Mar 12, 2019
Anna Istnick, Marketing Director of Global Banking Solutions at Diebold Nixdorf discusses self-service retail banking strategies with Diebold Nixdorf’s Brand Evangelist, Scott Anderson.
Anna Isnick: 00:00 Hello, and welcome to COMMERCE NOW, your source for fintech conversations, along with emerging trends in the banking and retail industries. I'm Anna Isnick, marketing director of global banking solutions at Diebold Nixdorf. I will be discussing self-service retail banking strategies with Diebold Nixdorf's brand evangelist, Scott Anderson. Welcome, Scott, and thanks for joining me today.
Scott Anderson: 00:21 Thanks Anna. It's great to be here.
Anna Isnick: 00:24 To begin, would you mind telling our listeners a little bit about yourself and your background please?
Scott Anderson: 00:29 Sure. My background, I actually came from a retail banking history. I spent 10 years in a large financial institution, spanning everything from branch, call center, product management, you name it, and had a lot of great experience from a banker's point of view. I kinda get where they're coming from. I've probably spent the better part of 20 years in the self-service industry and working with folks like yourself over the last handful of years and looking at ways to help banks be more relevant in their consumers' minds.
Anna Isnick: 01:00 That's awesome. With that breadth of experience that you have looking at things, Scott, from the view of the banker, what role do you see the self-service solution, or ATM, playing in the market today in 2019?
Scott Anderson: 01:12 That's a really great question and I think there are a few different lenses that the industry and bankers in particular, or even ATM deployers in general, can really look at the ATM, or self-service channel, through. First and foremost, I think the self-service channel is becoming way more strategically important to financial institutions. In particular, as they look at ways of engaging their customers on what is probably the most frequent touch point, that the customer engages with them physically. In addition to that, there are other financial institutions and deployers out there who really look at their ATM channel as a utility. It essentially dispenses cash. It was sort of the first branch transformation, if you will, 30, 40 years ago. I think what's really important when we think about that, equally to both camps, the importance of the ATM is critical, and the availability of that ATM and that trust factor that unattended 24/7 environment is going to be able to fulfill that consumer's need.
Anna Isnick: 02:11 Do you see it focusing more on the self-service as an experience? Or you called it a utility as an expense for a financial institution.
Scott Anderson: 02:19 I think it can be both and I think it is both depending on who you talk to and where those financial institutions or deployers are in their journey of bank transformation. My opinion is that it is a strategic asset to a bank. If we look at the world of fintechs today, they are grasping at ways to enter the physical space and the physical world of their consumers. Banks have this huge opportunity to leverage one of their best assets, which is their physical presence being the ATM.
Anna Isnick: 02:50 So true. How do you feel like, from a security standpoint, that FIs are looking to really ensure that that experience is secure?
Scott Anderson: 02:58 This is one of those areas where banks are grappling with very limited resources to be able to do what they need to do on a day-to-day basis. Security and protection of their brand in their consumers' eyes is critical. That's why I think it's important from a self-service channel perspective that not unlike having a vehicle, we don't let that go without being serviced on a regular basis. We don't let it go without rotating the tires. Most of us aren't even driving cars that are more than five or six years old. I think the ATM channel, because of the importance that it plays as a utility to dispense media and to accept media, but also as a strategic touch point, security and being up to date with security and making sure that that channel is fundamentally trusted by the consumer is critically important.
Anna Isnick: 03:50 I totally agree with you on that. I was reading recently about cars and how they said now the cars may slowly decline in the world today because with Lyft and Uber and everything going on that there's gonna be fewer cars. Do you see that analogy with ATMs, or do you see them more as that strategic thought?
Scott Anderson: 04:08 I think there's a little bit of both going on there. My point of view is, until that last note or dollar is out of circulation, there really is going to be an ongoing need for ATMs. The management of cash and the ability to automate some of those processes instead of having that manual intervention that we have traditionally seen in the branches, the ATM will play a critical role. I don't think it's gonna go away. The operating model may change slightly. It may be, instead of owning it outright, maybe I rent that capability. Maybe I outsource that capability. Ultimately, the importance of that channel, both to fulfill the consumers' needs for cash, but also as that critical touch point in the strategic digital engagement model is still paramount.
Anna Isnick: 04:54 You mentioned that cash and how cash is still relevant today. Taking that channel and making it more efficient, do you feel that recycling will continue to grow across the globe and maybe get some pickup in the United States?
Scott Anderson: 05:07 Yeah. That's a really interesting place. I know you spend a lot of time thinking about this as well and talking to some of the customers that you interface with on a regular basis. If we look outside of North America, recycling has really gotten a very large foothold. Because of the fact, most of the branch optimization, most of that getting automated processes off a teller line has taken place. Therefore, the ATM does a lot of heavy lifting for cash. As that becomes more and more prevalent in a certain environment, or an area, of the world, obviously cash management, cash in transit, all of those things that go along with more transaction through put on an ATM require us to think differently about how we manage the cash and the cash cycle with self-service.
