RDC is impacting branch foot traffic in 60% of
banks that offer it. Among a minority, branch transaction declines of 20%
or more are evidenced, accelerating already declining branch activity. The
implications for banks are profound: fewer chances to interact
face-to-face with customers, and the obsolescence of the traditional
branch, something few banks intended when they launched RDC.
Until recently, most banks did not regard remote
deposit capture (RDC) as a useful means of replacing costly branch
transactional visits with a lower cost self-service mechanism. After all,
RDC customers had been mostly large businesses who rarely visited branches
to make deposits. But, as client adoption migrates downmarket, RDC (and to
a lesser extent, image ATMs) will have a profound effect on branch
transactional volume as customers make deposits without using the branch.
Few, if any, financial institutions launched RDC solutions with the intent
of reducing branch traffic, yet that’s exactly what is happening in a
minority of banks taking aggressive postures with RDC.
In a new report, Do Banks Want Customers in Their
Branches? The RDC Branch Renewal Paradox, Celent examines the results
of a web-based survey conducted among 157 financial institutions in
December 2007. Among them, 56% of respondents offer RDC and another 9% are
in pilot with the product. The survey was preceded and followed by
telephone interviews to assist in interpreting results.
Even as RDC whittles away at branch activity, banks
continue to build branches. Since 1998, the US branch population increased
37%. With growth in the US population of just 10% over the same period,
the observed rate of branch building is more than triple the US population
growth. Thus, US financial institutions have invested heavily to grow
their geographic branch footprints while concurrently investing in
self-service technology to keep customers out of those same branches.
Paradox or strategy?
“Banks obviously want customers in their branches,
but the questions for a growing number of banks appear to be ‘which
ones?’ and ‘for what reason?’” says Bob
Meara, senior analyst with Celent’s Banking Group and the author of
the report.
“Transactional foot traffic is key to generating
new sales through cross-sell among most banks. Other banks welcome
declining foot traffic since customers are transacting using lower cost
self-service channels. Welcome or not, branch foot traffic is in decline,”
he adds.
After a review of historic branch building activity,
this report analyses branch transaction taxonomy, detailing the remarkable
dominance of check transactions at the teller line. The report then
examines the adoption of multiple self-service technologies and their
influence upon branch foot traffic.
The report looks at common branch scorecard metrics
and compensation strategies designed to leverage branch traffic for sales
gain. It concludes with an examination of changes afoot in branch banking
spawned by the inexorable decline of transactional activity most banks
face. Appendices detail research methodology and comprehensive branch
automation solution adoption statistics derived from the research.
This 47-page report contains 36 figures and 10
tables. A table of contents is available
online.
