Self Service in Retail Banking

Developing and Implementing a Successful Self-Service Strategy

Publication Date	June 2007
Publisher	VRL KnowledgeBank
Product Type	Report
Pages	235
ISBN Number	not applicable
Product Code	VRL00015

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Summary

Few organisations have a commitment to maximising the functionality and role of customer-activated, customer-facing terminals beyond the conventional ATM. This is surprising as an integrated self-service strategy has been clearly demonstrated to bring results across a number of key performance indicators. The present situation in self-service banking can be summarised by the following statements: The existing range of hardware can automate routine branch teller transactions.

Offer extensive service facilities and support personalised sales tactics. There is compelling evidence that self service is appropriate and effective in any segment, including small business. For the majority of customers, self service is a straightforward and beneficial experience, provided they receive sufficient support. Much of the development and management of any self-service estate can be outsourced to a growing body of increasinglycompetent service companies. Smart suppliers now typically carry more knowledge of self service than most of their clients
Most organisations have neither sufficient understanding nor a strategy that is anything other than piecemeal and have been unable to create processes that fully capture the benefits of self service. Self Service in Retail Banking is a timely and much needed report. It is the first comprehensive survey of the fast-developing world of self service. In addition David Cavell offers practical advice on how to approach the development and implementation of self-service strategy.

This information is clearly and simply presented, with photographs, diagrams and illustrations throughout.

This builds into a strategy template which presents the following 'ten-point plan'f for success:

Step 1: Start by developing a full understanding of the range of solutions, and the ways in which many of these are already being used. It must also address all the implications of a shift to a new generation of technology, for example, required upgrades to telecommunications.
Step 2: Build a vision. Step 2 is about the development of the long view. This is the point at which all the knowledge acquired in the work undertaken as Step 1 must be applied creatively to the needs of the organisation. It creates a base from which to define new projects and developments.
Step 3: Now communicate. Communicating the new ideas and concepts, and showing the audience how and where else it is already delivering benefits to other operators, is critical to creating a positive climate.
Step 4: Ensure self service is properly accommodated within branch design. The changing nature and volumes of transactions will require alterations to the inventory of equipment.
Step 5: Train and incentivise staff to educate customers and build a dialogue with them.
Step 6: Revisit the case for outsourced management of the self-service network. Outsourcing is a well-established practice, and this step proposes that any overall development plan or strategy for self service should include taking a fresh view on this option.
Step 7: Set up a project to eliminate the teller completely. This is an area where self-service solutions can have a high impact. This report evidences the availability of sufficient functionality to achieve this objective. The hard and soft benefits are also evidenced in both case studies and supporting papers.
Step 8: Identify and research projects that provide alleviation of counter or teller workloads. Issues to be addressed within this component of the strategy concern themselves with leveraging the existing self-service infrastructure for valuable short-term effect.
Step 9: Get up to speed on 'access issues'. A significant body of both knowledge and capability is building across the world to guide and provide solutions that better enable the disadvantaged and disabled to access many forms of customer- activated terminals. Many of the views of the related consumer bodies have now, directly or indirectly, been incorporated within legislation.
Step 10: Manage, monitor and modify! This final step concerns itself with two critical requirements. The primary requirement is to create a multidisciplinary management vehicle that will itself examine, understand and support the implementation of a new approach to self service. The second (but not secondary) requirement is an ongoing onus on the banker to observe the progress.

This report will help you understand the following key points:

The vital technology issues explained
How to achieve effective implementation, including training and incentivising staff and the case for outsourcing
Developing your brand using self service
Understanding the wants and needs of self-service customers, and finding out how different segments respond
Discovering how self service can influence the overall customer-bank relationship
Key compliance and 'access issues' identified
Preventing fraud

This report will help you benefit from international case studies and analysis of the following:

ABSA
ANZ
Bank of America
Barclays Bank
BT's Agile Bank
CIBC
Citibank Microfinance
DBS
First Data International
First National Bank
HSBC
ICICI
ING Vysybank
LINK
Nordea
Sampo
OCBC
Shinsei Bank
SpareBanken 1
Three Sparkassen
Wells Fargo

Who should buy this report

Heads of retail banking, customer service and marketing managers who want to understand industry best practice and the lessons they can take for their own business from recent experience - both good and bad - so they can assess their own prospects for self service Heads of operations and IT who need to understand the back-office issues involved in launching and maintaining a successful self-service operation.

