APT SVP Will Weidman’s article about the top five retail banking trends for 2014 was recently featured in Banking Strategies. Trends for the new year include more targeted advertising and the bifurcation of the branch. Click here to read more.
In the constant struggle to figure out how to successfully charge fees, some banks are now charging customers for using the branch. A recent article by CNBC cited multiple cases in which banks are introducing accounts for customers who plan to bank mostly through online, mobile, and ATM channels. However, if the customer wishes to bank in the branch, he may face a sizable fee: $8.95/month in the case of Bank of America’s “eBanking” account mentioned in the article.
As we’ve seen with many other banking fee innovations, charging for branch services bears risk. Bank of America recently folded their eBanking account offering after three years, a spokesperson acknowledging that “Customers want full service banking, even if they only visit a teller infrequently.” This action further underscores a trend that we’ve seen before: fees will likely be much less successful if they are tacked onto a product or service that customers are accustomed to receiving for free. In many cases, it may simply be too difficult to get around the customer’s disposition against fees for products/services that were historically free. Alternatively, banks may be more successful in charging fees for new or expedited services, such as fraud monitoring and faster mobile check deposit availability.
So how can banks determine which fees are profitable? Neil Weinberg, editor of American Banker suggested, “What is a premium service that they’re willing to see fees from? That’s the experimentation.” Experimentation is indeed the way APT has helped many banks understand the profitability of new fees. Banks should test new fees in a few markets or branches to measure the impact on key performance metrics and decide whether broader rollout is warranted. Click here to read more about APT’s work analyzing in-market tests at leading financial institutions.
A recent NPR article reports that Bank of America recently decreased drive-through teller services in some locations. This reduction in drive-through services is another example of the changing nature of the bank branch. In the article, APT SVP Will Weidman comments on this trend. Click here to read the article.
In a recent byline for Banking Strategies, APT SVP Will Weidman explains that “‘Big Data’ is wonderful but rarely do banks apply it at the branch level, where it could really do some good.” Click here to read more about how retail banks can make their big data drive real value.
In this video, APT’s Will Weidman surveys innovations in mobile and online banking.
Last month, US Bank announced that they will test features to allow customers to carry out banking tasks by speaking directly to their smartphones. To better understand the impact of the new feature, they will pilot the functionality by first allowing bank staff to leverage it. Piloting the features is a great way to understand the incremental impact of the implementation and what effects it will have on customers.
As banks evaluate customer-level investments in this way, they should keep in mind two key points that ensure banks properly understand the impact of the investment: (more…)
In this video, APT SVP Will Weidman discusses recent trends in the retail banking industry.
“How to Retain Customers While Closing Branches,” a byline from APT SVP Will Weidman, was recently featured in American Banker. Click here to read more.
APT VP Will Weidman recently wrote a great byline for Banking Strategies about the top trends for 2013. Check out the article here.
Will outlined the following five trends:
1) Multi-Channel Impact of Mobile/Online
2) Making Money from Mobile
3) Smaller Branches with Innovative Approaches to Staffing
4) Demanding ROI from Online/Social Media
5) Selective Investments in Branch Technology
Will argues that, “as these trends drive transformations in retail banking it becomes increasingly necessary to innovate while minimizing the risk involved in innovation.” Testing continuously proves to be the leading way to de-risk innovation while maximizing profits.
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.