Over the last several months, we have witnessed the world upended. The pace of change has accelerated in all major facets of life. Each of us can think of examples of how the pandemic has changed our daily routine. At Diebold Nixdorf, the clients we serve are no different.
The crisis has had a major impact on the way people pay and bank. Financial institutions (FIs) have needed to react quickly to offer banking services across their network of touchpoints, engage appropriately with clients and staff and at the same time keep operating in an efficient manner. COVID-19 does not really change the strategic directions of banks, but it can be seen as an accelerator of trends that were already shaping the industry on their transformation journey.
Let’s look at some potential realities in the “new normal,” in the short term, near mid-term, and long-term within the banking industry.
Now: In the short term, it’s all about maintaining secure operations and access
The onset of the crisis led many consumers to get a bit panicky, rushing to obtain previously underappreciated items like sanitizer, but also cash and liquid assets. In the banking industry, ATMs and branches were overrun and internet and customer service call center traffic were at an all-time high. FIs have transformed operating models to safely service consumers while protecting employees, mitigating risk by closing branch lobbies or branch locations altogether, and some have created clever ways of communicating to consumers the best way to access critical financial services during this time, i.e. via personal messages at the ATM while clients withdrew money.
FIs that were already advanced in automation have been one step ahead and able to differentiate from their peers immediately. They had already migrated the majority of their over-the-counter transactions to the self-service channel and were deeply invested in creating omnichannel journeys.
Maintaining operations has, of course, been mission critical. Servicing ATMs and other branch equipment has been a key priority for Diebold Nixdorf in helping our banking clients continue to offer secure essential services to consumers. Cleaning and sanitation products at ATMs and social distancing measures through plexiglass screens have also helped our customers keep both clients and employees safe.
Simultaneously, SMBs’ needs rose dramatically; they overwhelmed FIs with requests for loan stimulus onboarding, loan portfolio maintenance and loan payment suspension. Banks are well advised to react quickly and carefully on credit resolutions.
According to Accenture, clients will long remember how they are treated during the next 6 to 12 months. Empowering clients to initiate processes via self-service without the necessity to go to a branch can help accelerate access to the aid they may desperately need, while helping to efficiently manage the influx of forms, applications, and other documents.
Near: In the midterm, focus on a push and pull to self-service
We are starting to see several countries begin to reopen. Precautions such as social distancing and constant sanitation will most likely become the new normal, while consumers may want to continue to avoid contact and physical touching of surfaces wherever possible.
During this time, banks will still need to serve consumers with basic financial services. As more governments look to suspend shelter-in-place orders, more strain will come to banks’ branches and self-service fleets. We are starting to see self-service transactions on the rise again, after declining ~20% or more during the height of the crisis.
We still see a mix of payment options being used, both cash and non-cash. Therefore, it may become more critical for FIs’ operations to be more adept at efficiently handling the cash transactions that will be present. This could allow branch staff to focus more on serving consumers effectively while following new necessary health guidelines, instead of performing first-line maintenance and having to visit the vault for cash buys. This can further optimize the number of physical touches required for cash management personnel—helping clients, protecting staff and cash-in-transit personnel, and optimizing operations.
SMBs with a physical storefront still need to accept cash. Thus, most manual cash-handling activities come from SMB clients and are therefore one of the biggest cost and efficiency drivers in the branch. If they are able to automate their cash deposits at the ATM, nearly 70% of branch deposits could be automated, while at the same time SMBs’ wait time could be reduced, which is one of their biggest concerns. And they would like to use self-service. According to a survey Diebold Nixdorf conducted, 75% of merchants would use self-service technology for cash deposits and withdrawals.
In addition, implementing more denomination options for withdrawal at the ATM satisfies consumers who used to have to go the teller. In addition, we see more consumers increasing their value per transaction at the ATM. FIs are realizing more and more the benefits of a physical distribution model that is augmented by digital capabilities. Particularly, those that implemented video and remote services, pre-staged transactions to ATMs, etc., prior to COVID-19, have witnessed the tangible benefits of providing a human experience and advice of a teller while maintaining a completely remote presence and physical fulfillment through cash and other transactions. They may look to leverage this capability further in the future, but operate them differently with tellers and staff working from home instead of in a centralized call center.
Next: In the long term, digitization and “As a Service” emerge
As we emerge into a new era of society and banking strategies are adjusted, it will be more necessary than ever before to digitize your operations and ensure they’re running efficiently. We believe cash usage and self-service transactions will continue to be an integral component of most people’s financial lives. Those interactions and experiences, however, may be different. Consumers may have a preference toward a less touch-heavy interaction. Implementation of contactless at the device or connection to other self-service platforms, such as mobile pre-staging, can bridge this gap.
At another level, a complete device and consumer journey redesign may be implemented where the only physical interaction at the ATM could be the touching of cash, with all authentication and validation of the user happening touch-free or on a personal device.
Finally, some operations may change so drastically that banks may not be able to manage the necessary changes themselves. Through the implementation of managed services, banks will be able to quickly and more efficiently take care of their self-service fleet for whatever comes next. Or they may not even want to maintain a capital budget and resources for a self-service fleet at all, leaving operations, ownership, and management of the fleet to someone else. In both cases, FIs can focus more on serving and protecting employees and clients, and get back to the business of banking.
Looking back (prior to the health crisis) to the banking operations and self-service journeys implemented, we must ask ourselves, did they stand up to the test of the pandemic? Have they been able to serve consumers and assist branch staff in the best possible way? What about as we move into an uncertain future—will these channels meet the needs of a post-COVID-19 environment? It’s no longer enough to offer a wide range of siloed channels. Your complete ecosystem of physical and digital channels must be orchestrated and connected. As the pandemic has made crystal clear, consumers expect to conduct their entire banking world in the channel they choose, when they choose it. Will your organization be ready?
BANKEN
