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Banking

THE FUTURE OF THE BRANCH: HOW CORONAVIRUS HAS LED BANKS TO REASSESS THE VALUE AND PURPOSE OF LOCAL BANKING SERVICES

By Brian Holden, Director, Financial Services at SAS

 

For years, we’ve heard that branch banking is on the way out. Banks have been focused on the idea that younger generations want to do everything online, and digital transformation initiatives have centred around creating seamless user experiences on web and mobile and a truly networked society.

At the same time, visiting the local branch has been synonymous with manual processes, paperwork, inconvenience and inefficiency. And that’s not just the perception of customers—it’s what the industry thinks too. Over the past few decades, if you were looking to build a top career in banking, you would look to the skyscrapers of Canary Wharf, not the branch on your high street.

 

Bringing the human touch back to banking

But how quickly things change! Over the past few months, COVID-19 has confronted many people with a prospect of financial distress that they could never have imagined at the start of this year. And despite all the investment in call centres, online banking websites and mobile apps, the digital infrastructure that banks have built over the past decade hasn’t been the panacea that everyone expected.

Banks are realising that customers don’t want to do everything online after all. When their livelihoods and businesses are threatened, they don’t want to wait on hold with the call centre—they go to their local branch because they know they’ll get an answer. And when they’re really worried about money, they want personal advice and face-to-face support from a real human, not just a set of recommendations on a website.

As a result, the crisis has shown the branch in a completely different light: it’s not on the periphery, but at the heart of the banking community.

That’s not to say that digital banking has failed, or that digital investments have been wasted—it’s just that the crisis has highlighted something that should have been obvious all along. Banking isn’t just about processing financial transactions; it’s about helping people live the lives they want to live. It’s about making banking simple, safe and rewarding. Nothing is more personal or more emotive than a small business owner’s dreams or a family’s financial security.

We live in a network society, that’s true—but the network is fundamentally built on human relationships, not technology. Bank branches are critical nodes in that network. You can’t extract those nodes and expect everything to function in the same way. So instead of trying to invent some new means of personal banking interaction online, why not use the ecosystems and talent we already have, and give the branch its due as a trusted focal point for the local community?

 

From central to local

At the same time, those city skyscrapers no longer seem to be gleaming quite so brightly. Although security and regulatory compliance considerations have historically made many banks resistant to the idea of allowing employees to work from home, the pandemic is forcing them to push those boundaries.

With the ongoing risk of contagion, people are no longer willing to spend several hours a day packed like sardines into a tube carriage just to get to the office—and this is a situation that may continue indefinitely.

Under these circumstances, the branch begins to look like an attractive option not only for traditional branch-based functions, but as a decentralised workplace. By providing a secure location where employees can access bank systems, it eliminates the compliance concerns of working from home, while ensuring that staff aren’t obliged to commute into central offices unless they really need to. Moreover, with the cost of a desk in Canary Wharf estimated at around £100,000 per year, there could be significant cost savings from moving to a more branch-based model.

This isn’t just blue-sky thinking—it’s something that major banks are already actively exploring. Jes Staley, Group Chief Executive of Barclays, has gone on the record about rethinking the balance between central and local, potentially enabling investment banking and call centre teams to work from retail branches. With around 70,000 Barclays staff currently working from home due to lockdown, he told the BBC: “There will be a long-term adjustment to our location strategy. The notion of putting 7,000 people in a building may be a thing of the past.”

 

Finding the right level of automation

However, if we do see a shift towards more of a hub-and-spoke model, with more responsibility shifting from central office to the branch network, branches can’t stay locked in the past. The in-branch experience needs to be just as simple, fast and seamless as the web or mobile experience should be. Customers won’t tolerate queues, paperwork and manual processes, and they’ll expect consistent service regardless of how they choose to interact with their bank.

Offering the right advice and support to each customer across all channels is a challenge that can only be solved with the right combination of people, processes and technology. Essentially, you need to find a way to make the right information available to make the right decisions at the right time and embed those decision support mechanisms into all your customer-facing business processes.

 

The value of intelligent decisioning

At SAS, we call this “intelligent decisioning”—empowering humans with real-time insight through artificial intelligence and data-driven decision support. By adopting an intelligent decisioning fabric, banks can either automate decisions completely or provide recommendations that customer-facing staff can act upon instantly. This intelligent level of automation puts human expertise back at the heart of banking: it clears away the routine decision-making and frees up time for advisors to focus on the more complex cases, where their expertise is really needed.

An intelligent decisioning fabric is vital for any bank that aims to provide customers with truly personalised service either in-branch or via the call centre during the current crisis, when many customers find themselves in unprecedented need of their bank’s support.