Content

Executive summary
- Section A: Overview
- Strategy development a practical guide
- Section B: The case studies
- Large-scale branch-based self service
- Self service and the branch over time
- Heavy focus on the ATM
- Other issues
- Section C: The customer
- Section D: Automating the teller
- Section E: Fraud
- Why read this report?
SECTION A: OVERVIEW
- 1. A review of self service
- The scope of this report
- Channel objectives
- Representing and projecting the brand
- Protecting and developing existing profitable relationships
- Acquiring new relationships
- Meeting critical service needs
- The 'branch' in different forms
- The Bangkok Bank Bualuang Express Booths
- And the customers!
- The ATM
- Self-service functionality
- The ATM
- DBS/POSB (Post Office Savings Bank), Singapore
- Standalone automated depositories
- Coin or 'change' dispensing machines
- Kiosks
- Other terminals
- The software
- Biometrics
- Fraud
- Synergy with payment cards
- The ATM Industry Association (ATMIA)
- Strategies not pilots!
2. Self-service strategy development why now?
- An holistic approach to self service
- Step 1: Understand the hardware, software and communications solutions
- now available
- Step 2: Build a vision
- Step 3: Now communicate and keep communicating!
- Step 4: Ensure self service is properly accommodated within branch design
- Step 5: Train and incentivise staff to educate customers and build a dialogue
- with them
- Step 6: Revisit the case for outsourced management of the self-service
- network
- Step 7: Set up a project to eliminate the teller completely
- Step 8: Identify and research projects that provide alleviation of counter or
- teller workloads
- Step 9: Get up to speed on 'access issues'
- Step 10:Manage, monitor and modify!
- Conclusion strategies not pilots!
SECTION B: THE CASE STUDIES
3. Barclays Bank Group, UK
- Background
- Barclays and channel development
- The current self-service facilities
- ATMs
- Depositories
- Kiosks
- Interfacing with the customer
- Conclusion
4. BT, UK
- A commitment to channel technology
- The return of the branch and developing self service
- The Agile Bank
- The Agile Bank and self service
- An industry forum
5. The German Sparkassen
- The German market
- A major force
- World-leading adopters of self service
- One eye to the future
- Progress to date
6. Sparkasse Forchheim, Germany
- Self service within the 21st century branch
- The retail challenge
- Bank branch of the year 2005-2006
- Maximising self-service branch footfall creatively
- How to move the machines?
- Conclusion
7. Sparkasse Herford, Germany
- Driving large-scale self-service implementation
- The Herford principal office
- The 24-hour lobby
- The main banking hall
- Converting to the new model
- Conclusion
8. KreissparkasseWiedenbrck, Germany
- Background
- The self-service inventory
- Building on the self-service platform
9. HSBC, UK
- Thinking outside the box!
- Payphone locations
- Solution and implementation
- 10. The Indian market
- Dynamicand divergent?
- Controlled channel development
- Reaching out to the unbanked
- Citigroup Microfinance
- A role for self service
11. ICICI Bank, India
- A market leader
- A developing channel strategy
- ATM functionality
12. ING Vysya Bank, India
- Group background
- Delivery channel heritage
- The Self Bank concept
- A strategic building block
13. The LINK group, UK
- Background
- A window on the industry
- The LINK group services
- ATM sharing
- Branch-banking counter services
- Mobile banking services
- Faster payment services
- Avantra
- 2006 and beyond
- The next generation
14. Nordea, Sampo and First Data International, Scandinavia
- Nordea
- Sampo
- The Baltic opportunity
- Developing cash access
- Managing the network
- Conclusion
15. North America
- Background
- North American pioneers
- Customer preferences
- Canada
- The US
- Forward with the ATM?
16. North America three studies in ATM innovation
