The bank branch needs to stay relevant and reiterate itself as the preferred mode of banking. Read how the bank branch is transforming by integrating technology and innovation, and with other banking channels.

1. White Paper
Branch bank of the future – Transforming to stay relevant
- Anil Palakeizh Radhakrishnan, Abhinav Kishore Jaipuriar, Naga Madhavi Chintalapudi
With the proliferation of internet, mobile devices, smartphones, tablets and social media, branch banking has been facing
competition like never before. According to a 2011 survey by the American Bankers Association, 62% of bank customers
preferred banking online vis-à-vis other channels while only 20% preferred using a branch. Many experts have sounded
the death-knell for branch banking. 30 years since their advent, direct channels like ATM and telephone banking have not
been able to make branches obsolete and there is no reason to believe that newer self-service channels would replace
branches. The argument of higher operating costs compared to direct channels is unsustainable as most direct-channel
customers are not profit making compared to branch customers. We believe that technology, innovation and channel
integration will play a key role in re-engineering and re-energizing the branch as one of the preferred modes of banking.
www.infosys.com

2. The below chart shows the number of Federal Deposit Insurance Corporation (FDIC) insured commercial banks and their branches from 2001 to
2011. A quick glance suggests that the number of banking institutions have decreased gradually, but in the last three to four years, the number
of branches remained the same and even increased in 2011 compared to 2010. The number of branches per institution has gone up from 8.13
in 2001 to 13.23 in 2011. That is a 62% increase! Is there a catch somewhere? Is there still hope for a turn-around in branch banking? Can it still
be among the preferred choices of the new age banking customers, a customer fed on mobility and social media?
Source: FDIC (Federal Deposit Insurance Corporation) Historical Statistics on Banking
There are varying views that banks and customers carry in this regards. While customers feel - why should we drive for 15-20 minutes and
then wait in line at the branch? One can easily log-on to online banking from the web. Banks also have a similar opinion– why should we
not cut the number of branches when most of the customers are showing an inclination towards online banking? We can save significant
operational costs.
While all this is true, one needs to understand that there is still significant opportunity in branch banking and a new model is needed to give
branch banking the much needed boost.
Relevance of branch banking
• Sales and advisory services will be the major focus areas for the banks and move away from just servicing customers.
• Customers would not only get a physical distribution point to deposit cash (could be an individual or small retail business customer) but they
would also get advice or recommendation on any financial product that they are unable to comprehend.
• Bank customers like the Internet and the phone for checking balances and paying bills but, for more important things like encashing cheques
or for cash withdrawals, they need to go to the branch.
• In addition, banks tend to be more successful in cross-selling services such as a mutual fund etc. when the customer visits the bank branch
because these products are difficult to sell over the phone.
Despite the emphasis on alternative banking channels, customers remain branch loyal. Today’s branch transformation projects are about
making basic alterations to the way business is done in the bank branch. By enabling technology, banks make the networking of applications,
processes, systems and people easier, thus providing branch employees, an integrated access to all the stuff related to their role. This helps in
enhancing the tools and elements that the employee requires in daily business activities. Banks are realizing that it is wrong to look at branches
as transaction centers. They are evolving as ‘customer engagement channels’.
2 | Infosys

3. With the help of technology, transformation of the branch from a plain “brick and mortar” institution to relationship management center has
been possible. Bank branches need to transform into an advisory channel to survive and flourish.
Wealth management
Self-service branch
branch
• Heavily • Digital signages • Access to
staffed • Call centre financial experts
branches with • Concierge applications • Sales staff armed and relationship
low level of services, extended to the with tablets to managers
automation non-cash branch for cater to customers through inhouse
transactions cross-selling and in queues. Tablets video centres
through kiosks, up-selling in sync with the
video tellers bank's CRM
Relationship
Brick and Mortar Sales branch
management center
Emerging technologies in branch banking
Digitally-enabled branch Video banking in bank branches
The core function of the bank in future will be about creating the Video technology can be integrated with almost all the banking
association with the customer and extending the same through channels to enable a personalized banking experience for remote as
excellent customer support systems. To anticipate the requirements well as branch banking customers. Branch banking, phone banking,
of the customer proactively and present simple and targeted offers, self-service and online banking have already seen video-enabled
Banks can collaborate with social media sites through which the services provided by different banks. Video-enabled branches using
branch bank can serve their customers. PTM’s is a new way of attracting new customers and retaining the
existing ones.
For example, ABN AMRO has introduced a high tech teleportal branch.
The branch works on interactive technology, that doesn’t require the Few banks like NAB (online loan processing through video chat), SNS
presence of any staff. The branch can perform most of the functions Bank (video web conferencing for instructing the customers through
of a traditional branch. In this branch, customer gets to experience multi-media presentations) and Bank Sabadell (video-enabled phone
a live meeting while interacting with a 3-D screen, which provides a banking for addressing customer queries) are implementing the video
different but effective branch experience. banking techniques for attracting customers to the branch.
Modernization of ATM’s Digital signage/customer knowledge centers
ATM’s will have a more modern look and feel wherein it can have voice In-branch digital signages can be used to communicate promptly with
prompts, automated door with sensors to detect a person entering customers. The same can be used for employee communication in
and close the door once the transaction is done. pre-banking hours. Customer knowledge centers inside the branch are
rooms or open spaces where audio-visuals play on various products,
NCR has introduced the SelfServ ATM which is designed to accept
loan rates, special offers and can act as a great cross-selling and up-
cheques, make bill payments, mobile top-up etc. NCR SelfServ 32 can
selling channel. HDFC Bank in India has been using digital signages
automatically recover from software failures and downtime in 10 to
across its branches. New product launches are communicated
15 minutes. This kind of modernization of ATM’s will definitely help
immediately to customers walking into the branch.
the branch banks to gain more momentum in the long run.
Infosys | 3

