Tech Innovations That Support Branch Renewal

When it comes to retail banking, we've all been told the branch is where it's at--whether the "it" in question is customer presence or deposit generation. Yet, this latest push behind branch renewal isn't all about new bricks, fresh paint, and slick merchandising. Technology budgets that support the channel will also be boosted at the largest banks, which have platform automation separate from core processing. For this group of about 30 banks, spending to refresh aging branches or support new branch rollout will increase between now and 2007 to up to $1.5 billion collectively, according to recently issued report by Financial Insights, a research division of IDC based in Framingham, Mass. According to another study, by Datamonitor, U.S. banks will spend $1.4 billion on branches by 2006, up from $800 million in 2003. Meanwhile, IBM, Microsoft, and a constellation of niche vendors in both camps have begun to emphasize branch offerings that promise greater productivity by screening out "visual noise" and supplying timely information to frontline staffers. (Lowering overhead cost is also part of the proposition.) But banks of all sizes want new types of applications in their branch environment. Anuja Agrawal, corporate vice-president of strategic products for Aurum Technology, Plano, Texas, says that the community bankers she's spoken with ask for a "one-look" synopsis of the customer's history and value in a single application. Agrawal also sees requirements related to the Office of Foreign Asset Control (OFAC) and the Patriot Act spurring new application development. In terms of technology, branch renewal is likely to play out in the following ways, based on interviews with analysts and a wide range of vendors: * Easy-to-use, web-based customer relationship management for CSRs and tellers, too. Customer relationship management systems do little good if they're trapped in an ivory tower, notes Allen Trefler, founder and CEO of Pegasystems, Cambridge, Mass. The business process management firm can rapidly build custom applications for the front-, middle-, and back office and, as part of the mix, typically embeds customer relationship management functions such as lead processing. Siebel Systems, Inc., San Mateo, Calif., also sees a bigger role for customer relationship management in the branch. One U.S. customer, PNC Bank, has done extremely well with teller-based systems that help staffers identify opportunities, according to Ashwin Goyal, director of Siebel retail finance. "PNC has seen its customer acquisition rate up 19% and its customer retention rate up 12% in the five years since it began to reinvest in branch-based customer service and sales," says Goyal. He believes that other equally serious retail banks will follow suit and try to create teller applications that can boost selling power. * Applications with more intuitive user interfaces for all customer service requests. "Increasingly, tellers will do account maintenance functions that have, until recently, been the sole bastion of platform bankers." This observation comes from Richard Bell, research manager for Financial Insights. "The idea will be to free up the platform group to sell or, more broadly speaking, to distribute the workload in a fluid way as it makes sense." As an example of a teller function that has gotten increasingly automated, Bell offers the cashiers check: "It used to take three or four minutes and needed to be created by several mechanical contraptions. Now, the whole operation takes 30 seconds." Overall, teller applications are getting "smarter" in terms of offering better presentation, embedded decision support, or having logical workflow capabilities filtered into the design in order to help bankers cope with high turnover and steep performance requirements, notes Guy Hilbert, vice-president of industry solutions with Kana, Menlo Park, Calif. …