12/21/2020

Branch Transformation: Banking Automation Solutions

Transforming Branch Transformation – Not exactly what you had in mind? 

For years, there has been a lot of buzz about “branch transformation”—reworking your physical and digital footprint to better meet the needs of your market.  Financial institutions (FIs) have embraced this push for new technology, adding interactive/self-serve machines, cash automation, and mobile/video applications. This effort to change has produced great results. It has driven consumer adoption of digital services and has increased FI’s attention to effective interactions with all types of clients.

But now, we face the greatest disruption to the industry in generations. During this challenge, FIs must consider a completely different type of branch transformation. The attention on broad enhancements must pivot to put focus on some critical basics.

FIs need to find a way to meet client needs (which have changed in 2020) with the technology to deliver them in an effective way—all while keeping both their employees and clients safe.

Questions for a new normal banking automation solutions:

Not surprisingly, critical changes come with major investments in physical branches and equipment. This has become especially difficult since these transformations need to take place in an uncertain economy. How can you decide the best options are for your institution? How do you balance digital self-service with in-person, high-touch banking interactions? And how can execute your plans quickly enough to be ready to meet the needs of your community and staff?

Earlier this year, the experts at The Financial Brand looked at important changes COVID-19 has brought to the financial industry. Here are some of the key areas where they saw branch transformation happening:

1) Changes to consumer traffic

While the COVID-19 pandemic is likely to be temporary, the change in consumer behavior may be permanent. In an effort to reduce their exposure to others, many people have switched to using as many digital services (including banking) as possible. This has reduced foot traffic at many FIs, and it’s unclear if it will ever return to previous levels.

Ironically, if lower traffic leads to banks/credit unions closing some of their less-popular branches, it could cause extra strain on neighboring locations. While online and mobile apps can cover many services, some people will look to continue doing their banking in-person. Branch managers need to be ready to welcome any migrating customers/members and meet the new demand.

One solution to both the current and future changes to consumer traffic, are interactive teller machines (ITMs). Many FIs have turned to these devices during COVID-19 as a way to keep their customers/members and staff safe.

However, as consumers have become more familiar with digital tools, ITMs may offer a lot of flexibility in a post-pandemic world. ITMs can help branches react to changes to consumer traffic, lowering wait times during busy hours without the costs of employing additional staff (who will be idled if traffic declines).

2) TCRs reduce cash risks

As much as credit cards, online baking, and digital payments have reduced the use of cash, there is still a persistent demand for cash from the people that prefer it. But, during a pandemic, this preference comes with new concerns about virus transmission.

Already a tool of efficient tellers, teller cash recyclers (TCRs) can help add confidence—for both staff and the public—to safe banking practices during COVID-19. Early in the pandemic, The Financial Brand reported that “teller cash recyclers reduce cash handling by 90%, yet only 30% of U.S. branches have deployed them.” As the months of concern have continued, it remains to be seen if more banks have embraced TCRs as a permanent investment for their staff.

3) Drive-ups see renewed attention

An unexpected change to banking this year is the sudden importance of drive-up lanes. After years of declining use, aging drive-ups became essential to bank operations as lobbies closed down. (In fact, Equips’ market survey on COVID-19 impacts found that maintaining old drive-up systems was one of the biggest challenges facing bank operations.)

For some FIs, the shift to drive-up banking was met with a renewed interest in ITMs. One reason being that custom ITM screens can advertise financial services to people who were no longer seeing the promotional material normally posted inside the branch lobby.

If you’re looking for more insight on managing your drive-up equipment, read our post on tips for drive-ups.

4) ATMs for smaller banking

Much like drive-up lanes, ATMs have seen new value as a contactless option for getting cash. However, their limited capabilities and the overall declining use of cash may mean their return will be short-lived.

Despite this, The Financial Brand makes a case for the potential need for ATMs in the future: “As the number of branches decline more sharply after the pandemic, banks and credit unions still need to cover their markets. A well-placed deposit-taking ATM can fulfill that role. They cost about 10% of the cost of a branch to deploy and only 5% of a branch to operate.”

It seems more likely that versatile ITMs—not ATMs—would be better suited to fit this need, but the idea is the same. Small, automated banking sites may become a trend as FIs rethink their footprint and find ways to have physical locations that can operate without much overhead cost.

If you’d like to know more about ITMs, Equips has also written about the impact and uses of ITMs.

 

Transforming with Equips

Equips can help you navigate the choppy waters of transformation. Whether you are investigating new self-serve options, such as video banking or payment solutions, or focusing on ways to improve your physical branches by equipping them with new safety measures, we can help.

We have a network of resources and partners who are dedicated to helping our clients explore solutions that are right for them.