As the Internet grew into an online banking channel in the mid- 1990s, banking industry experts were predicting the decline and eventual demise of the physical branch. However, as they say, the future isn't what it used to be. Instead of withering away, there are more retail bank branches than ever. Some regional banks, such as Commerce Bank, based in Cherry Hill, NJ, are even pursuing aggressive branch expansion strategies, offering previously unheard-of amenities such as Sunday hours.
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The typical bank branch, however, isn't what it used to be either. These facilities are now sophisticated centers that support multi- channel access-including ATMs, Internet banking and call centers, along with the traditional face-to-face access. Branch automation software has grown in sophistication along with the branches. Today's generation of branch automation solutions are built around CRM and multi-channel access. Some have CRM functionality built right into the products, while others support leading CRM systems such as Siebel or PeopleSoft Vantive. These tools enable increased sales, cross-sell and customer service opportunities, as well as marketing customer information files (MCIFs), loan origination, data warehousing, and workflow and imaging.
Customers have changed as well. Many expect their financial institutions to be able to provide 24x7 real-time access to accounts and services from any channel. Banks have been leveraging new branch automation system purchases that serve multiple channels. Centura Banks Inc., of Rocky Mount, NC, recently deployed a multi-channel CRM system as a corporate portal and desktop with SAIC's Broadway & Seymour TouchPoint software. The software not only includes platform and teller functionality in its banking centers, but also supports call center and Internet transactions. "Centura's philosophy is to understand our clients' needs and to deliver solutions through the channels of their choice," says Kent Miller, chief information officer of Centura.
Branch automation systems, which typically include teller, platform and lending modules, have been a feature on the market for years. Typically, the teller workstation provides access to customer accounts, check capture and reports. Platform systems store customer data, and are typically accessed by branch customer service and branch representatives. Lending solutions offer application origination and links to credit databases. Now, this technology has been extended to call center operations, providing call center representatives the same view of the customer.
Branch automation vendors have retooled solutions for multi-channel delivery of financial services and customer service capabilities, says Stessa Cohen, retail banking analyst with Gartner Inc., based in Stamford, CT. "The branch automation system is no longer a single channel," says Cohen. "Branch automation systems now supply transactional and CRM functionality and data not just to the branch channel, but also to the bank's Web site, wireless devices and ATMs." Branch automation systems are finding a new form and purpose in CRM. Such systems "contain demographic and transactional data that bankers use to further manipulate the data by customer segment and overall customer profitability criteria, such as by product, by segment and by household," Cohen says.
Investment in CRM technologies by retail financial institutions will drive growth of these software tools at a compound annual growth rate of 6% through 2005-at a rate considerably higher than anticipated, according to new research from TowerGroup of Needham, MA. This CRM spending won't be limited to larger institutions, which typically have been the mainstay of CRM. "Until recently, CRM has been the province of very large banks," says Kathleen Khirallah, senior analyst with TowerGroup. "In the minds of many retail executives, CRM was equated with a major technology expenditure. We're now seeing the beginnings of a change in perspective." Successful CRM implementations rely more on effective management practices than technology alone, she notes. "Smaller retail institutions will discover that they can pursue CRM business strategies without investing every last dime of their capital on technology."
A plethora of software vendors that only previously focused on larger institutions have been expanding their marketing to mid-tier banks. While most large branch automation systems previously ran on large Unix or AS/400 systems, many have ported their offerings to more commodity-priced Windows platforms as well. This has also moved CRM functions within the reach of mid-tier institutions.
A number of vendors compete for this market. Solutions providers include ARGO Data Resources, Fiserv, Harland Financial Solutions, S1/Software Dynamics Inc., SIAC Broadway & Seymour, Sanchez Computer Associates Inc., EDS, and Unisys. In addition, upstart international vendors such as Kindle Banking Systems and Financial Objects plc have also been targeting the North American banking market with component- based solutions.
However, industry-specific solutions may not provide the full- fledged capabilities that dedicated CRM packages may offer. "While some branch automation systems provide CRM functionality, these tools may not have the high-end functionality of enterprise CRM applications such as Siebel," says Gartner's Cohen. "In addition, the bank may have to create customized interfaces between applications and enterprise CRM applications."
The challenges to banks are managing interfaces from delivery channels and sharing enterprise data with the touchpoints, she adds. In addition, Cohen points out that data synchronization between channels can be a daunting task. To overcome deficiencies with branch automation-based CRM functions, some vendors provide middleware platforms with a local CRM application, Cohen states. She notes that some systems collect transactional data from teller systems to build customer transaction histories and take in data from other CRM systems. Some vendors provide analytical views as well.
With the rise of multiple channels within banking organizations, many institutions are managing data silos that do not communicate with each other. The increasing levels of multi-channel delivery are creating enormous pressure to put CRM-enabled applications in place. "The mere capture and analysis of customer information is only one part of CRM," according to Tom Shen, president of Software Dynamics, which is now part of S1 Corp. "The most important element of CRM is the actual behavior of the organization at the front-end; anywhere the customer and the institution meet. Having a cross-channel integration infrastructure in place is essential to deliver on the promise of CRM."
As the systems that serve multiple customer channels converge, a new role is being carved out for branch automation systems.
Joseph McKendrick is a writer based in Doylestown, PA.
