The Right Balance of Digital vs. Physical Banking Channels

As financial institutions emerge from the COVID-19 fog, everyone is wrestling with how to balance their digital solutions with traditional physical locations. What's the best way to use remote technologies to enhance both approaches? Here are two helpful processes for banks and credit unions working to figure out the right percentage mix and roadmap for their strategy.

There has been a huge awakening for those banks and credit unions that lacked digital and remote options to stay operational during the COVID-19 pandemic.

Those with poor online banking, mobile apps, remote deposits, loan applications, and digital account opening all suffered immediate paralysis. Likewise those institutions running chiefly with physical locations, including both branches and interactive teller machine kiosks, were stuck. Those without remote technologies to keep ATM/ITM fleets up and running, drive-up lanes operational, and remote video, keyless access control and remote alarm also suffered.

This is not to say that nearly every bank and credit union was not dramatically impacted by the COVID-19 pandemic. But on the readiness scale, those financial institutions that have been more progressive and invested in technology, both digitally and remotely for physical locations including branch and ITM kiosks, were able to pivot and adapt more quickly and efficiently. Their efforts essentially provided contactless experiences and locations when people needed them.

Which financial institution are you? Where do you fall on the scale?

Banking Isn’t Out of the COVID-19 Quagmire Yet

At the time of writing this article heading towards August 2020, reports of COVID-19 positives have been increasing. Many regions are spiking, and in some cases, lockdowns or restrictions on congregating have been recurring. Just when we thought it was safe to go back to business — wham. Another wave and it is Groundhog Day all over again.

That said, most would agree we are all a little better prepared this time around for the select physical locations and ITM kiosks that are open. Masks have proven to be effective. Plexiglass and other shields and social distancing dots have been added. Airflow has been turned up.

But what about assessing your current state of digital and remote technologies? Plus, what is the right balance of digital to traditional locations moving into the future?

We are not sure anyone can accurately look into their crystal ball and predict when COVID-19 will end or if it will ever end. Is it here to stay, like the annual cold and flu? Will scientists finally produce a successful vaccine? Maybe it runs its course and somehow just goes away.

Our firm has retained an infectious disease specialist and formed a Health and Risk Advisory Board in an attempt to cut through the mainstream media’s noise. Our feeling was that something as serious in terms of employee and consumer safety, as well as the health of the financial industry, was worth of its own division. More on that later.

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COVID-19’s One Happy Byproduct: Remote Digital Channels Proved Themselves

Regardless of your view, what has become extremely apparent is the discovery that many financial institution employees can successfully work remotely.

This includes nearly every aspect of banking, especially for those institutions who invested in the right remote technology and cyber-compliant equipment and service.

Remote tellers could help consumers from the comfort of their homes. Clean up the den, install a logoed back drop, and they were in business. The same with video lending. Mobile or desktop, engage your customer or member and walk them through everything remotely. Same goes with account openings accomplished in under ten minutes. Appointment setting software made other interactions more practical.

Even call centers, a possible hotbed for coronavirus spread, can help with reduced head count and proper investment in remote technology.

Finally, management and executives used Zoom, Microsoft TEAMs and other video-conferencing solutions to host meetings and communicate with staff.

We have also seen customers and members who once resisted digital technology adapt to learning how to use it. So now Grandma can deposit a check with her phone and Grandpa signs wealth management paperwork remotely. Gen Z and Millennials were already comfortable with this technology, but Baby Boomers and Gen X found they can easily refinance or get that auto loan completed all from the comfort of their living room. The concept of not visiting a physical branch may have previously been foreign but in just a few months all that changed. They were forced to adapt.

A quick recap. We have discovered that a teller, loan officer, administrative staff, call center employee, management and executives can all work remotely. We have also discovered that a customer or member can do nearly everything, banking remotely, and even the outliers are adapting.

Is there even a need for a physical branch? Or centralized call center? Or corporate headquarters?

Many financial institutions may say no. The digital community would say no. Some institutions are already online-only with zero physical presence. While everything seems to be trending this direction, a few other points to consider.

It’s Inescapable. Many People Still Simply Like to See Other People

First, as much as technology can help with efficiencies, most people like to interact with other people.

Humans crave the company of other humans. As states reopen, people have been flocking to bars and restaurants. They are visiting friends and family and are going to parks, beaches and other outdoor areas. Hopefully, they will continue to practice social distancing and other safe pandemic fundamentals, but the point is they want human-to-human interaction.

These are the customers and members who enjoy visiting the branch regularly or occasionally. These are the people who continue to utilize the drive-up system. These are the folks who may never fully convert to everything digital because they like to see their check deposited or seal the deal with a physical handshake (or elbow bump for now).

In addition, when there is a dispute, especially involving money, there is something to be said about visiting your local bank or credit union branch.

While such complaints could be taken care of remotely, we have heard stories from people who feel helpless when there is not a physical location. Again, the comfort of having at least a centralized location to meet with their banker means something.

Then there are the dynamics of communication and efficiency of having in-person, hands-on training sessions. Or hosting management meetings in the board room where you can observe body language and collaborate on strategy. Or simply walking up the hallway for the classic impromptu between coworkers. We are hearing from customers and experiencing ourselves, how much they miss the human interaction. In fact, many of our employees have stated how happy they are to be back in the office just so they can physically interact with other humans.

Finally, even if everything eventually goes digital, it is not a light switch. This migration will take time and things may never go 100% digital. Rather we anticipate there will be a need for both physical and digital, at least for now.

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Finding the Right Physical/Digital Balance for Your Institution

What is the right balance between digital banking, traditional branches and ITM kiosks? The roadmap to establishing your strategy…

We are finding for most institutions, the balance is a strategic blend of tailored solutions and customer experience. Digital provides efficiency, physical provides human connection, remote technologies maintain safe, secure, functionality on both avenues.

What is the right percentage blend? It depends on your financial institution’s strategy.

There is no right or wrong answer, but what most are finding out is that if they did not have a roadmap to establish strategy … this was their awakening.

There are several ways for financial institutions to help build their roadmap to strategy. A Strategic Discovery Workshop can help re-assess vision both digitally and technically and map out where an institution must be in the marketplace.

Based on the findings from the workshop, an Executive Readiness Test is also extremely valuable and can then help identify areas of strengths and weakness in multiple categories where a financial institution must invest to compete in the new landscape. Categories like digital platforms, cyber security, remote technologies, networking and automation are all covered to help roadmap strategy.

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Time for Hard Decisions has Arrived

Unfortunately, some financial institutions may not make it. Many are not adapting quickly enough or worse, do not even have a plan or strategy. But it is not too late.

Those that establish their roadmap and strategy with their senior leadership team, can be ready and more efficient on both the digital and physical front. This includes all operational aspects, safety, physical security, cybersecurity, automation and managed services. These solutions apply to digital, traditional or remote regardless of where your digital/physical percentage ends up.

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