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Building the Mobile-first Bank Branch – Frost & Sullivan Whitepaper

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The transformation from traditional branch banking to ‘mobile-first’ services is essential for the financial services industry to keep pace with consumer mobility trends. This paper evaluates the impact of mobility for banks and examines the key steps to deploy mobile-first bank branches that enhance customer experience and streamline branch operations.

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Building the Mobile-first Bank Branch – Frost & Sullivan Whitepaper

  1. 1. Building the Mobile-first Bank Branch FROST (9 SULLIVAN Frost & Sullivan White Paper
  2. 2. frost. com Introduction . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .. . . 3 Increased Consumer Demand for Mobile Services . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . . . 3 Struggle to Reinvent the Bank Branches . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .. 4 Redefining Bank Strategies for Mobile Service 5 Step I: Determine the Type of Bank Branch Deployment Model . ... ... ... ... ... ... ... ... ... ... ... ... ... . . . 7 Step 2: Clearly Identify the Various Customer Zones and Processes that Should Be Moblllzed in the Bnanch . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .. . . 8 Step 3: Identify the KeyTechnologies Required to Support the Transition to Mobility-First Bank 9 Step 4: Consider Solutions to Reduce Risks for Mobile-First Bank Branch Services. ... ... ... ... . 9 Step 5: Leverage Data Analytics to Optimize Deployments and Scale Gradually . ... ... ... ... .. . . I0 Selecting the Right Partner . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . . . I0 Wrap Up . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... . . . I I Call to Action . ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .. I I -T: -:n'niI‘: :‘_-II-‘:1-fl
  3. 3. Building the Mobile-first Bank Branch INTRODUCTION The adoption of smartphones and tablets continues to accelerate in the United States. Frost & Sullivan expects smartphone penetration to exceed 90 percent in the US by 2020, while the installed base for tablets is anticipated to increase from approximately I50 million in 20|5 to nearly I90 million over the same period. The mobile revolution has had a significant impact across verticals and will radically transform the way organizations operate. Frost & Sullivan research on the US mobile financial services market indicates more than half of all smartphone users use mobile banking services, while nearly 40 percent of tablet users access their bank accounts from their devices. In order for the financial services sector to keep pace with this growing global trend, the transformation from traditional branch banking to ‘mobile-first’ banking services is essential. Banks unable to deliver ‘mobile-first’ services in their brick-and-mortar locations will find themselves at a competitive disadvantage, and will struggle to improve customer relationships and business efficiency. This paper evaluates the impact of mobility for banks and examines the key steps to deploy mobile-first bank branches that enhance customer experience and streamline branch operations. INCREASED CONSUMER DEMAND FOR MOBILE SERVICES Frost & Sullivan research indicates the average smartphone user in the United States now consumes nearly 2 gigabytes (GB) of cellular data every month compared to an average of 200 megabytes (MB)/ month in 2009, and spends upwards of I20 minutes on his or her mobile phone every day. Among mobile banking users, the most popular mobile banking activities include: I) checking account balances and transaction history: 2) money transfer services; and 3) receiving alerts related to banking transactions. Moreover, approximately 47 percent of mobile banking users use their mobile devices to deposit checks remotely, without having to go to a bank branch or visiting an ATM location. Exhibit I: Popular Mobile Banking Activities among Mobile Banking Users, US, 20 I 5 % USAGE Checking account balances and % transaction history Money transfer 0 between consumer's 6 U A OWII QCCOUHES Receiving alerts related to banking 5 transactions Mobile check deposit 4 Popular mobile banking activities among mobile banking users. Source: The Federal Reserve, Frost & Sullivan All rights reserved © ZOl5 Frost 84 Sullivan
  4. 4. Exhibit 2: Penetration of Mobile Banking Among Smartphone Users , US, 20I 5-2020 Smartphone Mobile Banking Penetration (96) Mobile Banking Penetration (%) 20|5 20|6 10|7 20|8 20l9 2020 Year Note: All figures are rounded; the base year is 20! 4. Source: Frost & Sullivan As consumers perform more mobile banking transactions, visits to banks will increasingly involve complex transactions and advisory services. However; traditional bank branches are still structured to dedicate staff to simple transactions that can often be performed via quick self-service kiosks or mobile devices. Thus, many bank branches are too large, manpower-intensive, and inefficient. Banks that remain tied to the traditional model risk losing customers to competitors with more advanced, technology-driven capabilities that can deliver a mobile- optimized customer experience. STRUGGLE TO REINVENT THE BANK BRANCHES Banks can optimize their operations by transforming legacy branches into smaller footprint, advice-focused centers, where customers can quickly check-in, perform self-service transactions, and make appointments with financial advisers As younger customers increasingly manage their financial lives on mobile devices, mobile-first solutions will evolve from service differentiators to service requirements. In addition to investing in technologies such as self-service kiosks and smart digital signage solutions, banks will need to consider providing employees with tools such as connected tablets to allow them to become ‘mobile concierges’. These types of solutions will reduce customer wait times, improve workflovv, and free staff to focus on engaging customers. All rights reserved © ZOIS Frost & Sullivan frost. co m
