"ATMs and omni-channel strategy" - in retail banking 2017 () - ATM Industry Association
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“ATMs and omni-channel strategy”
…in retail banking
David Cavell FCIB
2017
(djc_laffans@btinternet.com)
1
David Cavell
…www.davidcavell.com
Senior retail banker in lending, network management & delivery
channel development
Successful senior executive in retailing
UK financial services industry contributor
Now working with clients across the World on delivery channel
strategy …and implementation!
Please feel free to mail me with any follow up questions or
observations at (djc_laffans@btinternet.com)
2
Workshop scope and objectives
…plan of approach
The ATM has been the subject of much research, major
developments by market leaders and a wide variation in the
types and sophistication of current models.
We’ll look at case studies, market developments, key issues,
research and other insights.
And then suggest a framework for a rational approach to the
development and implementation of an ATM strategy… in an
omni-channel operating environment.
3
The agenda
…plus our discussions!
Background
Some ATM heroes and signposts to the future
Some other developments
Differing delivery models, different roles
Organising and managing successful strategies
4
Suggested corporate challenges
…for retail banking delivery
1. The profitable development of key target retail
segments – called in this workshop middle, mass
affluent (eg: top 15%) and small business…
2. Cost effective servicing of the low value mass market
3. The profitable provision of payment and other
financial services to the un(der)banked
5
Nearly three quarters of US
customers and two thirds in
Canada considered their
relationship with their bank…
“merely transactional”!
(Accenture 2014)
6
Objective: To represent and project the brand…
Standard of presentation
Standard of service/functionality
Corporate imagery
Corporate messages
Community outreach
Environmental issues
Etc
7
Objective: To protect and develop the existing customer base…
Competitive presentation and facilities, convenient
Personalised transaction handling
Recognition of and reward for customer value
Sensitive efforts to upsell
Checking for continuing satisfaction/discontent
Reinforcement of brand attributes
8
Objective: To acquire new customers…
Deploy machines/functionality convenient to the target
market
Offer third party users a competitive experience
Promote and incentivise usage and switching
Sell products to third party users or passing footfall
Promote differentiated brand values
9
Objective: To provide service critical to that location …
A no-brainer!!!!!!!!!!!!!!
10Key access issues up front!
…a landmark document
These guidelines are still in play and cover:
Access and site
Location/layout of operating features
Operating instructions
Screen design
Keypads
Card swipe, insertion and withdrawal
Outputs
Security and privacy
11Access issues today (and tomorrow)
…some key points
Recent ATMIA research suggests the following:
The scale of the issue is growing
There is a need to understand all aspects of
customer needs – and current inhibitors
This must be matched by an appreciation of the
solutions available to maximise accessibility
Board-level interest should be managed by a well
resourced accountable senior executive
The search for further improvements should continue
– including monitoring new developments
12The agenda
…plus our discussions!
Background
Some ATM hero banks and signposts to the future
Some other developments
Differing delivery models, different roles
Organising and managing successful strategies
13In the 1990’s
- custom sub-branded self-service branches
- high function ATMs (nothing else)
- specially trained staff
(courtesy of Standard Bank of South Africa)
In the 2000’s
- ATM led self-service configuration
- customer space dominates
- smart customer facing staff
(courtesy of the German Sparkassen and Wincor Nixdorf)
In the 2010’s
- thoughtful branch redesign
- ATMs can also work with tablets and staff
- staff are ‘on stage’ assisting and selling
(courtesy of Wells Fargo Bank)
14CaixaBank, Spain
…scale and innovation
Asset base of Euros 353 billion
#1 in Spain: 13.8 million customers
5,027 branches and 9,479 ATMs
ATMs have absorbed 77% of branch transactions
610 million ATM transactions pa.
7.5 million users of which 20% are not customers
Internet and mobile handle 55% of all transactions
Operates its “A” Flagship branch as a ‘Living Lab’
Biometrics, Google Glass, NFC, next gen ATMs, etc
Plus imaginBank!
15ATM redevelopment
…and leadership?
