Why the virtual bank branch delivers the best of both worlds

Illuminating Financial Services

There is a new trend transforming the retail bank that’s beginning to have an even greater impact: the virtual branch. It combines the speed, convenience and ease of use of digital banking with the personal human touch of the banking branch. It represents a huge win for the bank and its customers. Let me explain.

Not so long ago, I sat in an office with the CIO and Head of Funding Project Management of a large bank in Asia. The atmosphere was very tense because we were there to answer one very important question: how do we attract the new generation of customers–such as Millennials that are so used to mobile technology–to apply for an account with us?

People had stopped coming to the bank. Some days there were no new account openings at all. After some soul searching, we arrived at the conclusion that the bank was too traditional. The way it did business no longer reflected that way people wanted to bank – and that started with the branch.

To open a new account, you had to go into one of the bank’s branches. For people who aren’t familiar with most parts of Asia, imagine the worst traffic jam you’ve ever been in, so driving to a bank branch is not something you’d want to do. We realized that, to attract and retain new and younger customers, we had to increase the amount of services the bank could deliver digitally. This would begin with new customer onboarding.

Isn’t the virtual branch just online banking?

Of course, the bank had a range of online banking services. You could check your balance, transfer money, all the usual stuff. However, processes like opening a new account requires human interaction. In our case, the regulators were extremely concerned that if there was no face-to-face contact there were huge security risk and compliance (i.e., AML) issues. It took us some time to convince them that it was not only possible but preferable to have face-to-face contact in the digital world.

That’s the key difference between online banking services and the virtual bank branch. The virtual branch enables your bank employees to provide banking services via your customer’s chosen digital channel. Human contact isn’t removed, it’s encouraged. There are many reasons for this. We know that people–of whatever age–have an emotional attachment to personal contact. When they have a big financial decision to make, they want to speak to someone. It’s clearly easier to up-sell and cross-sell when you’re talking to someone. It helps build security through another layer of authentication.

We quickly realized that we could develop straight-through digital processing for the bank’s customer onboarding process. We created e-forms where the customer could initiate an application on their chosen device. We developed a mobile app that allowed the customer to scan all the relevant documents (ID cards, digital signatures, supporting documents) and attach them to the application. Our system then took all the customer information and routed it to the right person while automatically sending a notification to the customer to invite them to an introductory e-meeting via Skype.

While on the meeting, the bank advisor performs face-to-face identification verification with the customer and the system automatically captures video and voice to help make it easier for them to authenticate and access customer services in the future. The provisional account is then opened, approved and all information is filed and archived. Finally, we use personal information gained from the e-form to create a tailored welcome package and begin our periodic, personal customer communications.

All of this was achieved using a range of EIM solutions from OpenText covering information capture, content services, customer experience management, advanced data and video analytics and  OpenText Magellan AI. I believe that OpenText is one of the very few companies that can offer a complete solution for the straight through processing needed in the virtual bank branch. I’m very happy to report that it seems, by all the new account openings, that people really like the bank again!

The customer’s perspective

We know that younger generations–let’s say anyone under 35–are happy with digital technology. Reports suggest that 70% of Millennials are already using mobile banking. Speed and convenient digital services are driving their choice of bank. When I was talking with one group of Millennials about the selection process, I was told that they didn’t want to bank with their grandfather’s bank. Traditional banking processes are a turn off.

Increasingly, everyone else is catching up. Here in Singapore, over 90% of all customers do their banking online or via smartphone. It is something that people have come to expect. The virtual bank branch builds on online banking by moving the digital world beyond the transactional. It allows your customers to access higher value services and to quickly get the help and advice they need from an experts face-to-face. It adds a new layer on top of convenience. It adds trust.

Of course, the systems have to be easy to use. If they are, then you can deliver a whole new level of customer experience. People perform simple transactions when they want to and talk to the right people when they want to. In a digital world that’s quickly moving from text to voice and visual, customers can use these to speed authentication, access the products and services and perform all the activities they require without typing anything.

The bank’s perspective

Bank branches are closing everywhere, apart from Hong Kong, because they have become an expensive and under-used asset. I explain it like this: as cities and towns grew, banks opened branches to be as close to their customer as possible. Today, the branch isn’t as close as possible, the smartphone or laptop is.

The virtual bank branch offers a way to bring the same level of service customers expect from personal contact with their bank into the digital space and save a large amount of money at the same time.

However, that is not the real benefit for retail banks. For me, the real benefit is that, paradoxically, it lets you get much closer to your customer and to know them much better. In the past, someone may open a bank account 10 years ago and a decade later the bank knows little more about their customer than what was on that initial application. It’s clear that this is no longer acceptable and the bank is leaving potentially massive amounts of customer value unrealized.

In other areas of their lives, people are used to a contextual experience that evolves around their behaviors and preferences. They are coming to expect this from their financial services providers as well. There are many ways that you can achieve this through the virtual branch. I’d like to give just one example that we have implemented as part of the virtual branch in South East Asia. We have used advanced video and data analytics for sentiment analysis on each individual customer. When they contact the bank for a video meeting, facial recognition helps authenticate the customer and then work outs who they are and what mood they’re in and routes the contact accordingly.

Emotion has become the currency of experience. Banks will increasingly look to harness human behavior to drive revenue and brand loyalty. With the growth of customer data available, banks can apply advanced EIM technologies to deliver rich, contextualized experiences to customers. Those banks that seize the opportunity of technologies to create strategic innovation will quickly gain advantage over their slower competitors.

In addition, social media analysis lets the bank gain a greater understanding of the preferences of the customer as well as being able to monitor how the customer feels about its products and its performance. It gives a platform to effectively gauge the effectiveness of new products and promotional campaigns while continually gain insight into the wants and needs of the customer today, not ten years ago.

To find out more about the virtual bank branch and OpenText’s EIM solutions for straight through digital processing, please complete the short form beside this blog.

Albert Tay

Albert is Director, Financial Services, Asia Pacific and Advancing Market at OpenText. He has almost 20 years of experience within the Financial Services industry, and is a frequent speaker at industry events all over the world.

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