In full disclosure, I am a technology junky. My career has revolved around technology in some form or another for the last three decades. I have historically been all over extending the technology umbrella and my domicile is littered with the excess of trying out new technology over the years. But I am starting to think we, as a society, may be getting just a tad carried away. When I was in my teens, I read Popular Science and thought we would all be flying cars to and from work by the time I was this old. Nope, that didn’t happen. But something out of a science fiction book I read long ago is starting to. A favorite author of mine wrote about citizens of a planet that intentionally lived far apart and only communicated by video. All other commerce was done electronically. The gist of the story was that the citizens of this planet became so used to living remote they became disgusted when they had to actually meet one another. 
So is this where we are going? Probably not, as we happen to live on a pretty crowded planet, but there are some disturbing trends.
Libraries – Libraries are starting to take electronic orders for books/DVDs and putting them in key coded drop boxes on the front steps of the library. There’s no need to talk to anyone anymore to check out a book. People can just go online, make their requests and stop by the box at a convenient time. I suggest parents may not want to steer their children toward a degree as a Librarian.
Book Stores – Why buy a hard copy of a book or newspaper when they can be obtained on an e-reader, personal computer or PDA? The prices are drastically less, and the product is delivered immediately. In response by the vendors to customer demands, most books will even be lendable. We’re going to save a lot of trees. Time will tell if enough people want to go in and touch the real thing and have a cup of coffee to maintain the bricks and mortar stores.
Video Stores – Want to talk to a movie junkie about how good the latest romantic comedy is before renting it? Do it quickly. That Blockbuster on the corner won’t be there much longer. With the popularity of movie on demand streaming and Redbox DVD rentals, the only movie advice available from this point forward will be mass media and Internet research.
Retail Stores – How much in store versus online shopping are consumers going to do this year? With Amazon running rampant and the major big box retailers augmenting their Web sites, the only person I will be sharing holiday shopping experiences with this year will be the UPS driver. Anyone thinking about going to a store to grab that last GI Joe off the racks will be at a disadvantage. Why not just put in an advance order and have it dropped off?
Food/Restaurant – Word has it research into vending perishable food items is a hot ticket to riches. Can’t give the kids candy bars and sodas at school anymore? Let’s figure out a way to dispense bananas and yogurt. No need to even get in the lunch line anymore. How long is it going to be before I place my order at McDonald’s on a touch screen and a little conveyor spits out my Big Mac and fries? While the major food companies may think their customers wouldn’t find it acceptable right now, is there any indication that our kids, or their kids might not find it acceptable? You can bet the big food companies would spend the money on the technology in a heartbeat if they thought it was.
Travel – I can set up a trip and go from Oregon to Miami, including flights, rental car and lodging from my desktop. When I make the trip, the only human contact I need is the TSA, the airline flight crew and the hotel receptionist who hands me my keys and makes sure my credit card is good. (I don’t count the person I sit next to on the flight as human contact, as all we ever do is grunt at each other and pass peanuts and drinks.) A recent news article discussed long term plans for airlines to reduce flight crews. Remember when travel agent was actually a career field? Will steward/stewardess be the next category to go? Do I get a discount if I assist in handing out drinks or take the co-pilot’s seat?
It’s obvious the need for personal contact isn’t driving commerce. Consumers are more and more willing to forego personal contact for better pricing and quicker (not necessarily better) service. So what does this trend mean for us in banking?
I am continuously conducting informal surveys of banking clients in their 20s and early 30s. You know the kind. They have smartphones with apps out the wazoo. I ask them when was the last time they went to a branch and why? Their answers are always similar: “I visited the branch to use the ATM to get cash, make a deposit or transfer money.” So understanding that I am a dinosaur, I always get a bit more granular and explain that I meant to ask when they last went INSIDE a branch. It’s not unusual to get blank stares. Usually their last visit was when they had to sign some documents. Perhaps it was a loan, new account, etc.
In light of this feedback, let’s look at the type of initiatives under way in Gonzoland that would result in minimizing trips to the branch:
- Online Account Opening
- Mobile Banking
- Personal Finance Suites
- ATM Upgrades
- Remote Deposit Capture
Now let’s look at the type of initiatives banks are taking to strengthen their customer service at the branches:
- Customer Relationship Management
- New Teller Platforms
- New Deposit Origination Platforms
Doesn’t it seem that the investments in the latter group need to go down over time as we invest our way into a customer base that never comes to see us?
Now let’s look at what could be on the horizon in the not too distant future:
Increase in live chat. This is huge in the younger demographics. Try to get support from Dell lately? You just click on an icon and somebody starts chatting within the minute.- Using branch personnel to supplement the call center. Cornerstone is seeing some of our clients doing this now, but this could be a de facto response down the road. After all, your CSRs are “customer ready” and waiting for someone to help. Why not use virtual technology to let them take the next customer ready to go, whether it’s in person or via the phone or via chat?
- Remote verification of identity for satisfaction of Know Your Customer requirements. If we trust a signature on a check (Check 21), why don’t we trust a signature on a loan doc, or a new account app? Could we not give the customer an option of a video conference and remote capture of their signature?
The shift in personal contact from in person to remote is with us to stay. What strategies can be used to differentiate one bank from another in this environment?
- Focus on moving calls from the call center to telephone banking. Don’t always assume customers would prefer talking to a person. The cost for a call center call is exponentially higher than a call the IVR can handle.
Continue to drive alerts. Alerts are declining in the industry, and we need to reverse this trend through making the capabilities known. The concept fits in well with the younger crowd. And every alert reduces the chances of a call to the call center. Think about handing out info on alerts in the new account process.- Continue to invest in “virtual banking.” This includes the obvious, such as online account opening, online loan origination, etc., but also includes the non-traditional. How about providing an IPhone (or IPad) or Google app for your online banking site?
- Continue to focus on ATM functionality. The Gen-Y crowd uses the ATM as part of their virtual banking world. Functional adds like touch screen capability, deposit capture, etc. are going to be well received and will provide “stickiness” to customers.
- Start focusing on cross sell in the virtual banking world. This is a big one. There needs to be more “behind the pin” marketing on your Internet banking site that allows for better cross sell. We can’t allow the sales process to die a slow death of attrition as our customers move to virtual banking from in person banking. If we are going to cross sell at the teller window, we need to do it on our Internet banking site. Perhaps we should think about deferring some of those mega bucks that are being spent for sales tools at the teller window and divert them to integrated marketing on our Internet banking site. In some ways, marketing through the Internet banking site could be preferred over marketing at the teller window by much of our clientele.
I may be a strange hybrid of the old and the new, but I like the benefits of going to a branch if I want to. But, I don’t want to go if I don’t have to. One could theorize that over time the tide will turn and our customers may actually prefer to enter a branch to talk to a real human being. But I wouldn’t bank on it (pun intended). 
In the meantime, it looks like there are enough branches on street corners now to satisfy the needs of those that intend to enter them, and we need to start extending our channels to better fit with the needs of the next generation of banking customers.
Just don’t send out my happy meal on a conveyor.
-br
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