As we all were lockout with the COVID pandemic threat, a significant shift in the customers’ habits was observed. People quickly adopted digital communication - work meetings, conferences, seminars, concerts, education, and different social events moved to online video communication. The restricted access to bank branches was also easily substituted with online or mobile banking usage, video chat with the financial institution, and this a trend confirmed by various market players.
The Retail Banking Research (RBR) report regarding the utilizing of video banking, suggests that “financial institutions can provide teller services at self-service machines that are not available at traditional ATMs. Some of the examples are not being able to withdraw higher amounts at Nedbank’s terminals in South Africa, or to receiving mortgage advice, like with Bank of America machines in the USA. In addition, video ATMs offer a higher level of privacy: Singapore’s DBS Bank deploys VTMs in soundproofed booths, where customers can have their debit cards reissued, among other services. Another good illustration of technology is given by Brazil’s Saque e Pague’s “unidade digital” meanwhile, remote video transactions can be carried out in a private room in the branch.”
We should be honest that video banking as a service and technology has not had quite impressive history on the market, but it was still available on the market for the last decade. So far, the video hasn’t made it to become the leading retail banking delivery channels. Due to numerous benefits, the financial institutions that offer video banking tend to love it, but so do consumers who use it. However, it couldn’t reach the glory of online and mobile banking. In the end, the new normal suggests that there is now at least a good possibility that video banking is set to break out in the era of social distancing. Especially on smart devices, they could, at last, come into focus on both sides - banking experts and customers.
As the daily banking operations are easily covered by internet banking and mobile apps, a vast number of banking services requiring consultation and expert iterations are impossible without a remote communication channel.
The pandemic situation has strongly affected banking personnel also. The higher demand for video calls has resulted in reallocating branch employees, they already have assigned or redirected calls from contact centers to the relationship managers in the branch network.
In the next few paragraphs, we will widen your knowledge on this recent topic without going deeper into the technical analysis of the channel realized by financial institution retail managers.
As earlier mentioned, video banking does not have the fame of other online channels and payment services. However, it entered the retail banking universe with the growing popularity of tech solutions like Skype, Facetime, Viber, WhatsApp. Again, a new service introduction is driven by technology companies and mass customer acceptance, not purely banking innovation.
Historically, the digital transformation in the banking field started with the implementation of card payments, followed by internet banking adoption and the mobile apps boom in the early years of the second decade of the 21st century. The digital banking doctrines raised their numbers from Bank 2.0 to 4.0 and evolved from remote banking, through multi-channel and omnichannel banking. There is one existential topic to bother the banking society - how to improve the customer experience in the digital world and keep the emotional element of face to face communication. We can say with conviction that an essential part of the omnichannel banking theory is including video communication channels as the one that keeps the closest contact with customers through it.
Video banking was introduced mainly by the top market players like Barclays, Standard Chartered, China Guangfa Bank, Bank of China, and others in the mid 2010s, mostly due to the branch network optimization and introduction of fully-automated alternatives like Video Teller Machines.
Although video banking has many different forms, which can easily be integrated with all digital channels this solution is quite easily integrated also in the physical present points like Smart or Self-service branches and Smart ATMs. They all have similar core components like smart devices with a screen, camera, and internet connection. Banking vendors employ various technologies, but recent advances in audio and video compression make the use of these technologies much more affordable.
One of the significant differences between video banking and videoconferencing is the ability to conduct banking transactions and exchange viable data and documents, even checks, cash, and coins. If you organize it in the digital banking solutions, a video conferencing feature is implemented, and customers connect directly to a bank representative through a secure channel. The technology includes an interactive back-end that gives 360-degree customer view and access for the bank agent to all services and operations available in the branch.
Purpose-built machines, such as a Video Teller Machine (VTM), which enable both the video/audio link to the customer with the opportunity to accept and dispense cash and checks. Of the banks and credit unions that have invested in video, most have opted for interactive teller machines (ITMs). Mostly these are upgraded ATMs with a video connection to a live person and are used in-branch or at drive-throughs. Another, lower-cost variation used in-branch are video kiosks. Their experiences made the transition to mobile and online video chat more comfortable, and now more consumers are open to it.
To ensure customer identification and authentication, banks integrate their two- or multi-factor authentication services. All actions and transactions are confirmed with an independent second security factor only by the customer. Electronic document management solutions are a must for fully digitalized processing.
Video banking enables experts from the bank branch, call center, or home office to serve customers at home, work, or on-the-go. With including video communication, financial institutions gain a powerful tool for extensive digital transformation. As mentioned, video banking is easily integrated with different bank channels, and even it can have a leading role in branch transformation strategies. Video banking provides an in-person experience for online customers. When it comes to online personal finances, beyond self-service, customers sometimes want to live assistance from an expert.
