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Banks will need to do more than Web-enable branches if they want to reduce operating costs or improve customer service, according to Forrester Research.
Forrester estimated that European banks have invested around EUR13 billion in Internet and call centre technologies between 1999 and 2001, but said they have yet to see the results of such investment. During that time, many banks have also reduced their physical branch networks.
Nearly three-quarters of European banks interviewed by Forrester believe the Internet has had little or no impact on branch distribution and just over 60 percent said that branches will remain the dominant banking channel by 2007.
In this context, Forrester said that banks should now look to transform their branches into networked service centres. The research company defines such facilities as lightly staffed collaborative service centres based on open standards and connected to internal or external service networks through integration hubs.
"These centres would be based around collaborative networks that allow branch staff and customers to interact with each other in a much more efficient manner," Forrester senor analyst, Remus Brett, told ElectricNews.Net "For instance, by using instant messaging or a video/audio link, a client looking for specific information could communicate from their local branch office with a specialist in the field who might be based in another part of the country."
Brett said that the introduction of such technology would also give bank agents more detailed information about customers. "They could view real-time customer profiles and data such as Web usage and a client's history. This would give staff a new sales tool and increase customer satisfaction," he commented.
According to Brett, banks would also be able to reduce costs in the areas of development and maintenance through introducing such centres because they would centralise customer applications such as bill payment and fund transfers on integration hubs. In addition, staff would be able to work more efficiently due to the introduction of workflow technologies.
He added that banks generally have not updated their branch technology in around five years and should now start doing so with priority given to those branches that have been ignored the longest and those with the best profit potential.
The Forrester report notes that some banks are making moves in this regard with nearly half of the firms surveyed saying they have begun to connect their branches to on-line banking applications as part of a multi-channel integration strategy, and another 24 percent plan to do so. Close to 40 percent of banks believe such initiatives can cut costs by upward of 15 percent and also improve customer service.
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