  5. 5. Building the Mobi| e—first Bank Branch Exhibit 3: Technologies that a Bank can use to Reinvent the Bank Branch, US, 20|5 Technology Technology Technology Technology Technology Bank Integrated Tablets Enclosed Tab| et~Based Kiosks Smart Signage Displays Video Conferencirg Facilities Printers i—'l """""""" " I ‘E. '. "'. .'= ltd! ‘ . . FUNCTIONS FUNCTIONS FUNCTIONS FUNCTIONS FUNCTIONS - Mobile concierge tn - Allows customers to get I Digital advertising to I Connect virtually with - Mobile printing and serve customers quickly information in self-serve manner customers productspecialisls document scanning BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS - Reduced waiccims - Reduced wait times I Keep customer informed I Efficient customer service - Bridge physical and - Enhanced customer - Enhanced customer experience - Generate upsell and ' Deliver a personalized mobile channels experience cross-sell opportunitis e<perience - Deliver digitization services Source: Frost & Sullivan REDEFINING BANK STRATEGIES FOR MOBILE SERVICE DELIVERY Banks must now implement a major paradigm shift in their traditional service models in order to allow customers to mobilize their financial lives. Rather than deploying disparate technologies in a reactive and disorganized manner, Frost 81 Sullivan encourages banks to use a well-structured, step-by-step approach to facilitate effective mobile service delivery to their branches. Such an approach will allow banks to: ° Differentiate from the competition Enrich the customer engagement experience ° Increase worker productivity Strengthen employee satisfaction by providing the right customer service tools for customer All rights reserved © 20| 5 Frost & Sullivan
  6. 6. frost. co m . !, Frost & Sullivan’s suggests the following approach for redefining mobile ban king service strategies. Exhibit 4: Suggested Approach for Redefining Mobile Ban king Service Strategies Determine the appropriate bank branch deployment model 1'55’ ‘V I . “ Identify the customer zones and processes that should be mobilized in the branch 3'35“ l <i“i Identify the key IT and Telecom ' Y I technologies required to support the transition to mobile-first bank branches r . .4'34'l . — L L‘, Consider solutions to reduce risks for ‘ mobile-first bank branch services A 1 r gjla-fr: ‘ _ l, ‘ i Rely on data analytics to optimize ‘ deployments and scale gradually l E2: ‘ Source: Frost & Sullivan All rights reserved © ZOIS Frost & Sullivan
  7. 7. Building the Mobile-first Bank Branch Step 1: Determine the Type of Bank Branch Deployment Model Banks must first determine the type of branch format that suits their mobile-first service delivery requirements. For example, banks will need to determine whether to embrace Flagship, Hub, Spoke, Micro and/ or Pop-up strategies to eliminate redundancies and remove inefficiencies in their branch deployments. Exhibit 5: Formats that Banks Should Consider for Mobile-first Bank Branches, US, 20| 5 Bank Branch Format Flagship Key Attributes and Considerations Larger size, main bank branch in a region that offers multiple services to consumers A central, large r-size bank branch format, supporting multiple smaller bank branches (spokes) Smaller size bank branches, implemented as the ‘spoke’ component of the traditional hub-and-spoke bank branch deployment format A smaller bank branch format implemented to allow banks to expand their reach economically The smallest bank branch format, can be deployed as a tem porary structure All rights reserved © ZOl5 Frost 84 Sullivan Suggested Mobility Solutions I Bank integrated tablets, kiosks, and ATMs I Smart signage I Video conferencing I Printers I Bank integrated tablets, kiosks, and ATMs I Smart signage IVideo conferencing I Printers I Self-serve kiosks I Smart signage I ATMs I Possibly wireless video conferencing facilities IWire| ess self-serve kiosks I Smart signage I Wireless ATMs I Possibly wireless video conferencing facilities I Smart signage IWire| ess self-serve kiosks IWire| ess ATMs Source: Frost & Sullivan
