Equipping the Bank Branch of the Future

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1 Equipping the Bank Branch of the Future TABLE OF CONTENTS Executive Summary...1 Resolution...5 Genesys Solutions...9 Some of Genesys Banking Customers...10 Full-service banks (collectively) could lose around 35 percent of their market share by 2020, and as many as a quarter of US banks could disappear altogether if they don t modernize. ii Executive Summary The rise of mobile and online banking channels has generated significant savings for banks relative to the cost of in-person transactions and shifted the type of interaction in banks from transactional to advisory. At the same time, this online and mobile activity has allowed customers to quickly shift their business between banks, and increased the tendency of customers to have multiple banks. These customers are more frequently calling into the bank with sophisticated questions that had previously been handled in the branch, turning the call center into a new type of branch and requiring more attention to skills-based routing of contacts to call center personnel. It has also heightened the need to provide an omni-channel experience for bank customers who demand that their interaction history be understood by bank personnel regardless of whether they transact business through the Web, mobile app or in-person branch visit. As a result, bank executives are now rethinking the role of the branch. Mobile and online disrupt another industry Like all industries with a brick-and-mortar retail or branch component, banking has undergone a tremendous upheaval as a result of internet-based and mobile access. Today more than half of customers retail banking interactions in the developed world take place through online or mobile channels, ranging from 75% in Norway to 38% in Mexico.i.This has created a significant decrease in the footfall, or traffic, to the modern branch. After rushing to provide an online and mobile presence, banks have discovered significant savings from the digital channel. finds that there s a significant misalignment between the cost of operating a typical full-service branch and the value of the products and services predominantly simple transactional products and services, such as check deposit and cash withdrawals that branches offer to customers. It is up to 95 percent cheaper to process deposits digitally than through a teller, for example; and the cost of online and mobile payments is 65 percent lower than payment via physical checks. iii Bank branches represent a sizable investment for the bank. Research by shows that the 25 largest US retail banks spend in excess of $50 billion each year on maintaining more than 43,000 branches nationwide. iv Opening a new branch costs more than $2 million on average. v

2 Equipping the Bank Branch of the Future / page 2 McKinsey and Company predicts that branch networks will be radically transformed into sales and advice outlets they will be 20% more productive than today and their costs will be up to 50% lower. The rise of the digital channel has also changed the type of transaction conducted at the branch. in Visualizing the Branch of the Future suggests that as simple transactions (deposits, transfer, cash) move to mobile/online or self-serve kiosks, the branch is now being asked to change its offering. The crowd that likes the branch now comes for more important things, such as to open new accounts or to talk to a banker about financial planning. vi The role of the branch in the new banking paradigm Despite the rise of other channels, the branch continues to be an important part of the banking experience. have found that respondents who chose a new bank most commonly cited fees, ease of account opening and branch locations as the reasons. vii Branches in every market remain the dominant channel for starting relationships. Roughly three-quarters of new account openings happen in branches. viii finds that nearly four out of five customers (78 percent) say they expect to be visiting their local bank branch just as frequently or even more frequently five years from now, for example; in large part because 66 percent of them still prefer to talk to a person rather than purchase a banking product online. Two-thirds say they consider branch closures more than a minor inconvenience, and nearly half would switch banks as a result. ix In addition to branches being important for starting new banking relationships and consulting on complex issues, branches remain the most effective channel at cross-selling and up-selling products. found that the reason is because about one-third of banking products in the US are sold, not bought. That is, customers did not plan to buy a particular product, but they received an offer and then decided to get it. x Loyalty matters in crossselling: For almost every product and in every country, customers who gave their primary bank a high Net Promoter Score (NPS) both own and purchase more products from that bank than customers who gave a low NPS to their bank. xi The rise of the call center as a branch Banks such as BMO Harris Bank in Chicago, St. Louis-based Commerce Bank and U.S. Bank in Minneapolis are devoting more focus and resources on not just their self-service channels (including online and mobile) but also on their contact centers for handling customer issues that can t be dealt with via self-service technology. In that sense, contact centers are fast becoming the new branches. xii It s all about time and convenience; not all customers want to go into branches, but at the same time, they want to talk to a real person about complex issues, says Patrick Strieck of BMO Harris. BMO Harris and the others are training their contact center employees to do a better job of dealing with these complex issues, both by phone and by online chat. xiii The contact center often provides a safety net for the branch personnel, by providing a deeper knowledge and access to back-office systems to complete a customer request, Strieck says. By focusing on the customer experience, the contact center s partnership with the branch network is stronger than ever. xiv McKinsey, in its report EMEA Banking Practice, makes the following recommendations: Call/ Video Centers: Make them the preferred channel for support. The role of call centers is changing as banks migrate their basic activities to digital channels (notably the web and mobile), and clients dial a call or video center to seek advice and support. Capturing the benefits requires banks to:

