Customers are using more opportunities to bank digitally, which should come as no surprise to industry professionals.

How customers respond to self-service banking

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"Everyone else is doing it, so why can't we?"

The consumer buying experience has shifted dramatically in recent years; both digitally and in-store, and buyers are increasingly allowed to take the controls. Subsequently, it should come as no surprise that financial institutions nationwide are jumping on the bandwagon. Brick and mortar FIs are further compelled to re-evaluate how they do business by bank substitutes and e-commerce hopefuls who are shaking up standard operating procedures.

From small businesses to e-commerce giants – including Amazon, as reported by The Wall Street Journal – more companies are dipping their toes into the self-checkout waters. The reasons are both fairly straightforward and multifaceted. Digitizing this staple function reduces the cost of overhead, cuts wait times – which improves customer satisfaction – and aligns with technological trends. 

"50% of banking locations improve ATM functionalities mainly because their customers want it."

Banking is ahead of the curve
Retail banks and credit unions have long been riding the self-service bandwagon, and show no signs of jumping off anytime soon. In fact, as far as ATMs are concerned, nearly two-thirds of bank branches and credit unions expect to increase their usage of them over the next few years, according to research conducted by ATM Marketplace.

Why? Because that's what account holders want. In the study, close to 50 percent of banking locations said their bid to improve ATM functionality and technology was primarily driven by customer demands; thus the emergence of hybrid ATMs and ITMs/advanced automation.

It isn't just branch equipment that customers want more from. The same goes for online banking, and the latter continues to play an important role in omnichannel access.  According to polling by Accenture, approximately 66 percent of respondents said online banking was their preferred channel for conducting financial transactions. And while customers want both physical and online banking capabilities, if forced to choose between the two, 53 percent of Americans would rather give up personal banking than digital, based on a 2015 Gallup survey.

Retail banks need to fight for their place with consumers.  As digital evolves with self-service, brick and mortar must follow. Just as branches must be all things to all people, so too do your self-service offerings. For instance, it's not enough for ATMs to dispense bills in various denominations. They should also provide cash recycling capabilities, deposits, bill payments and mobile phone functionality. In short, the more the better.

KAL ATM Software CEO Aravinda Korala said banks and credit unions can't afford to play catch-up. They must be ever cognizant of how customers are reacting to self-service technologies on a real-time basis. This is especially true for banks that are downsizing.

"You need to be able to support those customers with all this self-service machine functionality that replaces a full service branch, and of course make sure that the support provided ensures the best possible customer experience," Korala advised.

Engagement is key
Do-it-yourself doesn't mean setting up a self-service portal and tossing it over to customers without explanation or support. The key is making sure that self-service capabilities supplement existing service capabilities, not supplant them. This, in turn, fosters greater engagement with financial services and planning. 

In other words, financial institutions need to provide regulars and new account holders with as many transaction capabilities as possible so that they're fully involved in the process, and complement that with appropriate support. Furthermore, these efforts need to target all customers.

Some are of the mindset that millennials aren't worth the effort and investment, not having much in the way of personal assets. But studies suggest otherwise. On average, millennials keep 70 percent of their income with their primary bank, according to Gallup polling. This compared to 64 percent of Generation X and 61 percent of baby boomers. Additionally, 14 percent of millennials have investable assets of $100,000 or more. And while customers of all ages are important, courting millennials is particularly crucial, given that this generation is poised to top baby boomers in 2019, according to the Pew Research Center. And as some of the aforementioned polls have noted, millennials by and large seek out self-service banking capabilities.

"Brick-and-mortar facilities further the rise of digital and self-service banking."

Combination of brick-and-mortar and self-service
Frederic Jacques, an associate partner at McKinsey & Company, noted that while it may seem counterintuitive, brick-and-mortar facilities actually help further the rise of digital but must also embrace the opportunity to differentiate the branch experience with technology like self-service.

"In an increasingly digital world, bank executives must rethink the branch and the services it offers," Jacques wrote. "The physical network can still play a critical role in building trust and credibility, providing financial advisory services, offering convenience, and assisting in the transition to digital channels. Getting the operating model within the branch right will be critical to a bank's success with its customers."

Banks and credit unions must respond to their customers' increasingly high expectations, and need to implement an omnichannel strategy that's responsive. Transformation and automation are a BranchServ specialty. From the LTA-350 cash recycler to state-of-the-art ATMs like the 7600T to advanced automation/ITMs like the MX8800, our products and services are future focused and user friendly.