Digital kills the ATM star

IBS Journal: There were some figures floating about recently that 80% of millennials want the option of visiting a bank branch. Is there a form of digital blowback occurring, with customer yearning for the classic branch?

Joe Gallagher: I wouldn’t say there’s a digital blowback per se, but what I would say is that putting iPads in the branch isn’t the end of the story, especially when millennials are concerned. Most people go into a branch because they want to talk to someone – confronting them with an iPad doesn’t achieve that objective. It’s not necessarily a millennial thing, it’s a human thing. If you’re making a major life decision you don’t want automated responses.

Banks are looking at it from a revenue standpoint and sure, there are more interactions made via mobile phone but that’s because people are using their phones hundreds of times a day. People are opening their apps wondering if their paycheque is in over the course of the day and the bank shouldn’t take that as a valuable interaction. It’s all about choice. Someone might be happy using a video link on their phone or they might be happy walking into a branch to speak to someone face-to-face about my mortgage. The human touch is important.

IBS: How do banks reconcile the fact there needs to be more automation, yet still maintain that human touch?

JG: I don’t think they’re mutually exclusive. Increasing automation is about cost efficiency but that can lead to a much more engaging experience. If you put the automation in, you can still have tellers on hand who can assistant should the customer need it.

With our series of ATMs the attendants can also tap into data about the customer – knowing if they’re saving for a mortgage, or have been splashing the cash recently – and use that to make informed offers. Technology can give a more engaging, more consistent experience and be cost effective, but can also free up people to build that relationship that people may need.

IBS: Banks usually have multi-year development cycles, sometimes in the decades. Is that detrimental to them riding this wave of innovation?

JG: I think that’s certainly the case now when you think about the pace of change. That applies to every industry. More so in the software side than the physical side. Things need to be looked at more frequently, in terms of human behaviour. Some things aren’t changing, like the need to speak to somebody we spoke about earlier. When it comes to the habits and preferences of generations that are now becoming consumers there certainly needs to be a fresher look.

There’s a big geographic difference to take into account, too, even across Europe. Raiffeisen Bank has recently started an initiative to digitise its customers, as 95% of their users visit the branch regularly, which is a huge number compared what we’re seeing in Europe.

IBS: Is it software problem or a hardware problem? Hardware can obviously hang around for several years.

JG: It depends on the banks. No one wants to refurb four or five times a decade, and ATMs have an average depreciation period of around seven years. The software side is changing at a faster rate but that’s just the nature of the beats. Behind that we have PSD2 and GDPR that will require an extra level of change in 2018 proper.

This article initially appeared in the January issue of IBS Journal

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