  8. 8. f rost. com Step 2: Clearly Identify the Various Customer Zones and Processes that Should Be Mohilized in the Branch Customers can now perform many different types of banking tasks on a variety of mobile devices. However, more complex transactions, such as processing a mortgage or soliciting investment advice, typically require an onsite branch visit. When a customer visits a bank branch, the end-to-end customer experience journey can be segmented into five zones (also collectively referred to as"in-the-branch” zones): ° Attract Zone: The initial customer experience ° Self-Serve Zone: Describes the experience delivered to customers who use self-serve technologies (such as an ATM or kiosk) for performing a transaction or for getting information ° Engage Zone: The customer wait-time experience - Advise Zone: Customer experience delivered when consumers are provided advisory services for the more complex transactions that cannot be handled via self-serve technologies - Transact Zone: Generally includes the customer experience that is delivered when consumers are performing a transaction through a bank employee (such as a teller) Exhibit 4: Suggested Approach for Redefining Mobile Banking Service Strategies V V V V l >‘4l<: l;! IL. ,= l Al"I: lACZl -L/1E| L.r'-. ~,1!: "A('fl$' slulmxcls ~ : V,I'Al-1: ~ ‘I: lAwl-, ‘7:C2r I ’ . kg Attention-Getting VIP Customer Teller Zone y l 4" Signage Lounge ‘ ti Financial 7 Health Alerts Communlcadon [_ Secure. Easy V an 1% mm hm Wm Check-In and Customer Video Conference Customers you plrthue from men _ Book Advisor Technology Bar wirh Product Check. Confirm l. ::: ::&l: :;Wmr Appointment and Print l: l Acquire Customers with Offers and Notifications Financial Health Source: Frost & Sullivan Banks need to clearly identify and prioritize the “in-the-branch” zones that they should automate and mobilize. While the ultimate goal should be to mobilize every zone in order to achieve the maximum benefits of mobility- flrst bank branch operations, it is prudent to adopt a gradual, modular approach to minimize risks. All rights reserved © ZOIS Frost & Sullivan
  9. 9. Building the Mobile-first Bank Branch Step 3: Identify the Key Technologies Required to Support the Transition to Mobility- First Bank Branches Banks must clearly identify the in-the-branch and beyond-the-branch customer interactions that they want to mobilize and then evaluate the specific IT and telecom technologies that can help them achieve true mobilization. While execution strategies are often focused on in-the-branch consumer interactions, banks should also ensure that they are able to serve customers remotely (i. e. before customers even visit a bank branch). For example, banks should consider personal financial management software (for smartphones, tablets, and other connected devices) for effective beyond-the-branch, mobile-first service delivery implementations. Frost & Sullivan believes that the following improvements can help banks reinvent their branch infrastructure to deliver mobile- first services: ° Provide mobile concierges with tablets allowing them to move freely while conveniently advising customers 0 Enhance the customer experience by offering automated self-service options via kiosks that have touch interfaces ° Attract attention and advertise to customers using smart signage displays that range in size from I0 inches to I05 inches 0 Bridge mobile and physical channels with a wide range of printers that deliver fast, secure, mobile printing and document scanning Step 4: Consider Solutions to Reduce Risks for Mobile-First Bank Branch Services Financial institutions must consider the array of available solutions that can help them effectively manage the transformational requirements of mobility-first bank branch deployments. A well-defined strategy is paramount to mitigate risks. To ensure risk-free deployments, banks should consider the following: ° Modular solutions: Frost & Sullivan encourages banks to consider modular solutions that allowthe flexibility to start small and scale gradually. Banks can choose whether to mobilize specific customer interaction zones or technologies based on initial customer reactions and assess the early impact on their business. ° Proven implementations: Banks should seek references from proven mobility-first solution providers to mitigate risk Implementing technologies and platforms offered by well-qualified vendors that have the necessary resources to invest in product innovation is vital to the success of mobility programs. ° Leverage 360-degree feedback: Banks should consistently monitor feedback and solicit recommendations by surveying both customers and employees throughout the implementation process. Moreover, it is important to monitor, measure, and benchmark best practices of competitive deployments. All rights reserved © ZOl5 Frost 84 Sulllvan
  10. 10. II) Step 5: Leverage Data Analytics to Optimize Deployments and Scale Gradually Following the initial deployment of any new technology it is important to leverage bank-related Key Performance Indicators (KP| s) to evaluate the effectiveness of new implementations. Banks are encouraged to determine which KP| s will be most appropriate to gain insights into the underlying performance of the deployment. As part of a holistic mobilization strategy goals should be clearly formalized and a manageable number of quantitative KP| s should be defined to measure results. Sample KPls to consider include: 0 Average customer wait times - Frequency and duration of interaction 0 New product sales through automated or self-serve solutions - Operational efficiency and cost optimization ° Customer satisfaction scores (impact on net promoter scores) Traditionally, banks have used KPI models based on revenue generated or customer accounts (booked by branch). However, the reality is that it can take up to 24 months for bank branches to break even in such a model, and migrating to a more efficient branch