Scott Anderson: 05:55 Therefore, I think cash recycling is a critical component to that, not only to reduce operational costs and the like, but also to ensure that when a customer wants to receive cash out of the machine, it's available for them, instead of having to worry about whether or not that ATM is out of cash, it's a long weekend. Looking at the business model to drive ways to say, "Hey. Recycling makes sense in these locations, maybe not this location," I think is gonna be very important going forward.
Anna Isnick: 06:24 Yeah. That's a great point. I feel that cash is so relevant still. I was just spending some time in Europe. You could see there was a queue at every ATM that we went to, 'cause you always need cash. There was always this queue. When you get up there, you realize that they have different ATMs, the financial institutions: one for recycling, one for dispensing Euros, one would dispense US. It was all different currencies. They had different applications for each. I'm sure that banks are going to start looking at how do we make this more efficient and make more recycling possible.
Scott Anderson: 06:57 That's a really interesting point that you make because most of the industry would look towards Western Europe and the Nordics as saying, "Hey, they're going cashless." To your point, not so fast. I'd say that's a desire, perhaps, for a lot of payments in that environment, but cash still plays a very relevant role in most consumers' day-to-day lives. Therefore, it's important that there's a vehicle that is automated, secure, available 24/7 to be able to deliver that capability.
Anna Isnick: 07:29 Right. I know that we do a lot together as we follow what they call the dash from cash going forward. We've seen, if you agree, Sweden, Africa, India, Asia, some of them are moving fast, but then they get slowed down a little bit just because of the regulations that have to go around and implementing it. Do you think that that is something that will impact the digitization of cash moving forward?
Scott Anderson: 07:52 I think, again, my crystal ball is cash is gonna be around for a long time. Will it be the predominant payment vehicle in every geography in the future? Probably not, but I do believe that it's going to continue to play a role. We have to look for ways to optimize that so that it's A, easy for the consumer. They don't wanna have to think about how, when, and where they're going to get cash, or make deposits for that matter, which is also critically important. Also, from the deployer's perspective, they need to look at ways that say, "How do I make this a more efficient channel for me? How do I take cost out of the equation?" And turn that model around to say, "Hey, this is actually a strategic value to me because as long as that customer needs to receive cash or deposit cash, it's an opportunity for me. It's a set of eyes on my brand to talk to them and to engage with them in a different way."
Anna Isnick: 08:47 That's so important, the ATM's role. What do you feel about the financial institutions and the branches themselves? If their branches are going down are they right sizing and then the role of self-service in that?
Scott Anderson: 09:00 Yeah. You and I have talked at length about this and the importance of self-service as a transformative strategy for financial institutions. If we think about what's happened in other geographies that are, perhaps, a little bit more advanced than North America with transformation, such as Europe, the ATM is a bit of a utility in the sense that it's predominant factor is to manage media, so cash, both in and out. When we look at the opportunities are in front of the financial institutions in North America, we are still very much grappling with cost of the footprint, whether or not there's financial viability for a branch in a certain location or certain town. I think the ATM plays in a critical role, because it can be a part of that transformative branch footprint while that branch is operational. Therefore, it's part of being in the branch as part of the cash mechanism and engagement model. When that branch is either right sized, optimized, maybe even closed, it's a great leave behind strategy where the ATM can actually be the branch. With the connectivity that the ATM now offers with middleware capabilities and transaction engine-like capabilities, the API world, we can now connect into various parts of the bank without being bogged down by that legacy of having just a standard protocol to a switch.
Anna Isnick: 10:29 Wow. You said that beautifully. That's a lot of things that we feel really strongly about, is the ATM in the branch or does it serve as the branch? Serving as the branch, do you feel that with the open APIs it's gonna make automating of more transactions, not just focusing on cash, but really migrating other services and interactions to that self-service device as a more cost efficient way for the FI to operate?
Scott Anderson: 10:52 Absolutely. I think this is where it becomes that strategic touch point, because if it is the leave behind strategy, or if it is the market entry strategy for some FIs who are looking to expand their footprint, it can't just be about cash and dash. It needs to be about an engagement model that says, "Allow me to interact with this physical presence as I would in my digital world with the bank, or even, perhaps, with a face-to-face person in the branch." It needs to have that connectivity to all aspects of the financial services organization. I'd take it one step further. It's more than omni channel in this sense, because we need to start thinking about that consumer may wanna do other things with other third parties, or other apps. The ATM can then be that vehicle that ties it all together and allows them to interact with their financial institution and peripheral or support services and offerings that may be outside of the four walls of the bank.
Anna Isnick: 11:50 You mentioned something interesting there. You mentioned face-to-face. As our consumers are out there engaging with their financial institutions, they want a lot of different things at a lot of different points. What are your feelings about the video interaction with the ATM and face-to-face?
