Huntington Bancshares is banking on an interactive video device to balance its need for cost savings while giving customers what they want the most -- convenience.
The machine, called Personal Touch, was recently added to a branch of Huntington National Bank in Columbus, Ohio, as a pilot for what could become one of the most innovative industry attempts at an alternative to traditional delivery systems.
William Randle, the holding company's director of marketing and strategic planning, declined to disclose the volume being handled by the two-way video device, but he did say said the company is pleased with the results thus far.
He said the test should lead to the creation of a "virtual branch" in October.
Larger Installation
"We're encouraged by the pilot to go forward with the larger installation," Mr. Randle said. "We are trying to get to the next step from the research we did last year to create an 'express bank.'"
Mr. Randle was referring to Huntington's efforts as well as a study conducted last year by First Manhattan Consulting Group for the Bank Administration Institute. Its recently published report, "New Paradigms in Retail Banking," uses data from Huntington and several other major banks to assess the appeal and potential growth of systems that could alter or replace the traditional branch.
"This is not just an experiment in technology," said Mr. Randle, who is chairman of BAI's retail-services commission and a member of the study's steering committee.
"The study surveyed 35,000 households and indicated that half of the customers would prefer not going to a bank," the Ohio banker said. "Very few people enjoy going to a bank. It's not high on the list of things to do."
Satellite Link
Virtual banking, seen by some as the way of the future, is arriving in Columbus.
Huntington's newfangled facility will replace an existing 5,000-square-foot branch. Mr. Randle said it would be about half the size and be manned by one or two people.
Huntington will install three Personal Touch machines and a pair of advanced-function automated tellers. The site will also be equipped with a satellite link to feed infomercials, news, and other programming.
The interactive video, connecting to a customer service center, will augment Huntington Direct, in which all banking service and transactions are delivered by telephone.
Customers now use Personal Touch for a full-motion video connection to a banker. The connection is made over phone lines.
Full-Time Access
Using a prompts on a touch screen, customers can call up information, make payments, stop payments, open accounts, and apply for loans. Mr. Randle said customers and noncustomers end up talking to a banker 25% of the time.
"Customers want access 24 hours a day, seven days a week," Mr. Randle said. "It makes them feel in control"
In developing more electronic methods of banking, Mr. Randle, like others, believes there is no reason to wait for a younger, more computer-literate generation to mature.
People like Mr. Randle say technology can reach or hold people who have been turned off by traditional banking, and if bankers wait, they could lose these customers forever.
Hi-Tech Enthusiasm
Sydney Smith Hicks, senior vice president with NationsBank Corp., Charlotte, N.C. is also enthusiastic about high-tech banking. She said she had spoken with many people who are interested in new technologies, and even her 70-year-old father is using a personal computer.
"There is an interest among people who have little time to actually do traditional banking," Ms. Hicks said. "It keeps business people sane."
Providing customer convenience is also an important consideration in technology investments at NationsBank. Mark Rickey, senior vice president and manager of customer access and information, said the bank uses a concept called on-demand banking, with a focus on the use of telephones, screen phones, and home banking.
Meeting Customer Needs
"Convenience plays a big part in it," Mr. Rickey said. "It's where the bank goes to the customers to try to pro-actively meet their needs. Part of the technology equation is to find out more about the customer. You can consolidate the back-office operations, but that doesn't necessarily advance anything for the customers."
Huntington, which has also been active in development and testing of the advanced screen telephones, got into interactive video banking machine by looking at front-office systems.
That is where the bank spends some 60% of its systems investments.
"Part of the problem is that there is too much focus on the back room and not enough on the customers," Mr. Randle said. "Our approach is different. We use the strategy of changing banking to a more self-service channel to do what the customer Wants."
Mr. Randle realized customers were finding less time to do the things that once seemed routine, especially paying visits to the local bank.
Aggressive Cross-Selling
Responding to nonbank competition and the capabilities of data-base technology, bankers are becoming increasingly aggressive at identifying sales opportunities and cross-selling to existing customers. But investments in convenience-enhancing services reduce the need for customers to visit full-staffed, high-maintenance branches, and their selling role diminishes.
Mr. Randle called investments centering on branches and products a "waste of time."
"We've invested a lot of money on technology with the focus on redefining the customer, as opposed to simply improving customer service," Mr. Randle said. "There's the euphemism of cross-selling, but customers go to a branch for a transaction, and don't want to be cross-sold.
"If you get them on the phone, then you have a real shot at opening an account."
One of a Kind
Mr. Randle said his video banking machine was the only one of its kind in the country. Officials at $17 billion-asset Huntington have high hopes that it will be a hit with customers.
As more machines are implemented, Huntington expects to be able to open smaller, less-costly facilities with fewer employees on site to carry out banking transactions.
Rick Sellers, president of Huntington Service Co., the bank's technology arm, said there would likely be "fewer branches from industry consolidation, plus the continued pressure on expenses."
He added, "You build different branches depending on what you want to do. You recognize the demographics and you build accordingly."
Development of Personal Touch, which costs a little more than an ATM, began in 1991 in cooperation with AT&T Global Information Solutions, then known as NCR Corp.
Other Sites Discussed
Paul Ayres, vice president of electronic banking at Huntington, said "discussions have taken place" about putting video machines in shopping malls, supermarkets, and even manufacturing plants.
"A lot depends on how well we do with it," Mr. Ayres said.
Among banking's new competitors such as brokerages and mutual funds, "information is the thing," Mr. Randle said. "That's why banks are getting beaten up by the so-called non-bank competitors. There are a lot of bankers only now getting the wake up call that they are not providing what the customer wants.
"The customer wants convenience, and if the banks don't do it, some one else will."
