Digital Transformation in Banking in 2022 and beyond

default image
Majdi AL-Beit Shawish - SEDCO CEO


By Majdi AL-Beit Shawish, CEO at SEDCO

The COVID-19 pandemic has forced banks to rethink their way of doing things including remote working, social distancing, and to focus more on digital and self-service channels. Many banks started to adopt digital transformation and the smart branch model, even before the pandemic. However, the pandemic has accelerated this transformation.

Through smartphones, banking services are only a few clicks away. However, people still need to visit a branch to perform cash, card, and cheque transactions, and occasionally to get a banker’s advice. 

While online banking is popular, physical branches continue to be an essential part of banks’ operations and customer onboarding and advisory functions. According to a McKinsey research, between 30% and 60% of customers prefer doing at least some of their banking in-person at banks’ branches.

Traditionally, 70% of the floor space is dedicated to tellers and other customer service areas, with only 30% allocated to 24-7 automated service machines. Smart branches flip the above ratio to a much smaller, simpler, and more efficient branch. However, a smart branch is not only about transforming to digital channels. It also requires fundamental shifts in how banks think about and support the branch, its employees, and customers. Smart branch transformation focuses on several underlining aspects including:

1. 24x7 Availability of Banking Services at a Lower Cost

While digital banking has become the norm for many, there are still those customers who value the in-person service. To maximize sales, banks must consider both the digital and human channels to satisfy the different customer behaviors.

Besides tellers and customer service agents, a smart digital branch should include ATMs, Self Service Kiosks, and Video Banking Machines to make banking services available 24x7.  

Branch effectiveness is measured by cost savings and increased sales. Retail banks aim to give customers access to banking services beyond cash transactions - round the clock, providing flexibility while decreasing operating costs.

With self-service machines, customers have the option to carry out complex banking transactions at any time, from applying for bank loans to issuing a cheque book on the spot.

2. The Use of Various Smart Digital Branch Formats

Banks are now optimizing branch footprint featuring different self-service zones. With this channel flexibility, banks can reduce branch size and overhead while simultaneously reducing queuing time for customers.

  • 24x7 self-service zone - This area is the core of a digital branch, operating 24 hours a day, and can help customers beyond the typical working hours. It can include ATMs, self-service terminals, and Interactive Teller Machines (ITMs) with video calling, enabling customers to reach service agents at any time.
  • 16x7 Rovering Agents Zone - Available 16x7 or at other timing with one or two bankers according to branch needs, standing desks can support customers with quick transactions that don’t require them to be seated; they can approach for sales and assisted services.  Moreover, standing desks can answer customer questions and direct them to machines/ online channels, or support them while using the machines, thus reducing the need for staff-based services
  • 8x5 standard branch zone - For complex transactions that require staff, a standard branch zone is available during standard working hours with three to four employees or relationship managers who can serve customers with specific requirements. Larger branches might need more than four bankers while including VIP areas for customers and businesses to receive premium services and support. This area suits senior customers who prefer human interaction.

3. Virtual Queuing to Eliminate Waiting

Virtual queuing is another way for banks to improve the experience by removing the need to physically wait. With virtual queuing, it is now possible for customers who prefer to deal with in-person tellers to book e-tickets through the bank’s application.

Walk-in customers can also join the virtual queue via scanning a bank QR-code and they can wait outside the branch until they are notified about their turn by an SMS message.  

The customer journey is just one of many things that technology and the pandemic have disrupted. With major retailers using technology to speed up the customer journey, modern banks now need to start adopting this approach.


4. The Use of Next-generation Analytics to Anticipate Customer Traffic and Service Issues in Real-Time

Technology should seamlessly maintain customer interactions and employees’ day-to-day work. With the right machines and software, bank branches can deliver radically improved, inspiring customer experiences. Smart branches aim to migrate more than 90% of customer services to assisted or self-service formats; to have simple, smooth, paperless processes for sales and service; and to use next-generation analytics.

Having integrated technologies such as mobile banking apps, virtual queuing, and advanced queue management system to control and manage each branch performance and to save both customers and staff time is essential for banks.

Through BI tools integrated across queuing and self-service solutions, smart banks today can track performance in all branches in real-time at various levels: branch, machine, counter, employee, transaction, service, down to customer appointments level. Banks can generate revenue analysis reports from the self-service machines.