More than just a hole in the wall

01 June 2006Features

Next-generation ATM and kiosk technologies are presenting new opportunities for banks to increase branch profitability, reports Joy Macknight

Last month, Barclays finished renaming its ATMs as the more colloquial “hole in the wall”. In a nationwide plan aimed at ridding its branches of the acronym, the bank wanted to make itself “more accessible” by using common language. “Hole in the wall is a term recognised by the majority of our customers. We have adopted it in our branch sites, so in terms of brand identity, people know that they are at a Barclays ATM,” says Phil Sowter, head of business planning, electronic banking at Barclays. He says that the customers like it and hopes that it will improve customer loyalty.

Sowter says that this was part of a Barclays brand alignment excerise, but it brings into question the traditional role of the ATM and what it means to people on the street. Financial institutions are realising that the ATM is now the primary contact point for customers — it has become the bank to many customers.

David Nibloe, head of self-service at HSBC, says that up to 95% of the cash that is taken out of HSBC’s branches daily by its customers is through an ATM. “Today more people will take cash out of one of our cash machines than will call up our call centres, or log onto our website, or go into our branches and interact with one of our staff. It is a very important contact point for our customers.”

HSBC has moved past the point of seeing the ATM as just part of the furniture and is using the channel for other functions than just providing cash, a balance or maybe a transaction summary. In June last year, HSBC launched a free global money transfer service, Easy-Send, via the ATM for its US-based customers. Customers can move money from their primary accounts to a secondary account that authorised friends and relatives can access with a special HSBC ATM card.

In November, the bank launched the ability to make charity donations through the ATM channel in the UK. The charity payments were first developed in Mexico and then rolled out in other markets. Nibloe reports that over £110,000 has been donated to Children in Need through the ATM. From the beginning of June, HSBC will be putting other charities, selected by a poll of its staff, onto the ATM as well.

Internationally financial institutions are changing the way they use the ATM to create a more enhanced experience for the captive audience and pushing the boundaries of the traditional ATM’s functionality. The State Bank of India has launched exam fee payments for students and is adding other government related payments onto its networks. The State Bank of Mauritius launched mobile top-ups in 2003, and has since added it to its internet services and also through a mobile phone using SMS. Israel’s Bank Leumi offers foreign currency withdrawal and loan functionality.

Charlie McIver, responsible for project implementation in Europe and the Middle East for front office software firm S1, says that Bank Leumi has a well thought out strategy of where its touch points with its customers are heading. “Bank Leumi focuses on the web and the ATM, and also the kiosk-related services that goes in parallel with the ATM, which are similar to ATMs but without the cash handling functionality,” he says.

Jim Merrell, director of self-service marketing and management, Diebold, also promotes the idea of combined ATM and kiosk services. “If you think of an ATM and the power that it has through the technology, it is very useable in the branch environment as an extension of the teller’s capabilities. We have always thought of ATMs as self-service, but they can also be assisted service devices where you start a transaction at the teller and the teller completes the critical information and the delivery point for that, yet the rest of the transaction might be at the ATM in the lobby.

“The same ATM can also be used as a source of information. When the customer is not standing there trying to complete a simple and straight forward transaction, you can use it as an information kiosk, as a communication point. All modern technology ATMs have fantastic graphics, they have tremendous sound and imagining capabilities, and you can do a lot with an ATM as a natural extension of the teller line and the traditional teller applications,” he says.

Speaking at NCR’s recent Self-Service Universe event in Barcelona, Ruth Fornell, vice president, financial solutions, EMEA, said that the technology is driving what banks can do. “There is pressure on banks to get profit up and cost down, and a big factor is where the transaction takes place,” she says. “We’ve done a good job of moving cash dispense; now we’re seeing the same with intelligent deposit — the hottest thing in the European market right now is the investment banks are making in intelligent deposit.”

One big change she points out is the distinction between “branch assist” and “teller assist” approaches.

“There are always going to be some transactions that require a teller. Teller assist gives the teller a device to make the transaction more efficient. Branch assist is about getting the customer to pre-stage the transaction,” she says, adding that pre-staging is a technique that has been learnt from the airline check-in business: “You get the boarding card and you choose your seat at a kiosk, but you then you have to go to an agent to give them your bags.”

