Four Tenets Guiding Branch Transformations in Latin America

The Global Classroom: Latin America

Over the past two years I’ve traveled everywhere from Hawaii to South Africa to meet with financial institutions of all different sizes. I collaborate with them to streamline their processes and jump start their branch transformation initiatives. As Diebold’s Advisory Services  team has grown into a global force, we’ve developed close working relationships with our regional partners and met with more than 750 FIs around the world. Along the way, we’ve discovered pockets of innovation in unexpected places.

Our team has wrapped up three major projects with banks throughout Latin America over the past year, including collaborating with Bancolombia to introduce cash recycling technology in Colombia. Having witnessed and facilitated our work with these institutions, here are four intriguing lessons I’ve seen in Latin America that North American and other FIs can learn from.

  1. Busy branches should operate more like American grocery stores.

During audits in Latin America, I’ve witnessed as many as 15-20 active teller windows in some branches. That’s far more than most North American branches offer, and far more than most need. But while we’re seeing declining use in many branches, those located in high-traffic areas could take a tip from their Latin American counterparts: Organize the flow of consumers.

In Latin America, the government decrees that banks must offer bill-pay services to everyone, both customers and non-customers alike. In fact, during one visit to a bank in Bogota, Colombia, 70% of the people using the branch were actually non-customers. We’ve also seen visitors doing as many as 30 transactions during a single visit, with the average branch visitor performing four transactions.

Banks in these areas have responded by creating a “10 items or less” style line for consumers who just need to complete single transactions. In the U.S., that philosophy might translate into designated lines for business customers, or those who need a single popular transaction, such as check cashing.

Takeaway: Do you know who is coming to your branch? Have you thought about ways to improve the experiences of your most valued customers?

  1. Tellers should be treated like your biggest asset.

It’s not uncommon to see 50-100% turnover in tellers at U.S. banks. Conversely, in Latin America, teller turnover is much lower, around 10%. Why is that? In those countries, the role of teller is a highly esteemed position. Additionally, there are few part-time tellers, due primarily to the volume of business at the branch.

We believe the role of automation is to free your tellers from tedious transactions so they can connect on a deeper level with your customers. But in order for automation and tellers to coexist, banks must rethink how they hire and train their staff. Evolved tellers act as customer specialists, or universal bankers, who are equipped with the right tools to build relationships with clients.

Takeaway: What’s the current turnover rate at your branches? Do your tellers feel valued? 

  1. Security should take many forms.

It has been fascinating to witness the many ways in which Latin American banks secure their branches and ATMs. Armed guards are common sights both inside and outside the branch, and branch managers have to take great pains to properly identify employees (i.e., with bank apparel, name tags, etc.) so that scammers don’t impersonate them and try to interact with customers in the lobby or ATM areas. Additionally, it’s nearly impossible to gain access to the teller line at a branch in Latin America. Employees must traverse a series of locked doors in order to enter the area.

Biometrics have also become more prevalent at ATMs throughout Latin America. In 2012, Diebold collaborated with one of Brazil’s largest state-owned banks to introduce fingerprint readers at 3,800 ATMs. The readers replaced the need for a PIN, so that even with a stolen card, thieves wouldn’t be able to gain access to an account. Now that biometric recognition is readily used in Latin America, consumers there may be more open to other innovative technologies at the ATM and more likely to use self-service devices for routine transactions.

Takeaway: Are you capitalizing on the latest security tools to protect your customers’ assets?

  1. Banks should be where their customers are.

We were surprised at the number of banks we saw inside malls in Latin America. Yet, it’s not surprising when you factor in the amount of foot traffic those malls were getting. In large cities there, many people are walking to the mall during their work day, so traffic is very high, and a mall may have four bank branches, as well as numerous self-service banking areas with multiple devices (i.e., ATMs, kiosks). Banks there have also partnered with companies such as pharmacies and local retailers so that customers can conduct simple transactions while they run errands, rather than wait in line at the bank.

These initiatives have evolved because customers rely heavily on the bank branch. Although mobile phones are popular, few people pay for data plans, so mobile banking hasn’t achieved peak usage. And, because mail delivery is not always reliable, people often prefer to order and pick up checks or debit cards at the branch.

Takeaway: You may not need to open a branch at the mall. But have you extensively researched where your customers are, and how they want to interact with you? Have you adopted lower-cost branch formats to increase convenience for your customers? 

 

Find out more about how our global expertise can inform your FI’s branch transformation strategy. We’d love to talk.