The functionality that makes it easy to see the person enhances trust and clarity. Being added to the interactions eliminates concerns that might otherwise stop customers from completing their transactions online.
Usually, video banking is an integrated part of remote channels like digital wallets, internet, and mobile banking. However, the service also can be separate and available at the bank’s internet portal.
Different channels can also be split by type, but we can consolidate them to the following ones:
Services delivered by channels
- Customer authentication and operation authorization
- Consult with banking professionals
- Fund transfers
- Bill and utilities payments
- Account inquiries
- Fraud verification
- New accounts application processing
- New loans application Processing
- Inquire about banking services
- Secure information and documents exchange
- Private banking and wealth management
- Claims management
Additional services at VTM
- Cash deposits
- Check deposits and print
- Cash and coin withdrawals
- Card issuing and personalization
- Contact Center Support
Video banking can be described as a branch-like collaboration in which operations are executed, authentication and identification procedures are processed, documents like photo ID can be exchanged, and electronic signatures captured. It is a complete replica of the branch experience, carried out online with the active human presence.
Benefits and considerations
Financial institutions are leveraging video as part of their digital transformation strategy to engage with high-value customers, build brand differentiation, and deliver enhanced services via the digital channels. Times like the current pandemic can bring into focus the real value of video banking. When lined with the right technology and communication channel – mobile or web- can be configured quickly and effortlessly, so the organization can benefit.
With a combination of video banking and physical, financial institutions can build a presence in locations that would otherwise prove challenging, such as high-value real estate and off-site locations. This channel is a preferred solution due to improved cost-efficiency compared to the cost to run a traditional fully staffed branch, as video banking offers a cost-efficient way for expanding branch network.
The two-sided video stream during a remote interaction promotes trust and confidence for consumers and helps institutions increase customer conversion rates. The sales process is organized online, totally with the synergy of digital and human assistance.
Additional financial institution benefits are not limited only, but can be summarized as:
- Active assistance using interactive presentation mode
- Fast file exchange
- Active support for complex products (like mortgages)
- Cross-sell and active engagement
- Supporting end to end processes
- Quicker advisor response
- Reduce the risk of incorrect responses by a chatbot
- Removing the barrier in a quick sale
- Decrease wait times in busy branches
- Reduced physical branch hours
The benefits of video banking are quantifiable. Some financial institutions that already adopted it report a 50-80% improvement in their NPS scores after transitioning to video banking.
Not only financial institutions can benefit. Even the short real-life experiences with video banking indicate that consumers of all ages and backgrounds embrace video banking. It is time and costs saving, and the acquisition of new knowledge and habits is not required. A survey conducted by one of the most prominent tech vendors amongst video banking users confirms that 85% of them using the online version are ready to use it again. When it comes to the “phigital” (physical + digital) version, the share is even higher – 90%.
Banking experts have their concerns about video technology, however. Most of them consider security, compliance, cost, and customer preparedness (i.e., devices ready for video) as the most significant challenges to deploying.
Video banking of the future
Nowadays, hundreds of millions of people worldwide are glued to their mobile devices, watching a Netflix episode or a YouTube clip. Video communication services are not limited only to financial products, and we see similar solutions for telehealth, conferencing and event management, HR, education, government, and others. People have the knowledge and habits to use it and why not to spread it to financial markets. As most financial institutions haven’t invested in two-way video chat technology yet, the COVID lockout is a chance for financial institutions to reconsider their digital transformation strategy.
Before implementing video banking, organizations need to figure out how to leverage it across the organization. They should think beyond silos but consider how video can be relevant to multiple business units and address a range of services, including lending, service contact center, retail delivery, and even wealth management.
Mobile video banking early adopters are enjoying rapid uptake, broad appeal, and high satisfaction scores. The financial experts are linking this success to specific target groups like Millennials and tech-savvy innovators. However, the New Normal broadens these borders, and two new segments appear to become more active - adults with children and the elderly. Mobile video banking is the preferred mode for people with stuffed day calendars and usage on the go. For the elderly, it gives some freedom to take off the burden passed to family members - no need to accompany them to the bank branch. And yet, with the live video, they still have a chance to chat with bank employees.
As the barriers between banking channels continue to dissolve, financial institutions can leverage video banking to maintain customer relationships at a lower cost. But this channel should evaluate, and there are signs of new technology coming. One of the current innovations tested on the market is real-time 3D video communications that not only deliver high-quality streaming but also enhanced customer journeys. The future for this channel is even more exciting when Artificial Intelligence and Virtual Reality will become incorporated in the incoming solutions and.
In conclusion, we can say that the augmentation of banking services with video technology, brings a personal human element and an emotional impact, and the organizations should consider video banking as a core element of their digital transformation strategies, equal and in combination with other digital channels.
Author: Merdihan Ismailov | Financial Institutions & Banking Product Manager | Sirma Solutions