kiosk can do for them. Some seek to use the device as Source Technologies envisions it--a teller-assisted unit that allows one teller to oversee multiple kiosks and complete customer-started transactions when necessary. (Some banks, like Washington Mutual, have cash dispensing devices complete the transaction started by the teller.) Other vendors offer kiosks that allow customers to take care of check ordering or bill paying--or to simply sign up for bill paying services.

Tim Kearns, director of marketing, MontegoNet, Portsmouth, R.I., says that the banks he's worked with want a higher yield from their internet investment.

"Putting internet access in the branch gives banks a venue to demonstrate the value of the service," says Kearns.

"It provides an easy customer sign-up and has helped to boost billpay service rates at certain community banks," he adds.

Bank of Newport, Rhode Island, and Westborough Bank are in the small but growing group of kiosk enthusiasts, according to Kearns.

Whatever the plans for the kiosk in banks, their numbers overall are starting to add up. Summit Research Associates, Rockville, Md., says that 735,000 self-service kiosks are in use worldwide, up from 400,000 a few years ago. Summit believes that 1.5 million units will be in use by 2008.

Early trials miss the mark

The transactional kiosk is a case of a not-so-new idea attracting a serious second look. A vendor push to create demand for these customer service devices in the branch and at check cashing locations began about five years ago, says Sam Ditzion, president and CEO of Tremont Capital Group, a Boston-based consultancy that specializes in the ATM industry. (Many vendors have been in the space ten years or--in the case of vendors like Diebold--even longer. ) Cost cutting and productivity were the drivers, says Ditzion.

"All the big players got involved in a series of costly projects," he recalls. "At the time, kiosks targeted to customers were placed in the branch and kiosks aimed at the unbanked were put at the check cashing facilities or in convenience stores."

The effort mostly flopped, Ditzion says, because the units were expensive, not very intuitive, and some manufacturers' devices were prone to breakdowns.

"The economics weren't right and people weren't ready," he says.

Kiosk drivers now

This time around, the technology has vastly improved and can be delivered at a lower price point. Years of internet development mean that bank vendors are better at developing interfaces with logical workflow that can help a customer identify himself, make a cash deposit as well as depositing several checks without breaking a sweat.

Moreover, Check 21 allows images to be transmitted instead of paper, further lowering costs. Also, a standard called XFS allows a bank to work with many vendors and have a standard way to handle servicing and application upgrades.

"I'm not saying it's a home run," says Ditzion, "but I do think branch kiosks have a better chance of success this go round."

Madhavi Matha, an analyst with Celent, Boston, agrees that kiosks have potential in 2006, and that successful airport kiosks have paved the way for use in other industries, including banking.

"But I still have more questions than answers at this point," she says. For starters, what branch region, size, activity level and demographic mix will work for the kiosk?

"Clearly, it needs to be a busy branch," says Matha. "But does it make sense in urban or suburban markets? How do the devices need to be introduced and supported?" She has a wait-and-see attitude but urges banks to investigate the uses.

"Any device that improves the customer experience and lets tellers take on a more consultative role deserves a chance," says Matha.

Matha figures that Bank of America--which tested kiosks in California--and SunTrust have picked up some clues about how to make kiosks effective. "They've made general, positive comments," she says. "But they haven't offered too much in the way of detail."

Michon Schenck, chief operating officer, Financial Insights, Framingham, Mass., is even less impressed.

"Banks are always going to check out technology that can take out cost, but I don't believe that teller-assisted kiosks cut down on lines," Schenck says. "We'll have to see more of these installations to get a better sense of the fit."

Customers need an orientation

Nearly everyone who spoke with ABA BJ agrees that customer acceptance is the "big if" with the kiosk. Different parts of the country, different demographic groups may respond differently. Around one factor customers unite: all seem to require orientation.

"There's definitely a right way to introduce branch-based kiosks," says Bill Waugh, vice-president of engineering, Wincor Nixdorf, with U.S. offices in Austin. "If you just put the units in, without a greeter and coach, customers will tend to steer clear. Once customers get used to devices, they tend to like them."

North Canton, Ohio-based Diebold, Inc., has been doing primary research on channel use and transaction mixes for years, comparing customer information from data warehouses to transaction types to get a behavioral profile. Big banks, especially, are increasingly aware of how much self-service a given branch requires, notes James Hughes, director, Solutions Development, Diebold North America.

Over time, he predicts, most competitive retail institutions will get the hang of it, although there are more transaction types than ever to analyze. His view? "There's no reason why a properly managed, marketed, and introduced kiosk can't thrive."

Diebold just recently introduced its Branch Transformation strategy planning service, which gives banks guidance on the behaviors and needs of the customer segments using their branch.

"A branch in the Fort Lauderdale area is likely to be speed- and transaction-oriented," says Hughes, "whereas a branch in Naples, Fla., will have a different dynamic and different requirements."

"U.S. branches need better signs that spell out the value proposition to the customer," says John Durocher, senior executive, financial services practice, Accenture, Wellsley, Mass. In a customer experience study conducted last year, Accenture found that most customers didn't notice kiosks unless they were formally introduced and shown how they worked; only then did consumers indicate a positive experience.

Branch design and configuration also need to be rethought to support kiosk use.

"In Europe, the signs are effective," says Durocher. "I know why I'm going to the kiosk. They tell me what's in it for me as a customer."

Pre-staging helps tellers

Tellers can benefit as well as customers, notes Bob Tramontano, vice-president of product marketing and engineering for the Financial Solutions Division of NCR, Dayton, Ohio. "The upside of kiosks is that they can let customers identify themselves and show tellers their value," he says. This is called pre-staging and it can make lines go faster.

"If a teller has a mundane look on her face, there's no graceful way to slip into that 'enthusiastic greeter mode' when someone proves to be a high-value customer late in the transaction," Tramontano dryly notes. "The right automated set-up can help the teller be more effective throughout the session."

Kiosks can also flash special offers or other customized messaging in the seconds before the teller picks up the rest of the transaction.

But there are more affordable ways to do those sorts of customer identification tasks, says Accenture's Durocher.

"You could put an RFID device in a card and have the ID alert go right to the teller workstation," he explains, referring to radio frequency transmitters. "The only real reason to use kiosks is to reduce wait times."

Tramontano agrees that transforming the experience of waiting--for tellers and customers--is the big push behind the kiosk. A widely quoted Forrester fact is that 40% of the teller's day is spent watching customers fill out forms or prompting them for additional information.

The teller-assisted kiosk, by allowing data to be pre-populated, can spread each teller a tad further.

"The kiosk isn't the ATM," says Tramontano. "It isn't fully automated. Customers don't want that, because they just walked by that row of ATMs in the front of the lobby."

While it seems as if the teller training required to get into the flow of teller-assisted multi-tasking would be difficult, Dan McIntire doesn't think it's a deal breaker. The senior product manager for Diebold says the units are intuitive and that tellers and customers can learn the device in short order. Moreover, "it really pulls the customer into their banking transaction," says McIntire, "which changes their perception of the wait-because they get involved to some extent."

And, it's not as if they are totally on their own. "In the midst of one transaction," he says, "a teller can pause, tell a customer 'I'll be right with you,' and continue." McIntire believes that a good use of a teller-assisted device is in suburban locations, where fewer tellers can manage drive-thru and walk up traffic in an easy, combined workflow.

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