3 Equipping the Bank Branch of the Future / page 3 Increase service to sales conversion. Call centers are potentially able to convert service calls into sales, but to do so they must have the right capabilities. Using a conservative service to sales success ratio of 3% (good players go above 5%), the sales generated by one branch would be equivalent to what four agents of a call center could achieve. The best call centers (with eligible calls conversion-into-sales rates of 6-9%) try to make a sale on 20-50% more occasions than the average call center, aided by the intelligent call routing of customers to the best agents, use of CRM, and an approach to performance management that aims to develop the appropriate mindset. Only 44% of bank customers are happy with the consistency of the multi-channel experience being offered by their banks. xviii Upgrade quality to become the preferred channel. Many European banks are increasingly using their call center to provide high quality service and advice (and sales) for customers. This remote phone channel is, today, typically exclusive to certain segments and not available to the full customer base. In some countries like the UK, this has become the standard way to serve affluent customers. These call center islands staffed by people with higher skills spearhead the drive for new sales and provide excellent customer service. xv Customers demand consistent, omni-channel visibility In another corollary with other industries with a brick and mortar retail or branch component, today s banking customer demands a consistent, seamless experience across channels, with full knowledge and visibility to the bank representative. To delight customers these days, Bain and Company discovers, the banking experience must be consistent and seamless in person, online, on mobile and on the phone, because customers increasingly hop among channels to complete a task. xvi Capgemini reports that few banks are forging connections with customers in a personalized way as the role of the branch continues to diminish. And new delivery channels, while offering convenience, have created an inconsistent and disjointed experience for many customers. xvii Preventing attrition arguably outweighs winning new relationships, given the slow rate of new account formation. xix Banco de Chile had a basic inbound call distribution system that wasn t integrated with the bank s Siebel-based customer relationship management system, says Ivonne Muller, Head of Contact Center at Banco de Chile. When customers called in, the bank wasn t able to identify them, provide details to the agent, or provide different levels of service to different customer groups. Key to that superior customer experience is the omni-channel visibility that today s consumer has come to expect. Unfortunately, banks are currently receiving low marks for consistency of experience. Customers care more about convenience than about channels, according to Ernst and Young. Banks need to look beyond multi-channel toward a fully integrated banking experience that combines the advantages of physical branches and in-person interactions with the information-rich digital channels. Omni-channel distribution leverages customer data gathered from branches, website visits, social media and elsewhere. Marketing offers are customer-segment specific, rather than channel specific, and allow customers to purchase a product in one channel that they had researched or seen promoted via another channel. xx Capgemini in its World Retail Banking Report 2013 found that in four of the five areas identified as critical to relationship-building, less than 50% of customers said they are satisfied. Trust and confidence is the only criteria that customers ranked above the 50% mark, and they did so only by a slim margin (51%). Customers are least satisfied (37%) with the understanding that banks have of their needs and preferences, and only 43% are satisfied with the intimacy of their bank interactions. Delivery channels also presented room for improvement. Only 43% of customers were satisfied with their bank s ability to offer the right products through the right channels and 44% with the consistency of the multi-channel experience being offered by their banks. xxi

