A recent American Banker article posed the question of whether some bank branches will be completely replaced by an ATM with video technology. The idea is that more complex transactions which cannot be completed at the ATM today could in the future be completed by a call center employee or a specialist in a remote office using video technology.
It would appear there is now more than one way for the branch to die. Customers continue to migrate towards online and mobile banking, and they may use increasingly sophisticated ATMs rather than set foot in a branch. In reality, neither will fully replace a branch, but this new technology offers interesting possibilities that banks should consider.
First and foremost, banks should start thinking about how this technology could impact staffing needs. Video ATMs could reduce the cost of servicing more routine transactions. We have worked with banks to measure the impact of ATM technology investments, such as remote check imaging. In some cases, this has reduced the need for tellers, and video ATMs could push this trend further.
This can allow banks to achieve bottom line savings, but they should also seriously consider shifting resources towards more specialized staff. The biggest benefit of adding technology in branches is that it often frees up resources to focus more on relationship management and increasing sales. As banks try out these new video ATMs, they should also try changing the staffing mix or adjusting staffing levels to find the right balance. Training programs are also important to help staff build this skill set.
Banks should also be highly targeted in how they invest in this technology or any new technology for that matter. This is an incredibly expensive investment, and, too often, we find that banks invest across the entire network. That is a waste of capital, and we have seen time and again that only a subset of branches will warrant this investment. Banks will need to determine if the investment makes sense based on a variety of factors, including branch traffic, size of the customer base, the competitive environment, demographics in the area, etc. When banks try out these new ATMs, they should therefore try them across a broad variety of branches that represent the full spectrum across these characteristics.
New technology is exciting and can help banks gain a competitive edge and find new ways to attract customers. However, without carefully testing the new technology’s business impact, it is all too likely that banks will overinvest and not realize all of the potential benefits.