Graham Mckay, executive director of ATMIA Europe, says that banks are changing their branch strategy to incorporate the ATM, moving toward a self-service branch that has walkers rather than tellers. The idea is to have three or four people walking around and helping people to understand the technology, but also be adept at the sales side of the bank’s offerings. “At our conference in London, where Barclays, Fortis, and Bank of Ireland representatives spoke, you could clearly see that the new trend is to have greeters and meeters, or walkers, talk to customers as they come in and help them with the self-service end. So they maintain contact with the customers but in more of a sales role instead of sitting behind a sheet of glass,” he says. “We are going to see the migration of the banks towards a self-service environment and a much more friendly environment rather than a brick wall with lots of machines in it.” HSBC has already started this transformation (see box).

In the industry, Nationwide is seen as a leader in trialling new ATM technologies. Kevin Scott-Evans, Nationwide’s head of ATM services, talks about the society’s current strategy for its ATM estate: “The first thing we did was put an ATM ad on our remote network that helped us advertise third-party products which generates income for us.” On the branch-based machines, it advertises the society’s products, as well as job advertisements. The society has implemented mobile phone top-up and is in the process of installing full-functioning machines that dispense cheques, cheque deposit and real-time balance functionality in the branches.

“Behind the scenes we have been upgrading the infrastructure to allow this to happen, so we have put in broadband connections to the ATMs, plus we have open software so we can deploy on anybody’s machine. This reduces costs when we upgrade our machines and it enables us to connect to web services. Our next move is that we want to be able to sell to our customers things like credit cards, personal loans, overdrafts, to people that have been pre-scored,” he explains. Many of the society’s branches are being refurbished as part of a big investment that Nationwide is making in its retail channels.

Nationwide is using Kalignite Software to build the new generation of its branch-based systems with the aim of being able to exploit all the services built for one channel on any other. “Our philosophy behind the scenes is to connect our legacy systems using web services,” says Scott-Evans.

But banks still face the problem of integration internally, with the multiple departments in their organisation, and externally with partners. Bob Westerkamp, client services support director at NCR, says that one of the biggest challenges for the banks is trying to manage an estate of equipment from a very siloed approach which prevents them from getting the bigger picture.

“The banks desire to find out who their top customers are and offer a differentiated level of service or a differentiated experience at the ATM. If I was one of the valued customers at the bank and I put my ATM card in, it needs to recognise me as a more valued customer than somebody else and tailor that experience to me by driving some marketing message to me or just enhancing the overall experience, so they retain those customers and continue to get new products in front of those customers,” says Westerkamp.

Case Study: HSBC Express Bank

HSBC has developed an ATM strategy around the fact that ‘cash and dash’ is not the only functionality that anATM can provide. In its branches, the bank has installed other devices, such as the Express Bank.

“This is where we would see a longer dwell time for the customer, so they are not going to have someoneon their shoulder who wants to withdraw their £50 while they want to do a more complex transaction,” saysDavid Nibloe, head of self-service at HSBC. “We substituted our old statement printers for Express Banks whichstill allow the customer to get their details, they can view their transaction account details or print them if theywant. They can look at all their accounts where previously they could only view their current account. Customerscan also transfer money and make bill payments or get a quote for a personal loan.”

HSBC has deployed over 450 of the Express Bank ATMs in its branches and on average they are used aboutonce every four minutes.

HSBC is also rolling out deposit devices. Diebold is providing a cash depository device that can accept up to200 notes and gives the customer instant credit to their account - which can be checked immediately onlinethrough the Express Bank. Wincor Nixdorf is providing a bulk cheque deposit device, which has cheque imagingand so gives customers the assurance they need for it to become well accepted.

These innovations are part of a wider HSBC branch refurbishment/transformation programme where it isspending upward of £400 million this year to change the branch by putting between 80% and 90% of the floorspace in the branch over to the customer, and only 10 - 20% for the back office.

“In branches where we have Express Banking Zones, we have found that customers need less counter space,which allows us to devote more space to meeting rooms and advisory services. We are investing in people outin the banking hall talking to customers, and this allows for more areas where they can sit down and talk to customersabout the products and services we provide,” says Nibloe. “Our belief is that doing the transformation iswhat helps the adoption. Just putting the devices into the branch alongside the existing counter service will meanpeople will continue to use the counter. What we are doing is not just an automation strategy, it is part of thestrategy to transform the space in which people are doing their banking - to provide good automation arounddeposit in the same way people have accepted good automation around cash withdrawal.”