By Angus Hislop, Director, Internet Business Solutions Group, Cisco
In retail banking, the telephone or the Internet is suitable for managing customers' day-to-day activities, but when it comes to more complex banking such as choosing investments options, managing mortgages, or dealing with small business operations, bank customers expect face-to-face meeting with a specialist advisor. This is especially true in the growing "mass affluent" market, which in the financial services industry generally refers to individuals with between US$100,000 and $1,000,000 in liquid assets. But specialists are expensive to hire, train, and retain. A bank can't afford to have a full-time advisor for each kind of offering available in every branch, which means these specialists have regional responsibilities, either moving from branch to branch on a regular schedule, or, especially when products of higher value are involved, making appointments with customers as needed.
There are two problems with this approach. First, it requires a great deal of time from a valuable sales force. The best specialist advisor spends, on average, 25 percent of his time dealing with customers.
Second, there is a significant amount of "leakage." Customers often miss appointments or don't schedule them because they can't get the person they want at a convenient time. Maybe they come back later; maybe they go to a competitor. The banks I work with estimate this leakage at 15 to 30 percent; a January 2008 Forrester report entitled "Banking Industry Using Video to Better Meet Customer Needs," put it at the high end of that range.
It's no wonder there's remarkable interest in TelePresence among retail bankers. TelePresence is a set of technologies that uses broadband communications, high-quality audio, and high-definition video to deliver the experience of a face-to-face meeting for people who are geographically dispersed. Unlike video conferencing, TelePresence presents attendees life-size so that virtually all of the visual cues of an in-person meeting are available, making it the first IP-based technology with the potential to eliminate the need for a face-to-face meeting.
Putting TelePresence in branch offices offers many potential benefits to the retail banking industry. First, of course, it offers a way to make much more effective use of specialist advisors, who can spend far less of their time traveling, and conduct a greater number of actual customer meetings. This same efficiency may also boost staff retention by making jobs less stressful and more financially rewarding.
Second, by putting customers in touch with precisely the right person on a schedule that fits their needs (often while they're at the bank on different business), and by enabling more frequent contact, TelePresence can boost sales and customer satisfaction and reduce the chance of losing customers to a competitor. Third, it makes compliance and risk management easier, because you can record a TelePresence meeting — something not generally possible with physical face-to-face meetings.
These recordings can provide solid evidence of regulatory compliance if necessary. Finally, there are the environmental benefits. Consumers are increasingly interested in the environmental stance of the companies they do business with, and TelePresence reduces the need to travel.
Of course, implementing TelePresence requires some effort, and there are four issues that banks need to understand and address before deploying TelePresence:
- The perception that it's too expensive. Much of the marketing of the technology has been to corporate boards or similar environments where cost is less of an issue. But there are lower-cost alternatives to the multiple-screen TelePresence systems, and these yield many of the same benefits and are perfectly acceptable to consumers.
- The sales conversion ratio possible with TelePresence. In the United Kingdom, face-to-face meetings deliver about a 40 percent conversion rate, while inbound telephone delivers about 20 percent. TelePresence is likely to fall somewhere in between. I believe that it will come close to 40 percent, and might be even higher if it can enable a better match between customer and advisor. However, if its effectiveness lies closer to that of telephony, then the price will have to come down further before it becomes attractive to retail bankers.
- Bank branches have less bandwidth than customers have at home, and can't support the technology. This is a short-term issue, and more pressing in some countries than in others; most large banks are in the process of upgrading branch bandwidth.
- Organizational obstacles. Each sales channel in a retail bank is likely to be the responsibility of a different executive. Where does TelePresence fit in? You can argue that it's an instrument for direct (telephone) sales, or that it belongs to the branch because that's where it's installed, or that it is an extra tool for the advisor sales force.
This is why it's critical to have the CEO or another executive as a sponsor. TelePresence is a transformational technology that changes the way a bank does business on a fundamental level. Only the highest levels of management have the power to move a TelePresence project past the pilot stage into a full-scale rollout.
Fortunately, retail banking CEOs seem very cognizant of the potential value of TelePresence to their business. Income from the affluent and from more complex products requiring advice accounts for half of the banks income, and TelePresence promises a stunning competitive advantage. Banks can get more profit from their specialist advisors, and also likely capture a higher market share among younger clients, whose impatience with banks is matched only by their openness to new technology.
These advantages are not easily duplicated by latecomers. It takes effort to train the staff — not only the specialists directly involved, but all the people who support them or refer customers to them. Banks need to make TelePresence attractive to customers from the start by getting details right through a test-and-learn process and by appealing to innovation and environment conscientiousness — or simply rewarding early customers with a discount. And, of course, reworking the bank's processes is a critical part of the equation. Careful planning should align technology with business objectives and customer priorities, while factoring in compliance and risk management. With the right preparation, the benefits of TelePresence promise to be enormous.
