Bank branch transformation: from the cash withdrawal „box“ to the financial services "boutique"

Germanas Kavalskis

Chief Communications Officer at Penki Kontinentai Group

Views 395

Bank branch transformation: from the cash withdrawal „box“ to the financial services "boutique"

05.12.2018 08:15 am

The largest European banks closed more than 9,000 branches over last years and shed 50,000 staff. These figures reflect the latest banking trend - digitization of settlement instruments and bank branches. The market of mobile and contactless payments, digital currencies, and etc. are rapidly growing.

The services digitization, transfer to the electronic space and the limitation of cash settlements have led to a steady decrease of bank branches since 2000. These trends are observed in Europe, especially in the northern part of Europe. However, the opposite situation is evident in developing countries: the bank branches amount is increasing steadily. In this context, an exception is Spain, which has one of the largest bank branches networks in Europe - 590 per one million inhabitants in this country, while, for example, in Germany this number is 385.

Another financial trend is the growing cash turnover despite the digitalization era. From 2012 to 2016, Mexico (at 68%), Singapore (46%), the United Kingdom (30%), Eastern Europe (27%) and the United States (25%) recorded the fastest growth in financial cash transactions.

Know Your Customer

The rule "Know your customer" is relevant in the banking industry not only from a legal point of view. Studying the customers’ needs plays a decisive role in improving customer service to anticipate their expectations. Developing service packages, banks try to assess the regions specifics and adapt services to the users’ needs. In the digital era, banking business does not revolve around the product, as it used to be, but also around the client.

The modern banks offer digital platforms with intuitive management and adaptation to the customers’ needs. Today ATMs are able not only to issue cash, but also help banks to get client’s feedback. For example, by the users’ needs and the requests history, an individual package of services can be offered (payment of a car or apartment loan). Given the actions history, ATMs can recognize the user and adapt linguistic version, provide options for the last or most used operations.

The banking equipment development is keeping pace with the times in accordance with the latest technologies. The ATMs interface becomes simpler, it adapts to smart devices. Standard keyboards are outdated - new ATMs are equipped with touch screens. Different contactless devices, mobile phones are used for cashing out money.

Everything new is a well-forgotten old

On the other hand, not only banks should be aware of the customers’ needs. The companies, developing software and specialized banking solutions, should foresee the bank’s potential needs, and the latter, in turn, should anticipate their clients’ and users’ expectations. 

According to these forecasts, the latest banking technologies are being developed. Such companies as Diebold Nixdorf and BS/2 expand the services range. They provide not only specialized equipment or software, but also render services for the bank branches transformation and modernization.

Although the bank branches transformation is again at the peak of activity today, that is not the news on the financial market. Back in 2004, the banking technology company BS/2developed a self-service banking department in the Lithuanian capital. It included ATMs for cash withdrawals and an information kiosk, where the client was provided with the most actual services.

Banks are not closed, they are transforming

Banks refuse the traditional methods of accepting and issuing cash and reorganize the usual branches. They create universal financial services centers, where operations with money are not a priority. In such centers, banks offer all kinds of banking services to the client: consultations, loans or leasing, enterprise financing, deposits, etc.

Today banks invest not only in expanding the services range, but also in the image of the branches. They change traditional customer service place to modern functional offices with creative design. The client can discuss the offered services, admiring the sea aquarium or enjoying a cup of coffee in a cozy atmosphere. Clients’ children can play interactive banking games here.

Such modifications projects need close cooperation with banking technology suppliers, which also propose projects for transforming the bank branches into modern universal customer service place. 

There are several stages of branch transformation:

1. Semi-traditional bank branches, where the client does not approach the cashier for cash financial transactions. The branch staff accepts and issues cash using electronic cash registers installing near the managers.

2. Branches with the assisted self-service. Cash transactions are not performed there. ATMs hold and count cash. The branch staff advises clients on a variety of financial issues.

3. Self-service branches. Bank branches without employees, where financial services are conducted via self-service devices. For example, the multi-functional terminal VTM.iQ (offered by BS/2) performs almost all branch’s functions: it identifies the client, opens a bank account, prints a contract, concludes a long-term lease agreement, orders and issues a bankcard, issues and accepts cash, etc. Communication with the bank staff is carried via video conference. 

4. Digital branches, where cash transactions are not performed. Such branches are radically different from traditional bank branches; they may not have any attendants at all. Branches can be located, for example, in a cafe. The bank service is carried via a computer or a tablet PC.

The thought, that traditional banking is stepping down, and the virtual financial services occupied its place, sounds exaggerated. Of course, traditional banking activities - cash operations - are decreasing, but innovative, more convenient, mobile and universal services are emerging.

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