Enabling Branch

Innovation: The

Powerful Role of

Self-Service

Technology

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Liam van Beek

Sr. Manager, Physical

Channel Strategy, BMO

Agenda

A changing landscape

• Understanding shifts in customer behaviour and their impact on the banking

industry

The response – Branch transformation

• Case study – BMO Harris Smart Branch

− The Smart Branch concept

− Executing with the customer in mind

The role of the ATM in the future

• The challenge – addressing key customer experience drivers:

− Simplicity

− Convenience

− Meeting needs

• Levers: Capability & Innovation

• Industry Opportunities

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The world is changing and it’s having a significant impact across

industries, including in banking

Bridging the gap:

How are we creating a better omni-channel experience and more effectively integrating digital technologies?

Changing Customer Behaviour:

How are we responding to shifts in banking behaviour?

Disruptors:

How are we responding to the

impact of non-financial retailers and digital

disruptors?

The future of cash:

How are we adapting to the rise of P2P

payments, contactless payments, virtual

currency and mobile wallets?

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A big part of the shift we’re seeing is centred on changing customer

behaviour

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Accessibility &

Innovation

Personal Assistance &

Convention

Digital Natives Individuals who are most

comfortable interacting digitally.

Traditionalists Individuals who have not adapted

to the use of digital technologies.

Digital Immigrants Individuals who have adapted to

varying degrees to the use of

digital technologies.

• Value convenience over direct

personal assistance

• Seeking innovative and engaging

options

• High usage of digital channels

• Comfortable with virtual relationships

and communication

• Digital adoption is not universal

• Fuller adoption can be facilitated by

increased exposure to digital options

• Selectively engage across channels

with continued value placed on

physical channels.

• Little to no digital adoption

• Derive value from direct personal

assistance and face to face

relationships

• High usage of the physical channel

As customers evolve how they choose to bank, their expectations are

also becoming more dynamic

• Customers are looking for a more

seamless and consistent

experience across channels.

• There is growing expectation that

the customer experience will be

personalized.

• Customer journeys do not always

start and end in the same

channel.

• Satisfaction across incremental

touchpoints does not reveal

overall satisfaction with the

cumulative experience.

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Call Centre

Online

Branch

ATM

Mobile

Data/CRM

Customer

The impact of this is reflected in evolving channel preferences which see

increasing reliance on digital channels to complete banking transactions

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United States

Online Banking

• 31% cite online banking as their primary

method and 74% report using online banking

within the last year.

Mobile Banking

• 35% reported using mobile banking in the last

year. The most common use was to check

account balances or recent transactions.

Physical Channels Banking

• 21% of respondents in one survey considered

the branch as their primary method for banking.

In another report 87% stated that they had

visited a branch in the last year.

• 14% cite the ATM as their primary method for

banking.

Canada

Online Banking

• 55% cite online banking as their primary

method and 77% report using online banking

within the last year. Payments are a key online

activity.

Mobile Banking

• 31% reported using mobile banking in the last

year. Usage of mobile banking is increasing.

Physical Channels Banking

• 13% of those surveyed considered the branch

as their primary method for banking with 40%

reporting a reduction in their use of in-branch

banking.

• 18% cite the ATM as their primary method for

banking. 85% of those surveyed use ATMs

when making cash withdrawals.

Sources: CBA – How Canadians Bank (2015), Federal Reserve - Consumers and

Mobile Financial Services (2015), ABA – Survey: More Consumers Embracing Mobile

Banking (2014)

Despite these changes the branch continues to be the focal point for

advice based sales

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Balance Inquiry

Bill Payment / Transfers

Administration

Report a problem / obtain status

Buy / sell investments

Make deposit

Advice

Sales

Branch

Call Centre

ATM

Online/Internet

Mobile

Another Way

“While customers have embraced multichannel access, they also

expect higher value from face-to-face interactions at their bank

branch”

Sources: McKinsey – The Future of US retail-banking distribution (2014), Ernst and

Young Global Consumer Banking Survey © July 2015 Digital Banking Report

Given the context, we can expect a material shift in how FIs leverage

their channels going forward

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Changing Customer

Behaviour

1. In-branch banking, though on the

decline, continues to be valued

in principal, if not practice, by

many customers.