- Canadian Imperial Bank of Commerce, Canada
- Bank of America, US
- Wells Fargo, US
17. Shinsei Bank, Japan
- Background
- The development of Shinsei Bank
- Channel strategy
- Shinsei's branch-based self-service channels
- Empowering the customer
- 21st century showcase
18. The South African market
19. Absa Bank, South Africa
- A major player
- Delivery channel headlines
- Accessing the Absa ATMs
- The developing Absa self-service capabilities
- Cash acceptance
- Self-service kiosks
- The internet kiosk
- Software platform
- Laying the foundations
20. First National Bank, South Africa
- A major national player
- Delivery channel strategy
- FNB ATMs an overview
- Functionality
- Accessibility (including availability)
- Security
- Technology
- FNB ATMs and the customer experience
- Conclusion
21. SpareBank 1, Jevnaker, Norway
- Background
- The Jevnaker branch
- The self-service inventory
- ATMs
- The internet kiosk
- The automated depository
- The rationale for the automated depository
- Conclusion
22. Examples of key self-service developments since the 1990s
- Early self-service branching
- Mass-market banking through self service
- Self-service terminals
- Multimedia kiosk development
- ATM cheque encashments paying notes and coin
- Junior banking
SECTION C: THE CUSTOMER
23.Migration to self service and access for all
- The role of branch staff
- Customer migration
- Targeting and measuring success
- Positioning for success!
- Access for all
- Access to ATMs: UK design guidelines
- Access and location
- Location and layout of operating features
- Operating instructions
- Screen design
- Keypads
- Card swiping, insertion and withdrawal
- Outputs
- Security and privacy
- Installation, maintenance and operating arrangements
- Appendices
- Moving forward
24. Self-service marketing
- A new generation of capabilities
- Personalising the communications
- Building and managing the campaign
- Advertising
- The customer experience
- Oversea-Chinese Banking Corporation, Singapore
- ATMs and customer relationships
- Raising the bar
25. Self service and the prepaid card
- Alleviating the teller workload
- The payroll card
- The remittance card
- The 'social' card
26. Beyond the branch
- New concepts and locations
- The automated banking kiosk
- Worksite banking
- The mobile van
- Drive-up and drive-through banking
- The bottom line
- ANZ Bank, Australia
- Channel commitment
- ATMs and payphones innovation in self service
SECTION D: AUTOMATING THE TELLER
27. Introduction and The future of cash
- The future of cash
- Anonymity
- Convenience
- Cost
- Contingencies
28. The core teller transactions
- Deposits notes, coin and cheques (or other paper)
- Note and coin automated depositories
- Note and cheque-accepting ATMs
- Cash recycling
- Envelope depositories
- Coin acceptors
- Transaction receipts
- Transaction scrutiny
- The 'night-safe' service
- Withdrawals notes and coin and multicurrency
- Withdrawals cheque encashments
- Withdrawals cheque drawn on a customer's account
- Coin for notes
- Currency exchange
- Inter-account transfers
- Bill payment
- Overseas remittances
29. Teller transactions added value and relationship development
- Beyond the cash!
- Incentives and rewards
- Trust and familiarity
- Identifying the customer
- Recognising and greeting the customer
- Handling simple queries
- Relationship-building dialogue
- Product sales
- Local and national affinities
30. The analysis and migration of teller transactions
- Understanding the potential
- The survey
- The workshop
- Data gathering and analysis
- Conclusion
31. The automated depository the business case
- A well-understood machine
- The hard numbers
- One-time costs
- Running costs
- Hard benefits
- The bottom line
32. Outsourced self-service management
- A well-established practice
- The Wincor Nixdorf approach
- The contract and service level agreement
- Procurement and installation
- Machine monitoring
- Machine availability