4. Branch-banking trends
Banks need to re-work on their traditional bank-branching
strategies and come up with innovative ways to improve
services. Banks need to put the new social and mobile
customer at the fore-front and make branch strategies
focusing on their needs, instead of excluding them and
focusing on traditional customers. Below are the branch-
banking trends which will help restore customer confidence
in branch banking.
Improve customer satisfaction through
multiple services
Instead of pondering on increasing transaction volumes
through single branch, the banks should focus on providing
multiline branch service; wherein the customer can shop
for all the required services like loans, payments, financial
advice, brokerage services, investments or insurance which
will enhance the customer satisfaction and compel or
motivate them to use the branch banking channel.
For Instance, Barclays too, took a leaf out of the hospitality
industry to improve the branch experience for its customer.
They have introduced a credo card, similar to the one Ritz
Carlton has, which reminds the staff of the level of service
4 | Infosys

5. that they should provide. The Barclays staff is empowered so that, Rewriting branch strategy
they don’t have to strive for irrelevant rules and hence can put the
Rather than building huge number of branches, banks need to
customer first. This policy change has seen customer complaints
create just the precise number, with the right competences in
reduce by close to 65%. Example: If a customer pays in £530.60 and
each market or rather right place. Less number of branches and
only £530.20 is credited in the account then, the bank first refunds
more ATM’s will help to achieve a high level of productivity and
and then goes about its investigation.
also manage to effectively serve the customers. The branches will
Similar to the 15 minute daily meeting in Ritz Carlton, Barclays need to focus on drawing incoming traffic and capitalizing on each
too has its own meeting where Barclay corporates, across the customer interaction to generate cross sales. As an alternative
organization inform their staff about what’s happening in Barclays, approach the banks can also focus to extend, to serve its customer
what is important and what the customers are saying. This fifteen through ‘in-store’ branches in supermarkets, coffee shops, etc. which
minute meeting at Barclays, where the team reviews what they did would help them mobilize their services to the customer point
all the while and any issues or blockers they are facing is similar to leading to increased customer satisfaction levels. For instance, Co-
what happens in agile software development called the standup. operative Bank has opened five in-store bank branches at highstreet
supermarkets operated by the co-operative group.
Focus on Gen Y customers
The Gen Y customers are moving away from the bank branches and Leveraging the emerging technologies
believe mostly in the online and mobile activities but banks can still Leveraging on the emerging technologies like modernizing ATM’s
proactively attract the young customers by reaching out to them and video banking the branch banking will yield enormous growth
and providing them the advisory information for financial planning opportunities in the coming time period. Banks could adopt
which otherwise is very difficult for them to fetch. This is one way the interactive, self-discovery solutions using touch screens, Wi-Fi,
branch banks can strengthen their advisory business and can also interactive video kiosks, iPad desks etc., at their branches. For
attract business from existing and new customers in future. Banks example, low end services like accounting can be provided by the
also need to improve the turnaround times for various services for branches through self-service kiosks instead of having a customer
branches to become attractive banking destinations for Gen Y. facing representative at the desk serving each customer.
Hong Leong Bank has started modern lifestyle banking in Malaysia. An instance of this would be the Spanish banking group Banco
The aim is to reduce the turn-around time for services. A normal car Bilbao Vizcaya Argentaria which introduced an advanced teller
loan is approved in 15 minutes while a personal loan is approved machines to replace the conventional ATM functionality, thus
and disbursed in 60 minutes flat at the branch. creating a next gen full self-service branch based banking.
Increase quality of Customer Service Representatives Security
(CSR)
Not always the internet banking or social media is a preferred mode
If branch employees could be empowered more, could be given of transactions by customers as most of the frequent banking
cross-functional training, covering any operational processes, customers are concerned about the data breaches, viruses, privacy
services etc., it could noticeably improve productivity and quality and transaction authenticity aspects that will limit the banks to
of service. An instance of this would be - use social media and internet banking in their business. Banks are
grappling with the issues like balancing privacy requirements of
Metrobank has tried improving branch banking by looking at the
customers against use of new forms of marketing hence; technology
minutest details when it noticed customer dissatisfaction with the
will take a back seat enhancing the scope of branch banking.
present form of branch banking where; many a times, customers
have either had to wait outside the bank, for it to open in the Recently, HSBC one of the biggest bank in Britain, was exposed to
morning, or have been pressurized because it’s the close of the impending fraud, because of flagrant security loophole concerning
day and the bank was closed. So, Metro bank introduced a sense millions of online bank account users. As a result, 3.1 million UK
of flexibility, such that they would open a little earlier if people customers registered to use the service have been vulnerable to
were waiting outside and would continue to stay open till the last attack for at least two years.
customer leaves.
The bank also believes in empowering the staff and removing finicky
guidelines that get in the way of delivering a compelling customer
experience.
For that the bank believes in recruiting good people, so selected
few get to work for Metro bank.
The bank gives more importance to attitude than skills. Like the
representative who is facing customer day in and out has to have
a smile of the face, if not they don’t get the job and hence in
metrobank, even employee targets and remuneration are linked to
customer satisfaction scores.
Infosys | 5

