Technology has changed almost everything about how modern businesses and consumers do business, and banking is no exception. However, moving beyond existing systems can often be a big task: most branch teller systems still have some software code that was installed back in the 1970s. This technology was once leading-edge but is now long past its prime and is causing capability shortfalls.

With the advent of digital—the internet, mobile phones, Wi-Fi and APIs—old branch teller systems are no longer suited to support the changing ways consumers want to engage with the branch. Or how tellers want to be able to serve them.  

When a consumer stands in line at the branch, getting frustrated with how long it takes to conduct a simple transaction, such as getting a bank draft for a new car, the teller is also contending with their fair share of frustrations. They’re dealing with slow, clunky and siloed systems, forcing them to jump between multiple screens or applications to complete a single task.  

Branch banking is still relevant

Consumers increasingly handle their day-to-day tasks and transactions via digital and self-service channels. But the branch still plays an important role.  

According to McKinsey, 28% of consumers still prefer to use a branch. And that percentage climbs to nearly 50% when considering more sensitive and/or complex activities related to fraud or other issues. But the experience can quickly become sabotaged when branch staff struggle to provide a fluid and positive experience because of the multiple disparate technologies they must use.  

However, financial institutions recognize the urgency to transform and improve the branch experience.  

A recent Celent report found that replacing or modernizing legacy systems and platforms is among the top drivers of IT spending strategy for nearly half (47%) of retail banks the firm surveyed. The report also recognized optimizing customer engagement and experience as one of the top five technology priorities for retail banks heading into 2024. And with 75% of retail banks saying winning and retaining customers is proving to be more challenging than it was a year ago, this is more critical than ever.

The branch model is evolving, and the teller system must transform with it

Consumers have come to expect a connected omnichannel experience, and in the retail world, that’s been achieved. However, the reality is very different when it comes to banking services. The challenge is that most bank and credit union staff lack visibility into their customers’ and members’ data. That’s because traditional teller systems are siloed, focusing solely on transactions at the branch counter. So, the teller can’t see what their customers or members do online, on the app or at the ATM.

As consumers increasingly favor self-service channels, it’s crucial for banks and credit unions to have a full view of their activities. Their staff should be equipped with the necessary tools to locate in-progress transactions or applications and be able to provide immediate assistance. Having to restart a mortgage application from scratch, for instance, will lead to higher abandonment rates and the risk of seeking services elsewhere.

The branch model needs to continue transforming to better align with consumer needs and the banker’s role must continue to shift to one that’s more advisory in nature. To lead that charge, financial institutions should be leaning into advances in self-service technology. They must take a holistic channel approach to evolve interdependencies across channels. This means modernizing teller systems to enable better service and support while enhancing back-end systems to make daily tasks easier and more productive. Physical and digital channels can’t continue to operate in silos. Seamless support across all channels and touchpoints—whether through a remote teller, call center or the branch—is essential.

The answer may seem simple: financial institutions need to upgrade. But it’s not that easy.  

These archaic systems aren’t built to evolve easily, so upgrading them is costly, time-consuming and resource intensive. But as banks and credit unions take steps to modernize their legacy systems, a patchwork of legacy and modern software is emerging, which places the institution at systematic risk from a myriad of aged and new codes trying to work together.

Why the cloud is key to avoiding pitfalls

The most popular and future-forward solution is to unbundle the legacy system and replace it with an API- and microservices-driven platform. With a platform, banks and financial institutions are:

• Enabled to easily connect all aspects of their business to a centralized system.
• Empowered to drive more efficiency and cost-effectiveness with less impact on daily operations.
• Able to deploy and update in phases rather than as a complete overhaul.
• Positioned to evolve in the future with flexibility to add new services, functionality, and partner solutions.

Migrating the teller system to a cloud-based platform gives financial institutions and agility they didn’t have before. They gain the flexibility to quickly, efficiently and cost-effectively add new services, applications and functionality—or connect to financial technologies and third parties—to meet evolving demands.  

This migration can help further transform the function of the branch and provide greater convenience and visibility. Linking all consumer-facing channels to the platform gives financial institutions a 360-degree of all activity, empowering staff to support a consumer trying to complete a transaction or application, regardless of the channel the person started in. By adding services such as mobile remote check depositing or the ability for businesses to preorder cash and coin, financial institutions can also reduce transaction times in the branch, improving experiences and efficiencies across the board.  

New competitive offerings and omnichannel experiences will continue to emerge in banking. As financial institutions make upgrading their teller system a key part of their strategy, one thing is clear: in our digital-first world, the need to modernize is vital. to meeting consumer expectations and improving in-branch experiences. However, those aren't the only reasons. A modern architected teller system enables financial institutions to converge channels and adapt to change while giving their staff the tools to quickly and intuitively complete tasks and provide exceptional service.

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