- Switching, authorisation and settlement
- Maintenance
- Why outsource?
- A caveat: Other client issues
- Conclusion
SECTION E: FRAUD
33. ATM fraud techniques
- The Diebold papers
- Card theft (at the ATM)
- Card skimming
- Shoulder surfing
- Fake PIN pad overlays (and other fake equipment)
- PIN interception
- Accessing cash with false presenters
- Accessing cash without debiting an account
- Transaction reversal
- Burglaries
- Operational fraud
34. Key issues and opportunities
- The NCR papers
- What does the consumer think?
- Bank of New Zealand
- Card technology comments
- Internal software security threats
- ATMs and physical security
35. Analytics and scoring in ATM fraud prevention
- The Fair Isaac papers
- The importance of speed and thoroughness
- Essentials in real-time fraud detection for ATMs
- Dynamic cardholder profiles
- Advanced neural networks
- Applying the techniques
- Grupo Financiero BBVA Bancomer (GFBB)
- Conclusion
List of figures
- Figure 1.1: Biometrics market by technology, 2007 (%)
- Figure 1.2: The ATM pictogram devised by ATMIA
- Figure 3.1: Barclays' Project Eagle branch trial at Abington Street, Northampton
- Figure 3.2: Barclays ATMs with the new 'tone of voice'
- Figure 3.3: Barclays' Colindale branch
- Figure 4.1: The Agile Bank at Ad Astral Park demonstrates the latest in
multichannel banking
- Figure 5.1: The Knax comic a magazine for young Sparkassen customers
- Figure 6.1: A birds-eye view of the Sparkasse Forchheim branch
- Figure 6.2: Customers are guided to the service they require by subtle colourcoding
- Figure 7.1: Sparkasse Herford created by mergers
- Figure 7.2: The 'new-look' Sparkasse Herford branch, featuring Crossini's
coffee shop, 24-hour lobby, an airy banking hall and the Knax Klub
- Figure 8.1: The principal branch in Wiedenbrck
- Figure 8.2: A panoramic view of the branch
- Figure 8.3: The spacious self-service lobby
- Figure 12.1: A ING Vysya Bank branch
- Figure 13.1: ATM locations, 2006 (%)
- Figure 13.2: ATM withdrawals-balance enquiry split, 2006 (%)
- Figure 15.1: Usage of distribution channels in Canada, 2000-2006 (%)
- Figure 15.2: Functionality of ATMs in terms of services offered (%)
- Figure 16.1: CIBC ATMs at a flagship branch
- Figure 18.1: South African banking system transactions, 2003-2005 (m)
- Figure 19.1: An Absa Bank mobile ATM
- Figure 19.2: An Absa Bank self-service kosk
- Figure 20.1: A mobile FNB ATM unit
- Figure 20.2: An FNB branch ATM
- Figure 21.1: SpareBank 1, Jevnaker
- Figure 21.2: Branch and lobby facilities at SpareBank 1, Jevnaker
- Figure 22.1: An Emirates Bank meBANK lobby
- Figure 22.2: An Interact stand-up multimedia terminal
- Figure 22.3: A 'Remote Adviser' facility in a Nationwide 'member access point'(a small highly-automated branch)
- Figure 25.1:Money transfer market industry growth, 2000-2007 (US$ bn)
- Figure 26.1: A Hypo Bank advertisement announcing its new payphone-style banking booth
- Figure 26.2: A Co-operative Bank walk-in kiosk
- Figure 26.3: An early Bank of Scotland onsite banking unit
- Figure 26.4: A modern drive-up ATM housing
- Figure 26.5: Ideas for a standalone drive-up/drive-through unit
- Figure 26.6: The ANZ Telstra integrated ATM and payphone booth
- Figure 30.1: Customers' arrival volumes
- Figure 30.2:What customers do at the teller
- Figure 30.3: Teller service improvement
- Figure 30.4: Branch optimisation
List of tables
- Table 1.1: ATM growth by region, 2005-2011
- Table 3.1: Barclays' new signage policy
- Table 4:1: Applications demonstrated at the first Agile Bank concept branch
- Table 5.1: Germany: Payment infrastructure number of terminals, 2001-2005 (000s)
- Table 7.1: Sparkasse Herford: Share of transactions conducted by self service (%)
- Table 13.1: Average transaction values, 2005-2006 ()
- Table 13.2:Withdrawals and balance enquiries, 2005-2006 ( and %)
- Table 27.1: The pros and cons of cash
- Table 34.1: Fraud threats and solution options