2. Customers no longer bank in

channel isolation, they complete

tasks across physical and digital

locations.

3. Customers prefer to deal with a

person for complex and advice

driven transactions and opt for

digital or self-serve when

completing basic transactions.

Branch

Digital

Self-Serve

Call Centre

The branch will remain critical to

driving customer acquisition and

advice based sales but its role in

fulfilling basic sales/service

transactions will begin to diminish.

The call centre will shift to a supporting

role for other channels and will become

a core location for issue resolution.

The role of self-service channels in

fulfilling basic sales/service

transactions will increase as

technology advances and we develop a

wider suite of allowable

transactions/services.

Digital channels (with an emphasis on

mobile/tablet) will grow in importance

for driving customer acquisition/share

of wallet and fulfilling basic

sales/service transactions.

While many FI’s are investing to enhance their digital capabilities, we are

also seeing a dramatic transformation in the branch landscape

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Transaction Focused

Relationship and Advice Focused

Ass

iste

d S

erv

ice

Self-S

erv

ice

In the current state

ATMs are

transaction

focused.

Established

Emerging

Aspirational

In 2015 BMO Harris introduced The Smart Branch Concept as a way to

engage customers with innovative ways to bank

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Smart Branch is a small footprint, technology enable format with a focus on

consultative sales.

With customer experience in mind, we equipped the branch with key

convenience features, including:

• Integrated sales and service space with universal bankers capable of

meeting both simple and complex needs sales and service needs.

• Innovative self-serve technologies including enhanced ATM (e.g.

customer selected bill mix, mobile cash) and Live Teller capabilities

(ITM) to manage basic transactions.

• Digital displays to engage and delight customers.

• Instant Card Issuance to provide fast and easy access to accounts at

the ATM and POS.

• Video Expert capability to connect our customers with specialized

sales teams without the need to book an appointment.

• Employee facing technologies to encourage banker mobility and create

a fluid customer choreography in the branch.

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There were several factors driving the successful execution of the Smart

Branches in Chicago

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Customer Engagement

Change Management

Capability

Creating comfort with the format

and technology and evolving to

meet customer needs.

Preparing customers and

employees for the change.

Creating the right

capabilities to enable

customers to choose

where and how to bank.

So what does all of this mean for the ATM Industry?

Customers expect…..

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Simplicity

Using an ATM needs to be quick and easy: • Intuitive user experience and interface

• Minimize the number of steps it takes to complete a

transaction

Convenience

Create flexibility in how customers can interact: • Innovative authentication options

• Provide better access through partnerships

• Integrating with other channels

Their needs to be

met

We need to meet increasingly complex customer

needs: • Expanding ATM capabilities

• Creating a personalized experience

• Moving beyond service to sales

Can we move the needle and leverage the ATM to build better

relationships with our customers?

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Transaction Focused

Relationship and Advice Focused

Ass

iste

d S

erv

ice

Self-S

erv

ice

Established

Emerging

Aspirational Can we innovate

and increase ATM

capability to build

better

relationships?

There are several levers that we can pull within the ATM industry to help

build customer relationships

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Network and Operations Capability Innovation

What can’t customers do

at an ATM?

How will we challenge

ourselves to think

differently about the

function an ATM can

serve?

How am can I run my

network more efficiently

and most effectively

manage customer

information?

ATM enhancements that

exist, but are not widely

deployed

ATM enhancements that

are aspirational

Expanding capabilities and driving innovation will be key in the evolution

of the ATM Industry

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ATM enhancements that exist, but

are not widely deployed

ATM enhancements that are

aspirational

• Personalization

• Dynamic Currency Conversion

• Foreign currency

• Customer selected bill mix

• Mobile ATMs

• Better integration of branch

format and ATM access

• Referrals and customer

opportunities

• Biometrics

• Omnichannel interface and

preferences

• 360 view of customer portfolio

• Viable commercial and small

business solutions / coin option

• Sales capability

• Problem tracking & resolution

What are the opportunities for the industry?

1. How can we increase capability without making things more complex

for our customers?

2. How can we rethink the value proposition for the ATM and make the

shift to relationship building?

3. How can we break down barriers for those customers who don’t

traditionally think of the ATM for more complex servicing and sales

needs?

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