 

Banking

WIRELESS CONNECTIVITY POWERING BANKS OUT OF THE STORM

FINANCIAL SERVICES

Graham Brooks, Strategic Account Director, Cradlepoint EMEA

 

It’s now clear the pandemic is going to have a long-term effect on the British high street. Back in April high street retailers, shop owners, and bank branch employees were wondering: ‘How many weeks will this last?’ By July, ‘weeks’ were swapped for ‘months’. Now it’s clear that life on the high street will be affected for longer than initially expected. Many brands have already shut numerous stores or are looking at the prospect of administration. Bank branches, too, are experiencing the brute force of the pandemic’s impact.

For a while, temporary measures in response to lockdown restrictions appeared to suffice. Flimsy plastic barriers and paper signs were printed and tacked up on the walls. But with the long-term impact now clear and the prospect of another year of social distancing, bank branches must transition to more permanent solutions. This means less people and more machines – contactless services, new cash deposit systems, and digital signage.

Digitisation is no longer an option for banks to ensure a continuous flow of new customers. It’s an imperative. In this article, we explore how wireless technology is going to help them facilitate that change.

 

Graham Brooks

Relying on connectivity for optimal service

Traditional banks now face their biggest challenge in history: digital-only banking. Over two-thirds of participants in a 2020 study planned to transition to a digital-only bank in the future. It’s therefore vital that traditional banks running physical branches update in-branch customer experience to compete with the new pack on the prairie. Reliability plays a big part. So does trust.

The future of in-branch experience lies in technologies such as IoT, VR/AR, and AI, all of which are highly data-intensive. Reliable connectivity is therefore critical, and banks should be shooting for zero-downtime connectivity, allowing no room for gaps in service.

To do this, banks can deploy Gigabit-class 4G LTE (LTE Advanced) or 5G adapters that bridge to a traditional ethernet connection, providing a wireless option to the wired-line router. Then, in the rare scenario where wireless connectivity is down, at least one of the WAN connections is always guaranteed to be live. The router has the autonomy to determine when failover is necessary.

Better still, the reliability of modern Gigabit 4G LTE and 5G connectivity now means that failover is often unnecessary. A branch can, therefore, run its network independent of a wired-line connection and benefit from the security and agility of a resilient wireless network, while still providing enterprise-grade connectivity.

Branch network reliability, in this way, will support the bank’s reliability as a whole. In turn, this will fuel the higher standards of customer experience needed to compete with more agile digital-only banks.

 

IoT bridging gaps in communication

The first organised response to stop the spread of the virus around the world was social distancing. While transparent screens can be used to block transmission, the overarching effect of these measures has been a loss of communication capabilities. This will affect banks like it has everywhere else, if not more as a space where interaction is so important.

IoT technology will be core to overcoming these barriers. Digital signage, kiosks, and surveillance cameras will all contribute to improved communication and security, and a better customer banking experience. But to enable such extensive use of IoT devices operating on a single network, banks must ensure they can accommodate such high levels of data transfer. Using Gigabit 4G LTE connectivity to extend its services beyond traditional network infrastructure, banks will achieve the required levels of bandwidth.

 

Cloud management simplifying in-branch communications

With high volumes of data being transferred across the network, security and availability should be at the top of the agenda when digitising bank branches. But these are not always easy to implement, especially in an environment with several complex networks of endpoints.

For example, marketing teams need to push personalised content to customers on digital signs and IT teams need to set visitors up on a guest WiFi network. These operations require the guarantee of security and availability, with trust and the customer experience at the core.

Wireless networks excel in this aspect as they can employ the benefits of a cloud-based management system. Cloud-based systems make it easier for bank staff working from home, who can access the same assets and applications from their sofa as they would otherwise have in-branch. The service is the same.

Cloud management systems also provide improved network visibility, giving IT teams endpoint information from across the network as it happens. With security patches being updated on devices simultaneously, leaving reduced time for opportunistic attacks to exploit known vulnerabilities.

Equally, by using a hybrid Gigabit 4G LTE network in tandem with a wired connection, businesses can achieve simplicity from an otherwise complex challenge. The primary wired network can be used to transmit any sensitive information securely, while a separate network using the Gigabit 4G LTE connection runs other in-branch operations.

The branch’s network, in this way, is ‘air-gapped’. The secure data being processed by the operations team runs on an essentially separate network to that of the marketing team’s content. The network will also increase its ability to process more information, with its workload spread out.

The simplest solutions are often the best. In this case, exploiting a hybrid network can address the complexities of security and availability when employing enterprise-grade connectivity.

 

Good things come to those who prepare

As the pandemic continues, banks will have to be flexible in their approach to branch management. But in the long run, it’s clear that digital investment will be one aspect they cannot neglect. How they approach this challenge is also important. But with an inherent reliability, flexibility and security of enterprise-grade wireless edge solutions, branch services will be on their way to sustainable digital development.

