4 minutes
Avoid past pitfalls with careful market analysis and visiting staff.
In a recent The Financial Brand article, Jeffry Pilcher, CEO, writes about Bank of America’s new “robo branch” concept. These unstaffed branches utilize an ATM and video conferencing within 1,000 to 1,500 square feet. Customers can set up meetings with staff remotely and then use the conference room when they arrive. A digital ambassador will be present at robo branch openings to make customers more comfortable with the new concept.
This concept has been tried in the past. In the late 90s, our firm installed 10 automated branches in Washington at the airport and shopping centers for BofA. There was an ATM, two phones and two PCs. These branches where dismantled within a year due to lack of use.
ATM use is a given, but the idea that customers will schedule appointments to talk with someone about high value services via video conferencing at a remote location is a stretch for most people.
That said, there are some applications where the concept can work. Since the introduction of remote teller technologies, we have been promoting the potential for automated branches at appropriate opportunities. Here are a few:
(1) Large employment centers often include a staffed branch. These can be reimagined into an automated center with a video teller and small video conference area. The conference rooms will likely be utilized, as today few employees have offices and lack privacy. We suggest providing visiting staff one or two days a week to resolve member issues and introduce high-value service providers via video conferencing. Staff can also support the HR department’s relationship needs. Employees are on site for eight to 10 hours per day, five days a week—the branch becomes an extended benefit that fits within their daily routine.
(2) When analyzing markets to maximize branch network performance, hot spots are locations with high potential for growth and increasing share of wallet through alignment with products and services and brand characteristics. To be successful, the investment must match the opportunity. A full-service express branch with 3.5 FTE is expensive to develop and operate. This leaves out markets with strong target characteristics but insufficient households to support a physical location. An automated branch with visiting staff will provide a presence, support existing relationships and build new ones, even with small business members. In some markets, there are no financial institutions at all, and an automated branch would be the only game in town.
(3) There may be markets you want to enter with more than just an ATM. In the process of analyzing markets for branch locations, we look at ATM transactions to suggest convenience centers for target members. The automated branch components could be added to a high-volume ATM site to help build relationships and market presence, particularly with a visiting staff member to introduce the credit union.
(4) Part of branch network optimization is understating which branches to retain, remodel, repurpose, downsize or close. Closing a branch is a difficult decision. One method to mitigate some of the negative response would be to replace a full-service branch with an automated center.
(5) Automated branches could be pop-up locations to match development in urban or suburban areas, until the need for a full-service branch is understood. In other words: being there first to play.
(6) An effective method of market entry is leading with mortgage, small business or other high-value services. An automated branch could be added to the location to provide a connection to retail and small-business banking that could then grow the site to a full-service express branch in the future.
For the past 10 years, BofA has been looking for ways to downsize its network through automation. Automated branches are another tool, but likely not the end solution. We believe that delivering information over members’ own devices is more effective than through a credit union’s hardware.
For example, two years ago we completed a branch study for a large client credit union. We observed how members engaged video messaging and used credit union provided tablets and PC. One location showed 12 members in a waiting area surrounded by video screens and table devices at a fancy tech bar. All 12 were seated with their heads down looking at their phones.
Members’ own devices must be integrated into the branch experience to maximize engagement, or you are losing a critical avenue to their trust. If it is true that people are more likely to trust information presented on their devices over others (read The Man Who Lied to His Laptop: What Machines Teach Us About Human Relationships), then why would they be more likely to discuss high-value service issues at a bank or credit union’s video conferencing location than their own home?
Automated branches are an evolutionary progression of physical branches, but without the value of full- or part-time staff, there is limited chance of success over the long run.
Paul Seibert, CMC, is an independent consultant under Paul Seibert Consulting, Seattle.