6. Redesigning flagship branches
An apple store like approach
The apple store is one of the most innovative and beautiful retail stores in the market today. Interestingly, the
legendary Steve Jobs, who wanted to improve the experience of the apple customer, faced stiff opposition within
the company when he proposed the idea to open these stores. And though critics had forecasted the death of
these stores, they survived; in fact they thrived, and today contribute immensely to the company’s revenues.
Banks too could take inspiration from the Apple store. They need to reinvent their branches such that, customers
look at them as more than merely a bank branch. Citibank has started to do this. By introducing a few (apple store
like) branches that are high on design and technology they believe that customer engagement has increased.
Since redesigning the branch and making it attractive to the consumer would be a costly affair, banks shouldn’t
look at doing it for every branch. Instead, they should identify either a few existing flagship branches, to redesign
or they could set up this new branch at strategically important locations, so that more people walk into them just
to get a feel of what’s inside.
When Steve Jobs opened up the Apple store, he primarily envisioned a space where Apple would have complete
control over customer experience. From the store design, to the sales people, Apple ensured that the experience
was different and was under their control. If banks can redesign their branches, such that customers would want
to walk into them, just to see what they are like, they would get the opportunity to have a higher control over
customer experience.
6 | Infosys

7. Conclusion
Despite the mounting influence of direct banking, branch
remains the preferred point of contact for the customer,
for face to face interactions. Customers prefer the internet
for getting information on the financial products but many
still prefer visiting branches for buying and after sales. They
also do not usually carry out intricate transactions or apply
for complex products through direct channels.
The present day customer prefers the banker to be more
proactive and is even ready to pay for professional advice.
In such a scenario, banks need to be familiar with the
customer’s requirement and introduce branches that
provide the best experience to their customers. This
approach will not only have a positive impact on sales, it
will increase loyalty too.
About the Authors
Anil Palakeizh Radhakrishnan is a Senior Associate Consultant with the Financial Services and Insurance Vertical in Infosys. He has 1 year
of experience in banking and capital markets. His areas of interest include Financial Technologies , Analytics and Social Media.
He can be reached at Anil_Radhakrishnan@infosys.com
Abhinav Kishore Jaipuriar is a Senior Associate Consultant with the Financial Services and Insurance Vertical in Infosys. He has 5 years of
experience in Banking and finance, pre-sales, Supply Chain Management and product development. His areas of expertise include banking,
capital markets and risk and compliance. He has worked on developing business cases and building strategic solutions for banking, capital
market and supply chain management clients.
He can be reached at Abhinav_Jaipuriar@infosys.com
Naga Madhavi Chintalapudi is a Consultant with the FSI Research Center team within the Financial Services and Insurance vertical in Infosys.
She has overall 7 years of experience, with her work revolving around researching various companies, industry/market analysis, vendor/
peer analysis focused on FSI and IT vertical. She has worked within a project for a leading UK based telecom player prior to working with FSI
Research Center for conducting Market Analysis for various Telecom products and Company Research for various Companies in UK markets.
She can be reached at nagamadhavi_c@infosys.com
Infosys | 7

8. About Infosys
Many of the world's most successful organizations rely on Infosys to
deliver measurable business value. Infosys provides business consulting,
technology, engineering and outsourcing services to help clients in over
30 countries build tomorrow's enterprise.
For more information, contact askus@infosys.com www.infosys.com
© 2012 Infosys Limited, Bangalore, India. Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges
the proprietary rights of the trademarks and product names of other companies mentioned in this document.