As with most things, good things come to those who prepare, not wait. Those banks that adopt innovative technology early will come out on top.

 

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Banking

WILL COVID-19 ACCELERATE THE TRANSITION TO BANKING ALTERNATIVES

Gael Itier – CEO & Founder at Akt

 

What will the world look like once the pandemic is over? At present, no one can be sure given the rapid pace of change experienced over the past year. However, there are signs to suggest that our social and economic structures are shifting, and what is certain is that the world will undoubtedly appear very differently than it did pre-COVID.

For example – the five-day working week – a staple of modern society – now appears to be under threat due to advancements in workplace technology and an enforced successful period of working from home.

Instances of such change are happening across the entire breadth of society, and the world of financial services hasn’t escaped this. Over the past few years, Europe’s fintech sector has boomed as entrepreneurs have worked to provide an alternative to the traditional banking system. Generally smaller and more agile than the incumbents, fintech companies have been able to create services that mesh better with a hectic modern lifestyle. However, given the changes that are likely to result from COVID-19, will we soon see consumers switch at an even greater rate?

 

The changes brought forth by COVID-19

The financial sector was already undergoing significant change before the pandemic. Regulatory evolution and advancements in technology had already brought forward measures such as open banking, and as previously mentioned, changing customer demand had led to increased competition and a number of new entrants to the marketplace.

Gael Itier

COVID-19 has acted as a catalyst, rapidly intensifying the pace of some of these changes. For example, from the perspective of financial institutions, many found themselves having to promptly shift to a model of working from home after having been previously pessimistic to its benefits. This effected the delivery of both front and back end services, as organisations needed to invest time and resources into adapting to the new normal.

The move toward home-work also changed the outlook of the consumer. Now spending less time in busy town centres, the average consumer will spend more time managing their finances using digital and mobile channels, rather than traditional in person services. Furthermore, with the global employment market on especially unsteady ground, many consumers are looking for flexibility in the services that they use to able to adapt to any unforeseen change.

 

Why the fintech sector has been perfectly placed to take advantage

Whereas traditional banks needed to drastically adapt their ways of work to not being in the office, for many new fintech companies this was already the standard. As such, some customers of traditional banks will have found themselves receiving comparatively worse service than they did pre-pandemic. Many customers will have managed their finances in traditional brick and mortar locations. As such, with consumers having to rapidly shift to using websites, mobile apps, or over the phone – a number of the incumbents may not have had the necessary capacity in these services to deal with the increased demand, and this will have resulted in bottlenecks. Newer fintech’s will often have no physical presence at all, instead having built up their services with digital outlets in mind. As such, they were perfectly placed to adapt to this shift.

A similar pattern will be witnessed should a customer or business try to open a new account or access additional finance. Traditionally, this will require the applicant to produce physical documents to verify their identification, and their credibility as a borrower. With brick and mortar locations either remaining closed or operating at a severely reduced capacity, this inhibits the ability of many traditional banks to process these new applications, again resulting in a backlog. Some fintech’s meanwhile have used technology which allows for this process to be done digitally, utilising automation to ensure that the process is smoother.

Many consumers – having been forced to employ technology to manage their finances – will have also been impressed with the greater convenience, and will seek to switch to using digital forms more permanently. This means that what they look for from their financial service provider may change. For example, this shift will see aspects such as the app user experience, digital account opening, and remote claims become more important in determining what service to use. While the traditional banks can and do provide these services, in many cases they are hindered by having to build on top of legacy software, and a lack of expertise when compared to newer fintech’s, many of whom will have been established with these features in mind. This will mean that they’ll be well placed to take advantage of the newer consumer demands due to the higher quality of their features provided.

 

Making money go further

The average consumer will now be seeking ways to make their money go further. With the global economic outlook looking precarious to say the least, most people will look to sure up their finances. This is as the pandemic has made many people realise that it isn’t viable to live paycheck to paycheck, and has shown the importance of having a financial backup plan and the benefits of having another source of income, such as owning income producing assets. Even though more people are now looking to involve themselves in their finances and investing, the barrier to entry is still very high for those starting out as investors when it comes to accessing and effectively managing investments. As such, a banking platform which allows consumers to manage all their financial assets in a single place, utilising technology such as automation to grow the value of these assets will be very well placed to capture market share.

COVID-19 has already redressed the world in a fashion that was once unthinkable. We’ve seen mass upheaval to the way we live, work and spend our money, and the financial sector has had to scramble to meet expectations as society changes around it. This has led to the growth of a number of new companies who’ve risen to the challenge by offering greater flexibility and a better standard of service to consumers. While for now this appears to be the start of a revolution, only time will tell whether this will continue as we emerge from lockdown.

 

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