Diebold’s CEO looks at branch transformation from an entirely different perspective.
We hear the same rumors you do: that cash is going away, that branches will become a thing of the past, that fintech startups will soon rule the internet. But we don’t like to trade in rumors; we prefer the facts. And we see a compelling amount of data that suggests some of our most traditional channels have a much longer tail than the futurists give them credit for.
At the Retail Banking Research (RBR) ATMIA European ATMs 2015 Conference in London this week, our president and CEO, Andy Mattes, addressed some of the most pervasive myths in the financial industry — and some key truths we must all begin to embrace.
Mattes quoted noted futurist and co-founder of Singularity University, Dr. Peter Diamandis, who said recently that “finance will be the most disrupted industry in the next 10 years.” We couldn’t agree more. Mattes walked the audience through a future that will, indeed, look very different from the branches of today, but one that is ripe with opportunity for financial institutions willing to take risks, fail fast, adjust quickly and commit to agility, innovation and collaboration.
Banks, Mattes told the crowd, must address the sea of changes happening within the industry:
- Cost must be cut across channels. Physical space is low-hanging fruit for digital startups.
- Banks can’t just “do” social. There are 8,000 fintech companies in the US, more than the number of chartered savings and loans. They’re inherently social and inherently digital.
- Non-traditional competition has only just begun. We can’t just worry about those fintech entrepreneurs … we must face the challenges raised by the biggest names in the retail business, from Apple to Walmart.
- Our consumers are driving change, not us. It took 50 years for telephones to become mainstream. It took 1.5 years for tablets. 65% of FI executives say their business will be at least moderately disrupted by digital tech in the next year, but only 42% say digital technology is a major driver of business strategy.
We see digital enablement infiltrating every aspect of banking today. Every channel. Every interaction. So on a deeply physical level, at the everyday interaction level, what does that mean for your branch network? We’re seeing fundamental shifts in the look of the branch and the people who frequent it. There are people you won’t meet in tomorrow’s bank — a group of endangered species whose presence we simply cannot guarantee long-term. Their increasing rarity should be a wake-up call for all of us.
The Teller: Today’s automation can handle up to 95% of the transactions a teller traditionally did. Smarter staffing and retrained tellers will be keys to operational efficiencies. It’s time to embrace that technology where appropriate, and focus on the things humans do better than machines. Spend the time and effort to work with your tellers, rather than throwing automation at them, to help them understand how branch changes can positively affect their jobs.
71% of consumers still want to open deposit accounts in person. 70% of those accounts are more profitable than one opened online. There’s an opportunity there: a budding relationship with each consumer — and the teller is in the driver’s seat. Have your tellers bought into this new approach? Do you believe they can be universal bankers? Do they?
The Self-Service Technician. This is a topic we love to talk about. Our industry is increasingly becoming software-led rather than hardware focused. The days of ATM downtime are largely behind us, and today’s technicians are becoming less reliant on a van, and more likely to be found in front of a computer.
More advanced software options mean banks can choose to adopt thin-client models and store more data on the cloud, and while that may be the right thing for some FIs, we believe each bank has to carefully examine their needs before making a decision. With our acquisition of Phoenix Interactive, Diebold is at the forefront of adaptable, stateless, hardware-agnostic FIT-client software architecture.
Armored Car Drivers. We’re creating self-service terminals with higher capacities than ever, which limits the need for cash-in-transit visits. Our new ActivCash dispensers hold up to 15,000 notes, and that doesn’t even count what is accepted via deposit. And we’re integrating more recycling technology into ATMs, ILTs, teller pods and banker desks. We may not see as many armored cars in tomorrow bank not because cash is disappearing, but because cash management needs are.
It’s one of our favorite myths to dispel: We are NOT heading toward a cashless society anytime soon — especially if you live outside North America or Europe. ATM withdrawals are expected to increase by 40% by 2019 and analysts predict there will be 1 million more ATMs in existence by then. And, cash is still the #1 player in US payments, used in 40% of transactions.
Millennials. This group is controlling an increasing share of global wealth, but they often think and act much differently than other generations. While we’re seeing younger consumers embrace technology-driven banking channels, we also know they’ve never met a channel they don’t like. That’s why we need to focus on the omnichannel experience, and create seamless transitions between digital and physical channels.
We know customers don’t think in channels. But they are quick to complain (vocally, publically and repeatedly) if one of their avenues to interaction doesn’t work the way they think it should. Banks must engage in consistent, meaningful, helpful ways, regardless of the channel.
Disgruntled Customers. We’d much rather meet our friends at the coffee shop than at the bank. No one says, “honey, let’s stroll into the bank branch.” Most of the time, we already know what we want before we even get to the bank: We want money and happiness, and we don’t want to be inconvenienced. We’re helping consumers pre-stage transactions on their phones, then carry them out at ATMs or in the branch. We’re empowering universal bankers with cash access at their desks, teller pods and terminals. We’re consulting with banks to adjust the processes that are causing the most consumer frustration.
Today’s consumers are used to instant gratification. Meanwhile, mediocre customer experiences cost brands $1.6 billion per year. Is that a problem? A challenge? An opportunity? The banks that will be most successful will be those that can provide exceptional customer service and engage with customers appropriately. Eighty percent of people can differentiate between toilet paper brands, but only 5% can differentiate between banks. The opportunity to stand out with your customer engagement is ripe.
These five endangered species can serve as a reminder that it’s time to adapt or fail. While the rules of physical cash have always been set by those who print the money, with digital payments, rules are being written by others: Google, Apple, Bitcoin and a slew of fintech entrepreneurs. Our world is moving from an emphasis on “cash and dash” to the digital world, and we want to help you find True North. We need to provide the interface between the physical world of cash and the digital world of cash.