Micro Branches For Banks

The micro branch concept is enabling you to increase and/or keep your footprint rapidly and with reasonable costs.

Banks are forced to close branches due to high operational costs. This is reducing their points of service and has a negative impact on their reputation.

11% of consumers left their bank in the past year—and consumer switching to virtual banks is at double-digit levels.

Source: accenture consulting 2016

We all know that customers want to open an account or take important financial decisions with the help of a teller and not online.

87% of consumers will use their branches in the future—and want human interaction when they go there.

Source: accenture consulting 2016

You want to have a better brand visibility? You would like to open new branches but you do not want to invest in brick-and-mortar branches? You want to open the micro branches quickly and you do not want to wait several months?

Consider a micro branch concept with the use of VTMs (Video Teller Machines).

Approximately all of the teller operated actions like you would perform them in a brick-and-mortar branch you can offer to your clients with a VTM. Open an account, verify the identity of the customer, print documents, scan signed documents and even issue personalized cards instantly.

Banks want to have a greater footprint in areas where they are not yet strongly represented. A traditional brick-and-mortar is very expensive and usually needs several months until it is operational. The VTM does not need a classical branch environment to run. The price and deployment time is far less then the standard branch would require.

Banks want to be present in malls and other locations where they usually do not place a branch. Here is the VTM the ideal solution. A VTM can handle about 100% of the jobs a teller in a branch can do.

The customers have a human touch when communicating with the teller via video and they usually appreciate this, following different newspaper articles and survey results.

Interesting infographics about the future of videobanking. Click here to see it.


Source: bankingtech.com

The teller can do cross and up selling because he is actively talking with the customer and present on the screen. If necessary a product specialist can join the conversation to give the customer detailed information about the product he is interested in. Here a VTM might even be better than a branch because the specialist in need can be added because he does not need to physically be present at the side of the customer.

As mentioned above the customer can be identified and sign a contract.

Depending on the local regulators a VTM in a Micro branch can be used to do a full KYC (Know Your Customer) during the onboarding of a new customer. Wet signature on A4 size printed documents which can be collected by the machine in a dropbox or digital signatures on PDF documents? No problem.

Don’t forget that branches are very important – despite of mobile always on banking.

The branch is alive and well

The bank branch of the future will be different, not dead. Consumers see themselves actively using the branch in the coming years. It will be a vital destination where digital banking and human interaction meet.

Source: accenture consulting 2016

Some possible additional locations for a VTM could be airports, metro stations, business districts and residential communities and rural areas.

If you are interested in learning more about this promising concept you might want to contact Scale360. They have successfully implemented the micro branch concept using modern programming technologies like Scala and MicroServices in combination with the latest cutting edge video teller machine technology in real life already.

Retail banking – not an easy business nowadays

Retail Banking

When we are looking at the banking industry of today, we will remark that it is changing rapidly.

These changes are mostly dictated to the banks due to economical, political and technological factors they have to deal with. I am looking at retail banks in this article.

Retail banks are suffering from tightened regulations after the first crisis in 2008. The BASEL I,II,II regulatory frameworks for banks as an example are costly to implement for them. Focussing on European banks we have to constate that the European Central Bank (ECB) is conducting a low interest rate policy which is not helping them to earn more money.

On top of this is the negative interest rate for the deposits the banks have to place overnight which is an additional burden to shoulder.

As we can read in the press, some banks have to pay enormous fines due to court decisions which is representing another painful cut into their financial resources.

These institutes are “old” school”, they are based on the requirements of the past. A large and expensive brick-and-mortar branch network, legacy banking systems which are not compatible with today’s digital banking infrastructure are not helping them to compete with the purely digital challenger banks.

The cost for a transformation of such a bank into a modern finance service provider can be discouraging for the top management. At the same time they know that they have to change or they will disappear.

Research institutes prove that millennials are the most important group of bank customers in our days and they are asking for ways to bank that are incompatible with the existing structure of the traditional banks. At the same time we can learn from other surveys that the role of branches is still an important one.

Bank customers still have a need to discuss face-to-face with product specialists when they have to take a decision which will influence their financial future such as signing for a mortgage for example.

Account opening is another business case which can be done online depending on the local KYC regulations but this important part of onboarding is still a strong point for branches. Your mobile phone won’t instantly issue a bank card for example.

The customer of today is always on. In consequence their way to bank is done on various devices via the internet, phone banking etc. This is when we can differentiate between banks capable of offering a true omnichannel user experience to their customers and those who can’t due to their incompatible core banking structure based on a decades old silo topology.

Imagine they would even have to integrate a brand new channel like instant messenger (IM) banking. Probably they would follow their existing way of paradigm and just try to create another silo to fulfill this task. At the end of the day they surely would be able to offer IM banking but it would not been integrated seamlessly into the rest of their channels.

I used the above examples to show some of the requirements the regulators and the market have created nowadays and what impact this has to the diverse back office structures and technologies which are necessary for the daily operational business of a retail bank.

How are the traditional banks facing this? In a classical way: By axing thousands of jobs.

But this will reduce costs only – but not transfer the outdated core banking systems into modern ones they desperately need to connect to the future. Well the future is now..

Some banks are heavily investing into digital banking solutions or even buying fintech companies.

Imagine there would be a company offering a solution to bring them on track in a timely and affordably manner by offering services like:

  • Cutting down operational cost
  • Transforming the branch network and even offering a model to create new branches for the fractional amount of the cost for a traditional one
  • Implementing omnichannel infrastructure without creating a new silo
  • Integrating an interface to augment the legacy banking system to go digital without the need to replace it
  • Creating new sources of revenue like marketplaces or partner channels
  • Making use of the existing data banks have collected from their customers by using big data analysis
  • Helping to get faster decisions for loan applications – making them even more secure by a better scoring model

Well I think such a company would have a more than bright future 😉

This post was published on finextra first.