Scott Anderson: 12:06 Yeah. Look, I think video has a role to play in certain, very specific, use cases and very specific deployment models. I don't think it's a solving equation for mass movement of transactions out of a branch that are card-less. There are other, better ways of doing that, and frankly speaking, more cost effective ways of doing that. Video plays a great role if it's an advisory capacity, if it's an onboarding capacity, or if there were very specific use cases where having that human presence to handle exceptions, to do things such as provide overrides, or even to onboard a customer and validate identity. That's where I think video can play a role. I don't think it has to be a long term strategy for a financial institution to roll that out on mass.
Scott Anderson: 12:55 I think it can be quite prescriptive to say, "Hey. Here's a business challenge that I have and in the short term, video will fill the need while I build out infrastructure in the back to support a more programmatic way of engaging customers who may or may not have a card and PIN to process with, who may be onboarding with my bank or who may just wanna have some of that more human touch as they interact with the self-service terminal."
Anna Isnick: 13:19 Looking at all that from FIs perspective to get that strategy down and think about all those different points that you made, do you feel like there's still a lot of possibilities to be unleashed? Do you feel that FIs today are leveraging these and are they doing it in a modern way? Because sometimes the life cycle of an ATM can be out there longer than is needed to meet requirements and security as things evolve. Do you think banks are ready to look at that and make decisions?
Scott Anderson: 13:47 Yeah. This is probably the catch 22, because I think a lot of business minded people in the banks, a lot of business owners in the banks, would like to move forward much faster and be able to deliver on some of those journeys and some of those capabilities that we just talked about. The challenge, the dichotomy, that we have here is there's a lot of legacy mired into the channel, mostly from a connectivity perspective and how the ATM is managed for transaction processing.
Scott Anderson: 14:16 I think what's also critical important is hey, if we wanna do some of these strategically important things and engage our customers in more meaningful ways, I need to have an infrastructure in a physical box that is up to snuff, that can actually handle some of this heavy lifting, that I can rely on, and that I don't have to worry about the age of the terminal or security layers on that terminal or the processing capabilities of that device to be able to support consumer demanded engagement, which is much more robust, much more like mobile or online banking environments versus that traditional, easy flow, pick an account, pick an amount, pick a receipt option and get your cash. We need to take it to the next level. I think financial institutions need to think about that and re-examine their investment methodology in the self-service channel and think about it less as that utility and more as that strategic touch point, especially as we look at branch transformation and engaging our consumers in different ways.
Anna Isnick: 15:20 As you say that, do you even envision that bigger, not just the ATM as the strategic ... part of the strategic channel, but also the back end of their systems and their software systems that are tying together everything? Does that need a refresh also?
Scott Anderson: 15:33 Likely, yes. If we pick on the American marketplace a little bit for a moment, most of the financial institutions are somewhat handcuffed by the processing environment where it is what it is. That's how I process my transactions. If we think about ways that, whether they do it themselves or they look at partnering with others to help them build out that middle layer, that infrastructure, there are so many better ways for us to connect into other aspects of the bank, or outside of the four walls of the bank as I had mentioned, and bring more meaning to an interaction at the ATM than simply cash and dash.
Anna Isnick: 16:10 Awesome. Well, is there anything else that you'd like to add as we close that you think it's very important for financial institutions to consider as they look at their technology from an ATM self-service standpoint?
Scott Anderson: 16:21 I think if I were to have a leaving thought, it's always a good time to do a look in the mirror and say, "Hey. Am I at the best optimal operating model for my self-service channel, or are there things I could do to improve that?" I think there's no harm in investigating options and opportunities to say, "How could I be better? How could I optimize this environment? How could I make it more cost effective, or perhaps even a better revenue generator for my financial institution?" All of this ties back to, "What's in it for my end customer?" At the end of the day, it's making sure that the self-service channel is part of that strategy to remain relevant with your consumer. My parting thought is, don't just look at this as the odd time the customer comes and touches me to get cash. It is eyes on your brand every time they visit the ATM. We should be treating it as such and involving that in the overall end to end customer journey, regardless of what transaction it is they're processing.
Anna Isnick: 17:24 That is great information to think about as they look at their entire strategy. It sounds like you're recommending financial institutions to do an ATM health check or fitness check on their self-service network.
Scott Anderson: 17:33 Yeah. Absolutely. I think there's a great, easy tool that we have that people can go through very quickly and share their results internally and build a plan around acting on some of those opportunities to enhance and improve.
Anna Isnick: 17:46 Yes. For our friends tuning into the podcast, if you'd like to go to www.dieboldnixdorf.com/ATMfitness, you can learn more about your self-service strategy status. Well, thank you so much for joining us today at Commerce Now, Scott.
Scott Anderson: 18:02 Thank you, Anna. It was great chatting with you.
Anna Isnick: 18:04 Likewise. Thank you to all our listeners for tuning into this episode of COMMERCE NOW. To find out more about self-service in retail banking, go to www.dieboldnixdorf.com/ATMfitness, or click on the link in the podcast show notes. Until next time, keep checking back on iTunes for new topics on COMMERCE NOW.