4 Equipping the Bank Branch of the Future / page 4 Customers with positive experiences also think their banks do a good job of offering consistent experiences across channels, as an average of 85.3% said so. Only 34.3% of customers with negative experiences said they think their banks provide consistent multi-channel experiences. xxi This data suggests a strong correlation between a customer s perception that his bank offers a consistent multi-channel experience and the customer s experience with interacting with the bank. Similarly, banks who do provide consolidated customer data and a seamless omni-channel experience have noted a causal link to success. relate that product win rates the share of products bought by respondents at their primary bank vary even more by bank than by country. In the US, the rates range from 38% to 63%, with Huntington National Bank leading overall. Several years ago, Huntington (which had high NPS to begin with) began to consolidate customer data and build a unified view across all locations and business units. It replaced its manual sales process with an automated one that made it easier for employees to manage cross-selling and up-selling opportunities. Huntington has gradually grown the number of products held by customers. xxiii Customers are hard to find, easy to lose The banking market is highly saturated and people new to banking are hard to come by. In one survey, only 0.7% of respondents in the developed world were new to banking i.e. having never had a bank account of any kind. xxiv At the same time, significant numbers of customers are actively considering changing their bank which has more banks scrambling for the same static pool of customers who display no loyalty. Worldwide, the number of customers planning to switch banks has grown from 7% in 2011 to 12% in The figure is significantly higher in China, India and several Latin American markets. For example, the number of Brazilian customers planning to change has jumped from 7% to 20%. Only Japanese customers are less likely to move banks than in Across the globe, dissatisfaction with high fees is the most important driver of attrition, cited by 50% of respondents. A poor branch experience (31%) and poor interest rates (30%) are the other leading drivers of attrition. xxv Customers wallets are filled with competitors Most banking customers have relationships with an array of financial institutions. The Ernst & Young report, Global Consumer Banking Survey 2012, shows that globally just 31% of banking customers have a singular relationship with a bank. xxvi The competition is not only just a click away, it s one credit card over in the customer s wallet. This is, in part, due to the proliferation of financial products offered by a variety of vendors. The consequences of failure to adapt analysis shows that full-service (or flagship) banks (collectively) could lose around 35 percent of their market share by 2020 xxvii to boutique, single-offering banks, and as many as a quarter of US banks could disappear altogether xxviii if they fail to adapt to the new banking paradigm. Banks are facing the same demands to cut costs that plague businesses in all industries globally: A 2012 survey showed that even though banks have been working to implement new cost-saving initiatives, costs have outpaced revenue growth. xxix analysts predict that banks risk lower margins and, thus, shrinking market share, unless they can leverage digital to play a bigger role in their customers commercial lives. We are, after all, witnessing a digital revolution that will transform US retail banking, impacting an estimated 40 percent of revenues and 55 to 60 percent of operational processes. xxx The retail banking industry is highly competitive and retail banking companies not able or willing to keep up will be left behind by those that are.

5 Equipping the Bank Branch of the Future / page 5 The National Bank of Greece has created i-bank, a new brand using contact centers and video kiosks. Traffic driven to the alternative channels through the i-bank stores is 10 times greater than through traditional branches. Alternative channels are the future of banking, and we seek to be on the leading edge, says Pericles Papaspyropoulos, head of Contact Center Sector, National Bank of Greece. Resolution Banks are embracing different types of branches and outlets Banks are rising to the challenge of the modern consumer and taking a number of steps, including opening a greater diversity of branch types, tailored to the locations and functions they serve: Light branches highly automated and focused on sales, but providing access to remote advisory specialists via video conferencing, a technology with the long-term potential to bridge the service gap between channels Kiosks geared to routine account services, featuring advanced ATMs with video, and located in malls and transport hubs. These could account for up to half a bank s branch network Full-service hubs like conventional branches but fewer in number, offering full sales and service support with extended hours and specialized providers for such products as mortgages and trading Flagships a small number of strategically located centers of sales and service excellence to promote the bank s brand and introduce new offerings around simpler and seamless-to-use self-service tools xxxi Leading banks are taking distinctly differentiated tactics for each segment. Some have improved offerings for affluent, high-value customers with premium services, which is how Citibank has become Asia s largest wealth manager under the Citigold brand, according to. Others have created entirely separate models for young adults. Bain and Company reports that in Singapore, the OCBC FRANK by OCBC branches could pass for a hip clothing store. They offer edgy images on debit cards and a simple savings account. What you don t find at FRANK are tellers or cash. And some banks profitably serve segments such as pensioners or lower-income customers with good-enough products and service through light-branch formats. In Malaysia, Maybank serves a mass market with self-service kiosks open for extended hours. The kiosks allow customers to open an account in 10 minutes with just their identification, for seven product categories. xxxiii McKinsey and Company predicts that branch networks will be radically transformed into sales and advice outlets they will be 20% more productive than today and their costs will be up to 50% lower. And the branch needs to be an integral part of a strategy for a seamless customer experience, spanning also all digital channels and the call center. McKinsey and Company continues Digital channels will be designed to create a wow experience for the user, thereby capturing these channels full sales potential (currently, more than 20% of all product sales start with an online enquiry or investigation). Call centers will become a profitable, professional channel in which video technology is increasingly used. As a result 15% of service requests will typically be converted into sales. Banks will manage these different channels so that service from the customer s perspective is seamless and end-to-end and from its own perspective it captures sales that are currently being lost. xxxiv

