In 1964, the Picturephone was our first glimpse into the future of video communication when AT&T introduced the technology at the World’s Fair in New York. Set up as a futuristic demonstration, it was thought then that video calling would become a vital commercial tool in the coming years, but it wouldn’t become mainstream until Skype came out in 2003. Still, it’s been nearly 20 years and we haven’t seen video calling make much of an impact. That is, until recently.
When the pandemic forced the globe to stay home and find new ways of communicating, conducting business, and managing our finances, video calling and teleconferencing played a big part in keeping what was left of our socio-economic fabric together. Now video conferencing platforms are out in full force and almost every commercial industry is taking advantage of video calling capabilities.
Big banks have similarly been pushed to adopt this change quickly or risk losing customers to new fintech banks that have become major competitors in recent years. But what exactly is video banking, and how could it impact banks as we know them today?
Digital transformation changed everything
Video banking is essentially used to refer to any kind of banking services that are offered with video representations to help customers. This is largely made possible due to new technologies, including machine learning or ML.
Machine learning allows AI programs to train against itself so that it can learn and improve customer interactions over time. This model is proving itself to be very effective for banking technology through customer service chatbots that use natural language processing to understand what customers are asking. The level of personalization in chatbots’ responses to customer questions becomes smarter and more accurate with each interaction.
ABN AMRO’s video banking features creates an ML/AI/Human hybrid experience that increases efficiency for banking advisors and improves the quality of the customer experience in less time. This is much more than just an MS Teams call with your bank. When customers utilize the video banking feature, they are linked with a representative based on their customer profile and the information they’re requesting.
Machine learning features allow this data to be pinpointed and analyzed in real time. During the interaction, advisors utilize ML tools that augment their communication with the consumer. When a client asks a question, the AI will make pertinent information available to the advisor, streamlining the conversation toward a solution.
What’s taken so long to finally introduce video banking?
Although these technologies have been available for over a decade, banking executives haven’t been as concerned with leveraging technology as they were about cutting digital costs. Migrating to the cloud and going digital all seemed like it would be expensive and require extensive training. But the COVID-19 crisis forced executives to see technology in a different way.
Before the pandemic, nearly half of financial executives said that scaling down digital costs was their top priority. In October 2020, 90% of surveyed executives stated they were focused on modernizing their capabilities, investing in technology solutions, and refocusing their entire business around digital technology.
A frontrunner in the move towards video banking, ABN AMRO was one of the first banks to introduce this technology in 2016. Joeri Hartmans, Product owner of ABN AMRO’s Video Banking Team, explains:
Despite the digital adoption rate in the Netherlands, a majority of Dutch people still value face to face contact for advice on complex products. We saw huge potential for increasing customer service, longer opening hours, shorter waiting times, more specialized skills remotely available. Customers are really looking for personal conversations, with quality and expertise. What we add with video banking is the convenience of digital that customers need.
And this early investment certainly paid off. As the pandemic began to tighten social distancing restrictions, the bank already had a fully developed video banking service it could offer to customers in addition to its in-person services.
Video banking and consumer trust
The biggest challenge that banks face when it comes to adopting video banking services is consumer trust. While other countries have been more open to adopting cashless options, Americans have remained skeptical. However, US traffic to mobile banking apps went up 85% in April 2020, and 40% of Americans say that they will not be returning to physical banks after the pandemic is over. In Europe, a whopping 74% of citizens are now relying on mobile banking apps to manage their finances.
With the public’s adoption of fintech and other vital banking technologies, why has it taken so long for the industry to introduce video banking services?
It wasn’t just executives that were unsure about going digital. With the evolution of cybersecurity threats, security has been a chief concern for consumers. According to Hartmans, most consumers are aware that the risk is in the hands of their banking institution of choice.
For most customers, it is the comfort that the video and audio connection will be secure, that the employee is skilled, and that all-in-all it is not too much of a hassle.
ABN AMRO relies on security precautions such as requiring multi-factor authentication and advanced security measures such as self-healing security software.
This software is designed to guard against cybersecurity threats much like how the human immune system guards against disease. In fact, immunologists were even brought in during the development phase of the software. The software is inherently decentralized, and designed to repair itself and recognize the exact moment it needs to do so.
Additional privacy protection measures that online banking applications often require include biometric logins, meaning all-in-all, digital banking can be more secure than using a physical payment card.
Is branchless banking the future?
While automation is currently used primarily to augment branch banking services, could automation and video banking technology completely replace bank branches in the future? It’s not out of the question with the widespread adoption of online banking services.
Last year, banks closed 3,324 branches due to the mass exodus to online banking, according to a tally by S&P Global Market Intelligence. If banks want to stay open and remain successful, it’s of the utmost importance that they partner with fintech companies that can help integrate their banking services with easy-to-use apps. Otherwise, they are at risk of losing their customers to more streamlined platforms.
According to Hartmans, the key is to make sure that customers see video banking in the same way as they see going into the bank and talking to an advisor.
You have to make sure customers have the same experience and get the same things done. To make sure we really service our customers who are geographically independent, we have to automate and digitize all processes of our products and services. Only when you really integrate video banking with your customer and employee journeys can you then make sure you are successful as a bank.