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Four critical ways banks can be tech leaders, not followers

Jun 17, 2020 / Technology
digital banking

Prior to COVID-19, banks may have felt like new technologies – including facial recognition, cardless ATM access, virtual assistants and mobile apps – were ubiquitous, which created analysis paralysis. What technology is right for my branch? How do I know it’s worth investing in?

The journey down the paths of “branch transformation,” and “self-service strategy” have been accelerated by the pandemic. One of the most notable changes to combat the impact of COVID-19 has been the push to self-service and digital channels for critical communication. As we look to transition into a ‘new normal’, what’s next?

There are four critical areas of focus to not only prepare for what’s next, but to determine what technology investments will provide adequate ROI. It’s not about how advanced or impressive your technology is, but whether your customers and branch employees are cared for and collectively benefiting from it.

Know your customer (really well)

Every branch has its own needs that are defined and driven by the customer. Step one is simple –  focus on your customers and the experience they value. What changed since the pandemic? Banks should have access to data that can identify what activities are happening: How do my customers use the branch and other channels? How are bank employees serving customers? Where is their time being spent?

Amid the COVID-19 pandemic, the best-in-class banks migrated almost 70% of deposits from teller to self-service, with slightly over 50% occurring at the ATM. Having data is one thing – leveraging it is another. This is where analytics come in.

In many cases, banks have deployed new technology solutions, but are not using them to their full potential. This is where leadership is crucial. Rather than chasing the competition’s technology, banks will ultimately be successful focusing on their customers’ needs in this new environment.

Define your tech strategy

Once you know your customer, your tech strategy follows suit. It is important to adapt processes and clearly communicate about the rapidly changing environment.

Consider relaxing your policies and procedures to help reduce friction for things like deposit and withdrawal limits, hold funds or access to funds or overdraft, especially since self-service will play a pivotal role in transition to a new branch banking interaction.

Research by Diebold Nixdorf shows that digitally savvy consumers use banks’ self-service channels more frequently, with mobile banking users conducting 25% more transactions through self-service channels than non-mobile banking users. It is also important to have a deeper understanding of the types of transactions your customers are conducting.

Understanding who you’re serving and what type of technology you need to invest in will determine where to place your technology bets.

Invest in your people

Banks must rethink their staffing models to minimize risks for employees and customers. Our research has found that many branch staff don’t use technology solutions deployed by their bank. Sometimes staff fear that promoting these services could threaten their jobs.

Banks can adopt several methods to invest in their employees, such as:

  • Communicating the rationale for deploying new solutions and the impact to their job responsibilities
  • Offering training on new solutions and role-playing scenarios for engaging with customers to promote self-service options
  • Designating select staff members as ‘digital ambassadors’ with deeper expertise in technology solutions

“If you build it, they will come” is not an effective strategy with respect to self-service solutions. Your branch employees play a key role in driving customer adoption of new solutions, so give them the tools and support required to get the most out of your technology.

Follow the yellow brick roadmap

Reopening branches won’t happen overnight and will require a measured, gradual approach. Similarly, technology implementation won’t happen overnight and the ROI is not always immediate. Setting a technology roadmap helps frame what banks will do in year one, versus year two or three. This roadmap must be inclusive of the technology, as well as people investments and process changes.

All too often, banks deploy new solutions, but fail to measure the impact of those investments. Set goals for transaction migration at the branch level and measure performance compared to goals. Assess customer usage of new solutions and develop additional metrics as needed. For a bank deploying a video ATM solution, what percentage of customers who used a video teller did so a second time?

Implementing your self-service strategy requires deliberate planning based on customer feedback and usage patterns. Testing and evaluating new solutions is critical to success.

The coronavirus has proven that change can happen instantaneously. Banks will need to assess possible outcomes and establish initiatives to position themselves advantageously. Rather than copying and pasting others’ tech investments, focus on your own because everyone is playing a slightly different game.

Simon Powley is head of global advisory consultant services at Diebold Nixdorf