Does the branch have a bionic future?

By : Bryan Peddie

February 20, 2018 01:00 PM

Against a backdrop of intensifying competition and evolving customer expectations, businesses operating in the modern retail banking industry need to work hard to not only achieve, but maintain, success.


It's clear that traditional models and strategies are no longer sufficient to deliver the standards many of today's banks are striving for. Providers need to be open minded, with a willingness to invest in modernization and innovation.


This is just as relevant - if not more so - for established physical channels such as the branch and ATMs as it is for online and mobile banking. One of the concepts that could make a big difference in this area over the coming years and decades is 'bionic transformation'.


Driving revenue through bionic transformation    
In its 
Global Retail Banking 2017 report, Boston Consulting Group (BCG) said banks will need to "fuse digital functionality and personalized, human interaction" in order to improve performance. It predicted that, through a combination of higher revenue and reduced network and operating costs, bionic transformation could enable retail banks to achieve a 30 percent increase in net profit by 2020.


Looking at the process in detail, BCG identified three interrelated stages that form a bionic transformation. These are:


  • Blending digital and personal interactions to improve responsiveness and cost-effectiveness in the distribution model.
  • Outlining a value proposition that combines human judgment with data power.
  • Adopting a 'customer journey mindset' with end-to-end processes based on robotics and machine learning, leading to reduced process intensity and higher customer satisfaction.


As far as the branch experience is concerned, the firm recommended moving away from uniform models and developing various branch formats based on relevant factors and intelligence. Data and customer behavior analysis can provide insights into what services can be successfully delivered online and when consumers prefer to visit a branch for face-to-face engagement.


To ensure your business is delivering the highest possible standards across your branch network, it's important to have the right solutions in place and to equip your staff with the tools they need to meet customer demands.


BCG said in its report: "Customer relationship management systems, next-best-action tools and other digital enablers can improve the quality and quantity of customer interactions. Our research shows that banks that move to this type of bionic network can see revenue gains of five percent to 15 percent, network cost reductions of 15 percent to 35 percent, and increases in customer satisfaction of ten percent to 15 percent."


Why it's crucial to get branch strategy right
Whatever strategy your business opts to use to manage costs and derive maximum value from its branch network, there is no denying the vital role this channel continues to play in retail banking. No matter how much we hear about banks closing branches and consumers moving their financial affairs online, there will always be a place for face-to-face interaction and human service in the banking sector.


The 2016 Global Consumer Banking Survey from professional services firm EY revealed that three-quarters (75 percent) of consumers around the world still consider a traditional bank with branches to be their primary financial services provider.


It also showed that almost half of customers are not yet fully comfortable with digital channels. EY said this points to a need for "better customer education and careful consideration of the branch closure strategy of many banks in developed markets".


Perhaps, rather than questioning the relevance and affordability of the branch, today's banks should be focusing on how their physical channels can be modernized, optimized and leveraged to provide maximum value - for the customer and for the business.

Bryan Peddie

Solutions Marketing Manager, NCR Financial Services

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Bryan is an ATM Hardware Solution Marketing Manager and is based at NCR's R&D Centre in Dundee, Scotland. Bryan has a specific interest in technology trends and how the role of the ATM and payments are evolving