Modern Banking: From Brick and Mortar to Networks and Hard Drives
By J. Marc Ward
Recently, national headlines have been filled with bank office closings. Iowa banks have not been hit as hard, but many banks have had to reduce their teller staff to a fraction of what it was. With foot traffic down, the cost of a brick and mortar location seems untenable. Why pay for space and employees when a mobile app and an ATM will increase revenue? But reducing the number of branch locations raises its own problems. In the banking world consumers are used to using smartphones, but not every issue or transaction can be handled by an iOS system. Marketing uses the term “phygital”—physical plus digital—to describe how banks should respond to the changing needs of their customers. Banking can benefit from the blending of physical and digital experiences to cut costs on underused branch locations, while maintaining the customer service standards the industry is known for.
Some Iowa banks have already evolved to be more “phygital” by using personal automated tellers (PATs). PATs are essentially ATMs with a twist—video tellers. PATs are full service ATMs for customers and non-customers, available 24/7, and have video teller capabilities during teller hours. Terry Greenley, Chairman of County Bank, has helped implement PATs at locations in Iowa (Sigourney, Montezuma and Williamsburg). Their tellers stream from a teller center in Sigourney, so County Bank’s customers can do things that would normally require a teller at a drive-up bank. PATs have helped County Bank to open new offices that are a little different than typical ones. They do not have tubes, drive-up bank windows or the large overhangs that bank offices tend to have. Instead, they have drive-up PATs. The technology has even allowed County Bank to have a PAT in Victor, Iowa, a community where the bank does not have a brick and mortar presence. At County Bank, PATs have helped reduce bank drive up times and have increased customer access to tellers. County Bank is now able to offer expanded teller hours through PATs. Greenley says the community loves it; he has seen customers of all ages who are comfortable using PATs. As with any new technology, you have to make sure the customers understand how to use it. Once they do, PATs are just one of many ways technology can be used to improve the banking experience.
Greenley warns that PATs are an intermediate step in banking technology. The banking industry will continue to rely more heavily on technology to address customer needs. Within 15 to 20 years, PATs may be outdated. However, PATs are a great first step towards phygital. Banks have several more options to incorporate technology in personal banking. Some strategies banks could use include:
- Arming tellers with each customer’s transaction histories, so tellers are better prepared to meet customer’s specific needs;
- Adding “ask an expert” features to online banking to help answer questions customers might have; and
- Storing customer information so that customers’ forms auto-populate with information like their addresses and names.
The future of banking involves creating a uniquely helpful digital experience that makes the physical experience that much easier. Community banks that find new ways to incorporate technology into the banking experience will be able to keep up and evolve with the changing needs of customers.