USAA has always been known as a forward-thinking institution, especially when it comes to mobile banking - the San Antonio bank's military customer base necessitates a quick move by the institution into all things remote. USAA's efforts to serve a customer base that's always on the move has making it an incubator of sorts for remote access technology.
That's why its recent move to expand its network of brick and mortar financial centers seemed puzzling at first. But the firm is continuing its pursuit of remote access even in physical locations. It's using videoconferencing to drive a hub and spoke service strategy, using a central location to serve as a command center for strategically located, lean financial. The result, it hopes, will be enhanced service and reduced overhead.
"With USAA at the forefront of mobile and internet tech, it's not surprising that they are going to be looking at ways to change and modernize their [financial] centers," says David Albertazzi, a senior analyst at Aite.
USAA believes that even as a remotely accessed financial institution, there are still complex transactions, such as those around insurance and loans, that its customers would prefer to handle face to face, even if the "face" is actually in another locale. "We realize there are certain types of things members want to do in person," says Peter McKenna, retail channel development director for USAA. "We want to do that and are leveraging technology, but are doing so in a way that, as a member-owned institution, is mindful of our members' money."
USAA has offered in-store services via a partnership with Western Union for years and operates a small network of stores that the bank calls financial centers. The institution's nominal brick and mortar network began a couple of years ago with a financial center in the San Antonio area. Since then, it has opened 14 centers in 10 markets, most near bases or areas with high military populations, and it plans to eventually open more centers, with two in the pipeline and an evaluation of future locations. The centers are in areas with a large military presence, with three centers in San Antonio; two in Killeen, TX; and centers in Arlington, VA; near West Point, NY; Jacksonville, NC; Fayetteville, NC; Clarksville, TN; and Annapolis, MD.
USAA is outfitting its existing and new financial centers with videoconferencing technology that was developed internally and through partnerships with telecom providers. Additionally, financial centers are being equipped with all-in-one touch screen PCs purchased from HP that have a built in web cam, microphone and speakers. The members use the PCs to navigate to services, which notifies the institution what kind of service is required. The customers are given self-service options, routed to in-store staff, or put in communication with centralized service centers in Phoenix or San Antonio via videoconferencing.
Customers use the videoconferencing to speak to USAA reps about complex issues such as retirement planning, financial issues related to military deployment, auto loans, investments and insurance claims. Members can also use workstations in the centers to manage accounts online and deposit checks via scanner; or set up in-person appointments with traveling wealth managers. "It's one of the eternal questions: what's the ideal mix of ATMs, financial centers, online and mobile services...In USAA's case, they have a strong insurance arm, for example and there are certain things involved in insurance that you are going to want to talk about with someone," says Mark Schwanhausser, a senior research analyst at Javelin.
The USAA financial centers tend to be smaller than typical stores, though McKenna says the newer centers are larger to accommodate more foot traffic. Onsite staff are trained to help with basic transactions involving banking and property and casualty insurance. McKenna did not say how many people work in each financial center center, or how large the savings in overhead is by having most of the complicated customer interactions handled outside of the actual centers. McKenna says the staffing of the centralized customer locations is determined by analyzing volume and transaction time, similar to the way the institution estimates contact center staffing requirements. "It's clear that if we were to staff our financial center with people with the type of skill sets to handle all of our products, it would be much more expensive."
Other financial institutions, such as Dollar Bank and Bank of Montreal, are also gradually incorporating videoconferencing into branches. Bank of Montreal is enabling service to remote locations, while Dollar bank conversely is using video to provide relief to tellers in highly trafficked branches in the Pittsburgh area.
Schwanhausser also says USAA differs from startups such as Simple and Movenbank, marketing firms that focus entirely on mobile delivery of financial services while establishing relationships with legacy banks to hold deposits. "In theory [the mobile financial startups] are going to be focused on a very particular audience that will have a smartphone and will be interested in executing financial services [via mobile]," he says. "But USAA has been around a lot longer and they have different needs in terms of service."
Albertazzi says all banks should work on strategies to meld automated channels and branches, and to use digital delivery to manage the mix of personal service requirements with limited resources. "In the past, you knew if there needed to be x number of loan officers or x number of small business specialists or investment services people. Now it's conceivable that there would be general practitioners at the branches, and when a specialty is needed, that person can be accessed via video to make those specialists available across an entire network of branches."
Gene Pranger, CEO of uGenius, a firm that sells video banking software, says video allows for smaller branches - he claims about 600 square feet, which institutions can deploy strategically to attract local residents. "Most consumers select institutions that are [close] to their home. Mobile and the internet have a wider circle, but if you build a local presence, people can drive by and see it."
Chuck Purvis, chief operating officer of Coastal Federal Credit Union, a uGenius client, says that while the credit union serves a tech-savvy customer base in the Raleigh/Durham/Chapel Hill area, like USAA it's gotten feedback that customers still want the option to visit the institution in person when the transaction or query warrants. "Maintaining a physical presence in the market is important in the long term," says Purvis, who was scheduled to become the credit union's CEO on July 1. "The most costly part of the branch is the teller line and the handling of deposits and withdrawals."
The credit union uses uGenius video tellers in its network of 15 branches, which don't have tellers on site; a move Purvis says has cut the credit union's teller count by about 50 percent. "What's left in the branches are highly trained sales people and branch managers. They don't have to worry about teller transactions, or cash and checks," he says.
Even for banks that have a heavy focus on mobile, maintaining a physical footprint through banking centers is still valuable.