6 Equipping the Bank Branch of the Future / page 6 Bank branches as destination sites Bank management is joining retail business owners who are re-thinking the purpose of the brick-and-mortar store or branch, and like them, are trying to turn bank branches into destinations. Umpqua Bank of Oregon, Cincinnati-based Fifth Third Bank and PNC Bank of Pittsburgh are all enticing customers and the general public to utilize the offices for non-banking events, such as poetry readings or nonprofit board meetings. In this age of stiffer competition for customers, as more of them bank online or on their mobile devices, it s important to attract folks to come and see the people behind the brand, says Kevin Mackiewicz of Fifth Third. I firmly believe that when the community meets our people and sees what our bank is about, that they ll choose to bank with us. xxxv Perhaps even more effective has been the Umpqua strategy of providing local businesses and nonprofits use of its branches to hold board and staff meetings, or even conduct their own seminars if their office space is too small. In fact, some of the newer Umpqua branches have been designed with multiple flexible spaces for just such events. We are adding value to our relationships with small businesses and nonprofits by being their community partner as well as their financial partner, a branch manager says. It s also been a good way to attract more of them as customers. xxxvi Concierge service in banks Missouri-based Commerce Bank and San Francisco-based Wells Fargo & Co. have focused on smaller, more open floor designs that eliminate traditional teller lines in favor of self-service technology backed up by roaming employees armed with handheld computer tablets to answer possible questions and access client records on the tablet. The goal is to combine self-service convenience with person-to-person contact when needed. xxxvii Personalization is key to the future bank Though the ability to differentiate purely on the basis of product, channel availability and price is limited, banks can still gain an advantage by creating an improved customer experience to attract and retain customers. The any approach delivering any product at any time through any channel is no longer sufficient, suggests Capgemini. Banks must strive to deliver the right product at the right time through the right channel. Succeeding at this imperative involves delivering personalized services to customers in exactly the manner that suits them, based on an understanding of what exactly the customers want. The more banks can delight customers by doing so, the better the chance they have of standing out from the crowd. xxxviii As says, service stands as the dominant cause of loyalty in most markets. xxxix New technology improves personalization The use of cutting-edge technology is helping to break down silos, creating omni-channel visibility of client records, developing innovative rewards for loyalty and giving customers the ability to personalize their products and services. Technology can also help to maintain intimacy as customers move towards digital banking and greater self-service. To achieve this, Ernst and Young predict that banks will need to partner with technology innovators. xl One technology that is gaining significant ground in the banking industry is the use of video conferencing, which combines the advantages of personalized, face-to-face interactions with the cost savings of remote and/or consolidated experts. reports that only four percent [of polled banking customers] have used video conferencing to conduct their banking activities but a majority is satisfied with the experience. And 31 percent say they would be interested in using video conferencing in the future. xli

7 Equipping the Bank Branch of the Future / page 7 The CSOB (Central Bank of the Czech Republic) client center s 300-strong team of agents handles 160,000 inbound calls, 10,000 s, and 200,000 outbound calls in an average month. Working with Genesys, agent utilization has risen to over 90% and agent productivity has improved nearly18%. Provident Financial Group (UK) estimates that by working with Genesys to improve workface management, they have saved nearly GBP 200,000 per year. Efficiently managing visits and workloads As the call center is increasingly an important element in the retail bank s service offering, the efficient use of the bank-savvy, highly-skilled call center agent is essential. Effective call routing within the call center can drive efficiencies and create better customer service within the branch as well: when branch staff is underutilized, they can take calls that are coming into the call center; when the branch is busy, a video kiosk staffed by the call center can take customer interactions. Each of these can shorten the time to resolution for the customer. The Genesys Customer Experience solutions are key enablers of any bank branch modernization initiative Genesys provides retail banks with the ability to integrate all customer interactions across all channels and to deliver these interactions with context to the best resource in the organization across both branches and the contact center to effect the best resolution. The implementation of Genesys solutions enables the following advantages: Branch employees can log into the overall customer contact environment of the bank and allow the Genesys solution to route contacts to them based on their availability and skill Virtualization of the contact center allows branch staff to act as virtual contact staff with the same management tools used for staff in the contact center Branch staff can be used to support all channels (web chat, web , social media, voice and video) via Genesys Digital Channels Genesys can enable better utilization of bank branches with: In-branch concierge The in-branch concierge can help speed transactions and provide individualized service. Genesys can help the in-branch representative see the entire history of the customer journey on his screen when speaking in person with the customer. When a customer enters the store they are greeted by the associate and identified using a phone number, debit card, QR code, or other identifier. Based on the customer s previous online browsing or banking history the Genesys Customer Experience platform can enable the bank associate to: 1. See past interests and products purchased 2. See offers made, accepted and redeemed. Understand special needs for this particular customer 3. Know the web pages the customer has browsed 4. Have information about the product or service the customer was browsing 5. Know if a web engagement attempt was made, if so the topic, and person they chatted with 6. Have visibility into other omni-channel transaction and interaction data, for example accounts, outstanding problems, phone calls, voice self-service, social media, mobile marketing, etc. 7. Make suggestions for up-sell

