There's no stopping Asian bank's digitalisation

When it comes to Asia, digitalisation is crucial for businesses to succeed. No matter what the industry, sector or location, companies must be both online and mobile to deliver the experience their customers expect.

Slower to embrace digitalisation than other industries, Asia’s retail banks are now starting to re-invent their branch infrastructures using new technologies.

What has triggered this new found focus on branch revitalisation? How are the regions banks breathing life back into the branch?

Firstly, a snapshot of the situation at hand from the research findings of a 2012 study by SunGard and Celent which explored the impact of the internet, mobility and social networking on the consumer banking experience in South East Asia, as well as banks' readiness to meet changing consumer needs.

Overall, findings showed that while consumers do have a positive relationship with their bank, there is still room for improvement and the branch is a good example of this.

If we look at methods of financial management, the study revealed that consumers use their bank’s website to acquire information more than any other method (37%). While this shows sound investment in online channels, it also exposes flaws in the current branch model.

For example, customers self-educate a lot more and having access to lots of information from the banks website about new offers etc. means they can go into the branch better informed than the banks staff, negatively impacting the branch experience.

As approximately 80% of new product sign ups take place in the branch, banks must integrate the branch with other channels that have seen more recent investment, in order to mobilize and empower customer service staff with an accurate, single customer view to capitalise on untapped cross sell opportunities and drive sustainable profitability.

Historically, the branch served as the main channel connecting customers and banks but this has changed for two reasons.

First, during the 80’s and 90’s, banks turned their focus to digital channels to get consumers out of the branch, which was deemed as expensive due to equipment, rental and staffing costs.

Secondly, the waves of technological change have spurred consumers to opt for these digital channels as preferred engagement methods. As a result, the branch became a stagnant, archaic part of the bank and raised questions around its future role within banking.

However, although Asia’s consumers are highly connected, increasingly mobile and heavy users of social media, the reality is that branches still play a key role in today’s consumer banking relationship.

Our research confirmed that consumers in South East Asia continue to visit branches for advice or help that is either unavailable via self-service channels or that consumers feel is a more secure method of interaction than online or mobile banking.

Others simply prefer the personal touch. The majority of consumers still need human interaction and as far as their money is concerned, they need that physical reassurance that their money is safe.

The invisibility that comes with virtual channels makes this all the more important and despite the fact that digital banking brings new levels of convenience, we are not robots and we need the human side of banking to co-exist and complement online and mobile channels.

Customers are looking to the branch not only as the human face of their banking relationship, but also as part of the convenience they expect today. This is evident in the views of consumers who classed branch location as a top three factor when choosing who to bank with, according to the 2012 SunGard and Celent survey.

There remains an acceptance among consumers that some transactions, such as credit applications, require a branch visit.

And from a bank’s perspective, the branch remains a vital source of profitability in driving revenue from existing customers. So despite claims that the branch has seen its day, branch networks have continued to grow right across the world.

So banks are increasingly starting to recognise that the branch needs to evolve with the digital age to complement the customer experience across all other channels. With that, the digitalisation of the branch is born. Banks are aware that they need to meet the expectations of their increasingly tech savvy customers.

This is driving the need to digitalise the branch using technologies that enhance the customer experience. In doing so, banks can mobilize branch staff, automate teller services and better identify cross sell opportunities that will not only enhance efficiency, lower costs and drive long term profitability for the bank, but will be of real value to the customer.

All of these are game changing assets in offering a compelling customer experience.

Across both developed and emerging markets, the digitalisation of the branch is underpinned by three key drivers – customer service, increasing competition and of course, a reduction of costs.

The Asian bank of the future accepts that the digital environment presents a new dimension to their ability to enhance client relationships. The digital evolution is not about to start, it is clearly already underway.

In Asia, customers are clearly making headwinds in the digital realm – so it is up to the banks and financial industry to ensure they are willing and able to follow.