Branch banking today is experiencing a resurgence of automation. Tagged as "branch renewal," financial institutions are again giving attention to this vital, yet almost neglected, customer delivery channel. According to Financial Insights, a provider of independent research services to users and providers of financial industry technology, branches are being asked to "provide increasingly higher levels of personalized service and to execute a customer management and service strategy within the retail bank to an increasingly demanding customer base."1
So, what happened? What is the catalyst of this change? The answers can be found in the behaviors of both financial institutions and consumers:
* Financial institutions
Over the past two to three decades, financial institutions concentrated on channels other than the retail branch. In the 70s and 80s, the emphasis was on building ATM networks, developing call centers and providing telephone banking. The 90s saw a spending boom by banks in online, Internet and e-mail technologies. As a result, most financial institutions' budgets favored building the new channels while branches continued to ran on dated hardware and software.
As technology brought more convenience to consumers, it also made them more demanding. The contact center and e-mail channels were once thought of as being able to reduce or eliminate the need for branches. Yet while customers adopted these new delivery channels, they continued to use the branches. The American Banking Association estimates that 90 percent of customers use traditional branches and over half prefer the branch as their primary channel.1
The competitive nature of banking has changed significantly over the past 10 years. Banks face channel proliferation, channel integration, non-bank competitors, commoditization of products, introduction of new products and services and greater customer demands. All of these changes impact the customer experience and will ultimately erode a financial institution's market share if the challenges remain unanswered.
The response to branch renewal requires more than just a localized software and hardware update. For example, sharing data across the enterprise empowers bank personnel to respond to customer requests without passing them to other channels. With this handle-it-once approach, the customer experiences a fast, professional resolution to the request and the bank saves time, effort and money as retention rates rise.
Gartner, Inc., a research and advisory firm that helps clients leverage technology, further states, "Branch system software is no longer confined to teller and platform functionality and is no longer confined to implementation at the retail branch. Branch systems are moving toward an enterprise, multichannel architecture. This architecture enables the bank to deliver teller and sales and service platform functionality and data to the call center as well as other delivery channels. It also provides the opportunity for the branch and other channels to access enterprise customer and product data gathered and stored outside the branch system."2
While these market challenges shape the business direction, so do technological changes:
* OS/2 support has been terminated
* Older branch and teller solutions, for example IBM 4700 and DOS-based applications, have been sunsetted
* Aging hardware cannot run today's new robust applications
Another driving technology factor in branch automation decisions is the recent affordability of bandwidth, making web/Internet technologies more desirable. This underlying technology in a bank's branch renewal efforts can distinguish the financial institution from its competitors. Another benefit is that when technology is properly executed, costs are driven down and the customer experience is enhanced. In short, "The need to refresh branch technology has created a $500 million market for hardware, software and professional services that will be needed in the next three years alone. …