So how are such developments relevant to high street banks? Major retail banks have always relied on branch networks to reinforce the essential elements of their customer relationships: trust, convenience, trusted advisor status. The challenge for banks has been how to use technology to provide a rich one-to-one customer interaction that can compare to the branch experience in terms of providing information, advice and cross sale opportunities, yet at a lower cost.
The advent of Facebook's video chat capability could, in time, help change customers' acceptance of a virtual branch offering and enable banks to enhance the quality and value of remote customer interactions.
Certainly, banks have not been slow to spot the potential of 'virtual' branches:
- ASB Bank in New Zealand has one of the most developed virtual branch experiences – it recently launched its 'virtual branch' on Facebook, allowing people to 'talk' to selected staff about their finances.
- In February, Bank of America announced plans to close its lowest performing branches and trial video conferencing rooms for high net worth individuals.
- BBVA in Spain launched a virtual chat agent, 'Nathalie,' as part of a project to promote innovation internally with staff. 'Nathalie' uses artificial intelligence to build on her ability to answer staff queries. BBVA is evaluating its potential with consumers.
- Russian Standard Bank is planning to launch a new online customer service through video chat.
- NAB in Australia has launched 'Virtual Terminal', an online portal which provides real-time responses for credit and charge card transactions.
For existing high street banks, virtual branches offer a means to extend geographic reach, reduce costs and build relationships with Generation C, the connected generation. At the same time however, they present new entrants, retailers and established brands with a real opportunity to connect directly with this demographic and to steal a march on traditional providers.
By Hugh O'Reilly, Associate Partner in the UK