The debate over the importance of a bank branch continues to rage on. While emerging technology is creating strong trends in favor of digital channels, the momentum for innovation in branch banking is also growing stronger. Banks are experimenting with new formats, new locations, different sizes, and more in-branch technology. In fact, this study by Fiserv on Expectations and Experiences: Channels and New Entrants brings out some interesting statistics on how and why various customer segments are using a bank branch versus digital channels. On the other hand, the strategic importance of physical locations is being heightened by even Amazon.com opening up physical book and grocery stores!
And now, the discussion has taken on a new dimension with the advent of Augmented Reality (AR) and Virtual Reality (VR). Will innovations in this space finally enable the bank branch to be replaced? In this latest article, Jim Marous, tackles the question of how banks can meet the needs of face to face interactions through AR and VR solutions.
Indeed, the case for AR and VR enabled experiences makes a lot of sense if we think of emulating a current bank branch virtually. Augmented capabilities do allow for familiar experiences digitally without having to physically visit a branch. In addition, according to a 2016 Forrester study, customers will migrate and adopt the channels that offer the least friction. The use of AR/VR based augmented channels can significantly reduce the friction of visiting the branch for in-person interactions.
However, we also need to consider the various dimensions of personal interactions because use of technologies without addressing the underlying drivers will not meet the goals of effective customer engagement and service. The physicality of an interaction is only one of the dimensions that go into defining the future of banking and financial services. That’s because time and attention intensive channels although hi-tech may not reduce overall friction as expected. As the Forrester study highlights, growing customer expectations imply that assisted channels are often viewed as escalation or last resort mediums by many customer segments, rather than as satisfiers or delighters. Hence, to maximize the benefits of augmented channels, it’s important for banks to integrate multiple areas to create an experience that customers will love.
So we could look at the problem in the form of two parallel tracks of development:
- Track 1: Launching augmented and other digital & technology innovations
- Track 2: Building the bank of the future that engages customers through the right experiences
It’s a moot point that the technology innovations from track 1 will continue to be leveraged extensively to deliver experiences and transactions more efficiently. But what should be delivered? This question can be answered through the second track that defines what a branch – and a bank - is ultimately likely to become. To make the right predictions, and drive the right innovations, we need to understand the kind of usage we are innovating for.
Let’s review some of these considerations:
- The first one in my opinion is about creating transactions from experiences, and not vice versa. This essentially means that we interact with the customer by being an orchestrator of value. Examples of this include creation of wider, contextual experiences with banking as the center-point of such an integrated ecosystem made up of players from different industries. We’ve seen banks do this by linking day to day transactions such as restaurants and retail with savings for the future. Solutions such as these on APIs and digital identity solutions from Capgemini are helping to bringing ecosystems of partners together. This ecosystem building is important because non-bank entities are already moving in to take the lead in customer engagement in today’s highly competitive market. In the end, the strategic battle is for customer engagement, arguably even more than the standard financial services that support it.
- New technologies such as AR/VR, chatbots, and mobile must be connected with underlying CX systems using marketing and service automation. That’s because many of these exciting innovations assume that information will be available in context when needed. A common example of this is the visualization of various customer accounts with tips on next best actions such as investing or spending. Customers also expect to continue their conversations beyond a single touchpoint. This implies that we must be able to maintain context not only across channels, but also from one product to another. Customers must view the bank as one entity supporting their overall engagement and purpose instead of fragmented experience across many different functions, channels and businesses. Augmented channels will require a significant amount of personalization and prediction of future state of a customer’s portfolio. To support this need, solutions such as smart customer analytics and all-channel experience will be needed.
- A majority of customers begin their search on 3rd party information sources. If we expect to reduce friction and make augmented channels attractive for customers, then eliminating or minimizing the need for external reinforcement must be a central goal. This means that we must be ready to provide advice on broader financial goals putting the customer at the center, not just on the products that we can sell. For example, a common reason for customers visiting a branch is to understand products in more detail and evaluate if they are right for them. However, so long as we focus only on our products, we cede control of the customer engagement to third parties (such as aggregator sites) that are helping the customers decide among multiple available options. Being one of the many follow up information sources is not enough.
These are just a few of the many considerations in defining the right customer experiences to maximize the adoption of augmented channels. In my view, just as every digital innovation has done in the past, innovations in AR and VR will undoubtedly carry more in-personal interactions. They will also create new opportunities. This is especially true when they are focused on servicing well specified transactions. However, thinking broadly about the causes of friction in customer experience and moving to address them is vital for long term customer engagement.