Probably a world-leader, CaixaBank completely
redeveloped its ATM in-house…
Redeveloped customer interface
Extensive high quality functionality… +250
Personalised and CRM driven
Provision for biometrics
World first in contact less (Courtesy of CaixaBank)
+90% are branch located
Euros 500 million for 8,500 new ATMs by 2024
16Wells Fargo Bank, USA
…customer-led channel strategy
An asset base of US$1.9 Trillion
6,100+ retail branches
13,000 ATMs (3,000 off-site)
Over 70 million customers
27 million digi-active including - 18 million on mobile
A smart approach to studying customers and channels
has revealed some valuable insights – more later…
17Wells Fargo Bank, USA
…and the ‘Neighborhood Bank’
18ICICI Bank, India
…the leading commercial bank
An asset base of US$109 billion
21 million savings account customers etc
4,850 branches (6.1% of all transactions)
14,000 ATMs (18.6% of all transactions)
42% of customers use internet banking
43% use mobile banking (with 150+ features)
An ongoing innovator in all channels…
(Footnote: Internet access in India has increased from 100m in 2010 to an estimated 500m in 2017)
19ICICI Bank, India
…the role of the ATM
The proximity of a branch and an ATM are still the top
two factors influencing the choice of bank in India
The bank operates three categories of ATM
- the conventional types of machines
- a micro-ATM in its ‘digital villages’ project
- a very lightweight machine in its new branch-on-
wheels (less than a quarter of the usual weight)
Geospatial tools are used for ATM network planning
as well as for branches
20ICICI Bank, India
…the ‘Touch Banking’ branch
21Bradesco Bank, Brazil
…and biometrics
Asset base Reals $1.3 trillion
27 million checking account customers
5,300 full and 4,800 sub branches
36,000* owned ATMs (with 25,000 contactless)
Also access to 21,000* Banco24Horas
11% of transactions go through branch ATMs
4% of transactions go through remote ATMs
77% go through mobile and internet (41/36%)
All 57,000* ATMs have had “Bradesco Security in the
Palm of Your Hand” for over 8 years – no PIN
22Signposts for the ATM’s future
…which of these is it to be?
Cash payments continue to grow and the ATM
remains the key source… +ve
Increased functionality (+250) further enhances its
ability to be a branch-substitute… +ve
The 4 million mark (per RBR) is reached but after that
growth plateaus… ???
The growth in digital payments accelerates and the
demand for cash reduces materially… -ve
Branch closures accelerate and that also impacts the
growth of ATM networks … -ve
It inhibits the capacity to renew old machines … -ve
23The agenda
…plus our discussions!
Background
Some ATM hero banks and signposts to the future
Some other developments
Differing delivery models, different roles
Organising and managing successful strategies
24Key numbers
…in the ecosystem
The global estate of ATMs is forecast to grow to 4 million by end 2021 (RBR)
Access to the internet is now 3.7 billion or 49% globally and growing
- North America (88%)
- Europe (77%)
- Asia (45%)
- Africa (28%)
(Internetworldstats)
Mobile take-up is forecast to grow to 4.6 billion unique subscribers by 2020
- 361 million in 2000
- 3.6 billion in 2014
- Each subscriber now has an average of around 1.8 SIM cards
(GSMA)
25ATMs and the digital branch
…eg: Commerzbank
Commerzbank is a major German player with many
foreign interests including an innovative Polish
subsidiary and a new commitment to retail at home.
Asset base of Euros 490 billion
17.5 million customers – 11 million in Germany
1,000 branches
A recent Euros 1 billion investment in products,
services and technology included…
26Commerzbank, Germany
…flagship branches
Two major branches in Berlin and Stuttgart brought
up to industry-leading standards…
27And now, the return of the
…pop-up branch!
28Mobile banking units
…on the move still!
(Courtesy of GS-Mobile, Germany)
29Talking to the customer!
…the value of video?
Albert Mehrabian is often quoted as saying in
1971 that…
55% of meaning is communicated by body
language – including facial expression
38% by our tone or the way we say it
7% by the words
Agree or disagree?
30Talking to the customer
…beyond the cash transaction
Early video teller machine benefits came from
increased teller productivity, supporting
customer use of self-service, extended hours
Standalone video also had much success
through making specialist staff available by a
remote link to the branch eg: mortgage sales
Both uses have seen success that justified its
extension of into general customer service
How might this all work for the ATM?
31The agenda
…plus our discussions!
Background
Some ATM hero banks and signposts to the future
Some other developments
Differing delivery models, different roles
Organising and managing successful strategies
32Principal business models
…legacy and digital
Branch-centric - the ATM extends reach and
hours whilst also lifting work from the branch
Call-centric – this model is increasingly digital
and the role of the ATM is to provide local
cash and non-cash transaction support
Mobile-led – the ATM provides cash access
although the model is seeking to build the
proportion of payments that are non-cash 33Disruptors and the ATM
…access to cash
New players are operating through mobile-led
models but still have to provide access to cash
Evidence from the ATMIA and the USA
continues to show high usage of cash even
amongst the younger age groups
Leading providers of challenger banking are
using the smartphone or card… and the ATM
ATMs also continue to work for beneficiaries of
money transfer schemes eg: mPesa
But for how long do they need the ATM? 34Disruption
…digital lowers the barriers?
