Besides, today's retail banking customer expectations about what they need from a branch are shifting rapidly. How financial institutions approach this digital transformation will be of paramount importance throughout the next decade.
According to the latest global market study by IDC, by 2019 total IT spending by financial institutions worldwide will exceed $310 billion. IT services will make up one-third of that spending and much of these services will be spent on transforming the institution into digital platforms.
Moreover, specific to the bank branch channel, almost $20 billion will be spent worldwide. With such a large investment to be committed to remaking the branch network, banks must plan to make investments and understand each phase of the transformation as it pertains to any individual banks' business priorities.
Digital Transformation Includes Lifestyle Assessments
IDC believes that the most important concept to consider when discussing digital transformation at the branch level is recognizing the need to correspond with the customer (and employee) digital lifestyles.
This could mean opt-in tracking of consumers' handheld devices as a way of offering a differentiated concierge service when they walk into the branch, or possibly enabling financial advisors to visit wealth management customers at their homes, carrying the near-full capability of the branch with them.
"The challenges faced by banks when it comes to transforming their bank branches from a transaction center into a sales center have been a continuous obstacle for many years," said Marc DeCastro, research director at IDC. "But the time has arrived when the technology required to truly transform the branch has reached a point where the benefits can no longer be ignored."
The end result of transforming the branch will be when the right mix of technology and support personnel allows the bank to immediately engage with the customer -- as opposed to the customer engaging with the bank -- and both the customer and the institution can mutually reap the benefits.
IDC analysts believe that there are several transformation milestones that must be followed, in order to help facilitate the process and achieve optimal results:
- Audit the existing bank branch network.
- Benchmark and measure KPIs for the branch network.
- Assess the technology solutions relative to the strategic direction.
Once a new solution has been identified, and due diligence completed, then the implementation of the new digital system -- inclusive of any required branch workflow modifications -- will need to be carefully deployed.
When the digital system has had a chance to stabilize and be implemented on a larger scale within the branch network, then there is likely to be opportunities for refining the applications and making modifications.