8 Equipping the Bank Branch of the Future / page 8 Personal banker If a customer is recognized as high-value, they can be routed with priority to their personal banker, wherever that person may be (in the branch, at home, on the road) via the customer s preferred channel. Personalization Genesys can help provide true personalization with a high-level summary of context across the customer journey. In-branch kiosks can efficiently manage branch visits: In-branch kiosks can help alleviate long waiting lines and give video access to the most appropriately skilled and best available person in a contact center to complete a transaction or ask questions. Going one step beyond just a kiosk, branches can also dedicate a physical office for full service with a screen to show a live, remote agent as if they are sitting across from the customer. Queue management can be part of this as well, with customers being routed to either actual people in the branch or to a remote person accessible via the kiosk. Initial check-in would be at a kiosk. The use of in-branch kiosks could also create a staff-less branch. Prior to a visit, customers can set up appointments for a branch visit online or via a mobile app and get into the queue even before they arrive at the branch. The Genesys Enterprise Workload Management solution can track appointments as tasks. The Genesys Proactive Customer Communication solution can help remind customers of their upcoming appointments. Increase staff utilization by aggregating remote customer interaction activity across branches and the call center The Genesys Contact Center Modernization solution allows you to leverage branch staff to take video calls from remote customers who initially called the contact center. The Genesys solution has the ability to route calls from the contact center (or web, mobile app, etc.) to the branch, effectively virtualizing the contact center by extending it into the branch. You can also improve efficiency by tracking and routing calls coming into branches, taking a global view of all calls across branches and sending the overflow of one branch to other branches or the contact center. Offline branch workload management The Genesys Enterprise Workload Management solution can be used to virtualize the workload, not just within one branch but across branches, back office departments, and the contact center. This allows you to create a global task queue for offline work, i.e. work that has to be completed after the interaction between a customer and a bank associate has ended, to better distribute tasks. You can also track offline tasks generated in the branch and send overflow to the contact center, other branches or back office departments with all working in concert.

9 Equipping the Bank Branch of the Future / page 9 Genesys Solutions Contact Center Modernization: Enabling the branch network and the telephone banking contact center to work together can work in a number of different ways: Route calls that cannot be answered in the branch to the contact center along with the appropriate context so that the calls are properly resolved At busy times, overflow calls from the contact center to available resources in the branch networks Reach out from the contact center to experts in the branch network for assistance based on their presence and skills. Digital Channels: Allowing branch staff to handle digital work during quiet times including: s Web Chat Social Media Continuous Workforce Optimization: Training, planning and monitoring these virtualized resources requires an integrated workforce optimization platform

10 Equipping the Bank Branch of the Future / page 10 Some Genesys Banking Customers GLOBAL BANKING & MARKETS FOUND FROM BEST BRADS RECREATED PMS Recreate LOGO REGIONS

11 Equipping the Bank Branch of the Future / page 11 About Genesys Genesys is the market leader in multi-channel customer experience (CX) and contact center solutions in the cloud and on-premises. We help brands of all sizes make great CX great business. The Genesys Customer Experience Platform powers optimal customer journeys consistently across all touchpoints, channels and interactions to turn customers into brand advocates. Genesys is trusted by over 4,500 customers in 80 countries to orchestrate more than 100 million digital and voice interactions each day. Visit us at or call us at i, Customer Loyalty in Retail Banking: Global Edition 2013 ii, Banking 2020 Thought Leadership Series: A Critical Balancing Act: US Retail Banking in the Digital Era, 2013 iii iv v vi, Remaking the Branch, 2014 vii viii ix x xi Bain & Company xii xiii xiv xv McKinsey and Company xvi Bain and company xvii Capgemini, World Retail Banking Report 2013 xviii Capgemini xix xx Ernst and Young xxi Capgemini xxii Capgemini xxiii Bain & Company xxiv xxv Ernst and Young xxvi Ernst & Young, Global Consumer Banking Survey 2012 xxvii xxviii xxix xxx xxxi xxxii xxxiii xxxiv McKinsey and Company xxxv xxxvi xxxvii xxxviii Capgemini xxxix Bain and company xl Ernst and Young xli Corporate Headquarters 2001 Junipero Serra Blvd., Daly City, CA USA Tel: Fax: Genesys and the Genesys logo are registered trademarks of Genesys. All other company names and logos may be trademarks or registered trademarks of their respective holders Genesys. All rights reserved.