ATMs and branches are starting to look a lot alike. Not literally, of course - it's still easy to tell a self-service cash dispenser from a storefront. But banks of all sizes are busy turning self-service machines into tellers, while turning teller stations into ATMs.
New technology projects, such as Wells Fargo's electronic pads at teller stations, Dollar Bank's use of ATM video to put customers in touch with actual tellers and Bank of Montreal's leveraging of videoconferencing to bring financial experts to remote locations, highlight innovation that banks are using to win the battle of the bulk.
Even four years after the financial crisis first hit, banks face a problem of bloated overhead that, as the consultant Michael Nuciforo opined in March's issue of Bank Technology News, adversely affects their ability to innovate in other areas. Making branches and automated teller machines work faster by bringing more personal service to ATMs and more digital service to teller windows is a primary way in which banks are reimagining the concept of the store for a new age - one in which branches frankly are smaller and employ fewer people on-site. Branches are embracing technology-enabled agility, lean physical resources and customers who are more comfortable with digital banking than ever before because of their experiences with mobile and the Web.
"There's a tipping point as a result of the regulatory and broader economic issues of the past few years that have banks rethinking the cost and effectiveness of maintaining branches," says Bob Meara, a senior analyst at Celent.
One of the larger branch networks in the U.S. belongs to Wells Fargo, which has more than 6,000 stores and 12,000 ATMs across the country. The bank is doing a number of things to marry self-service channels such as ATMs and remote access via mobile banking applications to the branches. One initiative has enabled the actual teller stations in the branches to take on the appearance of an ATM session.
The bank is outfitting branches with touch-screen PIN pads that allow the customer to execute transactions such as deposits and withdrawals as if they were at an ATM while standing before a human teller. While that's happening, the rep signs up customers for new accounts or performs more complex interactions.
The strategy is to bring at least some automation to all consumers, even those who prefer to do all of their banking in person at the branch. "More than half of our ATM transactions are from 'teller preferred' customers [those who like to engage with tellers primarily]. So with that in mind, we built an ATM-like interface for the teller window. If you want to do a withdrawal, you enter that amount into the pad and the teller dispenses the cash to you," says Jonathan Velline, executive vice president of ATM banking and store strategy for Wells Fargo.
The bank is also using ATMs to help execute a broader channel diversification strategy. For example, it's tying mobile banking closely to cash machines. Customers who are authenticated at an ATM can enter their cellphone number to sign up for mobile banking. A personal financial management interface has also been linked to the ATM. "You can see how much you withdraw in a month," Velline says. ATM activity can be tracked by consumers as part of budgeting goals, with the goals represented by a thermometer - the "temperature" moves up and down to monitor progress.
Apart from some partnerships with hardware manufacturers, Wells develops most of the underlying technology for self-service and branch automation internally and links varied channels and touch points to its customer relationship management and core banking system, which allows for cross-channel pollination: mobile, ATM, Web and personal service are all drawing information and executing transactions from the same core processing software.
Marc DeCastro, a research director at IDC Financial Insights, says the drive to reduce costs and manage declining foot traffic at branches will spark a broad change in how expanded automated self-service capabilities can be used to optimize branches as a financial services venue.
"How the branch is perceived and how it will be built out in the future is changing. There is a movement to go with much smaller branches, perhaps having very small self-service branches tied to a more centralized full-service branch" he says. "So you have a local branch with no tellers where everything is automated, but if you want to do something more complex you'll have to travel to another branch a few miles away."
The analysts and tech providers Bank Technology News spoke with place the cost of running a branch network at about two-thirds of a bank's overall facilities budget, when the expense of employees, maintenance, equipment and size and location of the actual buildings are factored in. A new branch network dominated by smaller buildings, digital self-service, video tellers and less local staff would undoubtedly save money.
Existing remote access technology that's not necessarily cutting edge, such as video tellers and telepresence, is getting a second, more serious look as a remote customer service enabler.