format can help to achieve branch profitability faster than traditional models. Thus, measuring the success of mobile-optim ized bank branches requires a different approach. SELECTING THE RIGHT PARTNER It is imperative that banks select a provider that can support true end-to-end mobile-first solutions, from initial planning and deployment, to post-rollout activities. Frost & Sullivan recommends that banks consider providers that can offer a complete set of mobile solutions, including hardware, software, digital signage, and services for both customer service delivery and employee workforce requirements. Banks should work with a provider that allows their mobile-first bank branch deployments to grow as bank requirements change over time. The following considerations should help banks evaluate and identify a preferred vendor of choice for their mobile-first bank branch strategies: 0 A solution provider approach: Providers should be prioritized that clearly understand the bank's requirement for mobile-first bank branch implementations and are able to offer integrated solutions that match to specific customer support requirements. 0 Device portfolio: The portfolio of devices offered by a provider——either from its own portfolio or in partnership with other device OEMs—is an important consideration. Devices should be available independently or as part of a solution. The ability to offer customized bank-branded devices with secure software (such as app containers) should be an important consideration. 0 Pricing strategy: With the stakes so high for banks, solutions that differentiate on price (often at the expense of quality) should be viewed skeptically in the selection process. Banks should consider long-term partnerships with providers that can invest in scaling and enhancing the capabilities of their implementations over time. It is therefore prudent to consider vendors that can showcase proven deployments and capabilities. All rights reserved © ZOIS Frost & Sullivan frost. co m
  11. 11. Building the Mobile-first Bank Branch ° Security strategy: It is critical to work with providers that already understand the unique security requirements of a banking environment and can offer optimized security for sensitive financial and personal data. The provider should offer the appropriate security consulting and implementation expertise to help banks ensure that they do not compromise security. The ability to ensure the appropriate data security at the device level, both for in-the-branch and beyond-the-branch implementations, should be a critical requirement for any deployment. ° Other important considerations: Other important considerations include professional service capabilities, technical support capabilities, total cost of ownership advisory services, and the ability to leverage existing bank infrastructure to support back-end integration. WRAP UP Tightening economic conditions, coupled with the proliferation of mobility, make it essential for banks to deploy mobile-first bank branches that can generate significant efficiencies in their business and enhance the consumer experience. Banks that adopt a well-structured, step-by-step approach to facilitating mobility-first services in their branches can successfully meet customer expectations for mobilizing their financial lives. First movers have already seen the value in deploying mobility-first bank branches, it is now time for the financial institutions on the sidelines to em brace the potential of mobility. CALL TO ACTION Providers that can expertly support an initiative from its initial planning stage, through deployment and into the post-rollout phase, can help banks successfully deploy and manage mobile-first bank branch so| utions. Specia| ized partners that understand the key requirements of banks can add significant value to such deployments by bringing in the necessary hardware, software and product integration expertise. One resource to consider is Samsung Business. More information on Samsung’s Mobile First Bank Branch solutions can be found at http: //wvvvv. samsung. com/ us/ business/ by-industry/ finance-solutions/ mobile-fi rst-bank-branch. All rights reserved © ZOl5 Frost 84 Sulllvan
  12. 12. Auckland F rankfu rt Miami Shanghai Bahrain Herzliya Milan Shenzhen Bangkok Houston Moscow Singapore Beijing Irvine Mou ntain View Sydney Bengaluru lskander Malaysialjohor Bahru Mumbai Taipei Buenos Aires Istanbul Oxford Tokyo Cape Town Jakarta Paris Toronto Chennai Kolkata Pune Valbonne Dammam Kotte Colombo Rockville Centre Warsaw Delhi Kuala Lumpur San Antonio Detroit London Sio Paulo Dubai Man hattan Seoul Silicon Valley 33| E. Evelyn Ave. , Suite I00 MountainView, CA 9404| Tel 650.475.4500 Fax 650.475.| 570 San Antonio 7550 West Interstate I0, Suite 400 San Antonio, TX 78229 Tel 2|0.348.|000 Fax 2 I 0.348.|003 London 4 Grosvenor Gardens 877‘G°Fr°St London SWIW ODH myfrost@frost. com Tel +44 (0)20 7343 8383 Fax +44 (0)20 7730 3343 www. frost. com Frost 84 Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants. For more than 50 years, we have been developing growth strategies for the Global I000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? For information regarding permission, write: Frost 84 Sullivan 33l E. Evelyn Ave. , Suite I00 MountainView, CA 9404l WHPAP-HHP-MOBILEFIRSTBANKBRANCH-OCT I 5F5

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