New players enter the market on a solus basis
Or as partners
Digital has lowered the barriers
The best defence is a strong brand and good
well-focused customer propositions
Including a ‘best practice’ channels strategy
And there is also a need to stay competitive
which usually means creative as well
What does this all mean for the ATM?
35The agenda
…plus our discussions!
Background
Some ATM hero banks and signposts to the future
Some other developments
Differing delivery models, different roles
Organising and managing successful strategies
36A definition of strategy!
“ the determination of the basic long term goals
and objectives of an enterprise, and the adoption
of courses of action, and the allocation of resources
necessary for carrying out these goals”.
Prof. Alfred Chandler – Harvard Business School
37The objective?
…why find the optimum mix
Target segment
Product proposition
Channel preference – customer
Channel preference – bank
Optimised mix
38Customers and the ‘new’ channels
…major underlying cost issues?
New channels are not always taking over from old
Customer like the multi channel offer but…
- they don’t give up old channels (except call centres)
- new channels grow transactions
- and overall delivery costs can increase
The experience of Wells Fargo Bank sheds light on
the significance and value of a multi-channel
proposition…
39Wells Fargo Bank, USA
…and customer intensity
When talking customer profitability & channels (2016)…
Most customers prefer a mix along the continuum of self-
service and personal service
Research shows customers are more engaged when their
banking relationship (channels) matches their preferences
Aligning with customers’ preferences increases engagement
and intensity
Customer Intensity = channels used and transaction types
Ultimately creating value for the customer and our business
High versus low intensity - 2.4x purchase rates
- 24% higher retention
- 1.7x profit per household 40Customers say
…it must be a joined-up process!
“Customers….. will no longer tolerate inconsistent
experiences across a financial institution’s delivery
channels” (Tower Group & NCR)
How does your approach across ATMs etc work?
41Coordinated interface management
…for maximum effectiveness
If the value of the new technologies is to be maximised
the time has come to over-ride the silos! The customer
interface must now be managed on a coordinated
basis for all the devices in the mix…
Legacy self-service including kiosks
Digital television and digital advertising
Mobile, tablets and pads and e-books
Social media access
With a common…
Image
Brand
Navigation
Functionality (by device)
42‘Staff’ competences for the ATM
…why not?
The following is adapted from material for staff
standards but could be used with the ATM?
- Eye contact (where acceptable)
- Recognition, smile and greeting! (why does eye contact come first?)
- Courteous enquiry of the customer
- Service fulfilment
- The requirement beyond cash
- Understanding the issue
- Resolving the issue
- Offering robo-advice, information and education
- Sensitive cross-sell pitch (CRM driven)
- Reconfirming that the customer’s business is valued
- Discussing brand-related issues during the dialogue
- Courteous and friendly parting
- Care in the use of language
The customer-ATM dialogue justifies equal attention! 43Knowledge of the options
1 – ATMs and other devices
The ‘to-be’ model
2 – focuses plans and commitment
Managed, coordinated action plans
3 – sub projects
Monitoring of emerging developments
4 –R&D
Introducing valuable new concepts
5 – when viable
44Transactions will be originated/prestaged by many
different devices, which will also have video links
This could also disintermediate many ATM non-cash
transactions – and could take over the VTM link
A recycling, reconfigured in-branch ATM might do no
more than handle physical fulfilment – in or out
Could it be that the TAU and next generation in-
branch ATM merge to become the same machine?
45Video sales and service
Avatars
Digital screens
Biometrics
Signature recognition
QR codes
Etc
46Nearly three quarters of US
customers and two thirds in
Canada considered their
relationship with their bank…
“merely transactional”!
(Accenture 2014)
47Whatever the different scenarios
…adopt ongoing best practice
Whatever the fate of the ATM, ongoing professional
monitoring and evaluation is required…
To understand and apply best practice to ensure that the maximum benefits
are derived from existing machines and any new locations
To optimise the configuration of machines deployed
To retain a knowledge of new developments and features that offer the
opportunity for incremental improvements in delivering channel objectives
To measure accurately and understand the drivers of the basis on which the
ATM delivers benefits, whether financial or otherwise
All through an objective management mechanism that will respond with
remedial action to any shortcomings in performance including its withdrawal
where existing and projected performance so merits 48The agenda
…plus our discussions!
Background
Some ATM heroes and signposts to the future
Some other developments
Differing delivery models, different roles
Organising and managing successful strategies
49“ATMs and omni-channel strategy”
…in retail banking
David Cavell FCIB
2017
(djc_laffans@btinternet.com)
50Note: Unless otherwise indicated, the many illustrations used in
this workshop have
originated from the respective organisations and
are gratefully acknowledged.
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