Video tellers are being touted as a way for banks to increase efficiencies and cut costs while also giving customers the human interaction they desire, but some argue that speed is more important than seeing a friendly face.
Ultimately, consumers go to a bank to access funds or obtain credit. Though the Internet and smartphone revolutions have set new expectations for speed and accessibility, not every interaction needs its own app, experts say.
"The last thing we need is more mobile features; it's just an arms race for startups," said Alistair Crane, president of content at Monitise. Instead, consumers "need more access to core functions of the banking platform."
Many industry experts think consumers want face-to-face interactions with bankers (even on a video screen) when considering complex products and services, so some banks are testing micro-branches, or small unmanned pods. Micro-branches are usually equipped with high-tech features such as Bluetooth beacons, Near Field Communication (NFC) and video tellers, providing a style of interaction reminiscent of the universe of the classic Jetsons cartoons.
Crane disagrees that consumers want face-to-face interactions; instead they just want decisions faster. "Making me still video chat with a human is still pretty painful," he said.
Banks use algorithms for determining whether customers should be approved or denied for account openings and loan products. Banks could use that algorithm to provide a "yes" or "no" answer in real time in any channel, including at ATMs and micro-branches, said Crane.
As incumbents and startups race to provide more mobile features, Crane said, "There's not that much that needs to happen actually. What it takes is a fundamental shift; the bank has to decide that they're going to actively expose this decision-making engine to the outside world."
Atom, a U.K.-based startup that plans to be the country's first digital-only bank when it launches in mid-2015, looks like it will expose some of its risk algorithm. The company, which received a 25 million pound funding round in December, plans to provide full range of products including consumer and business mortgages via Web and mobile applications.
But this approach could be alarming for many banks. Showing customers how the risk algorithm works, for example, what reasons they were denied a loan, could upset customers.
Monitise could help banks move into this realm. Its September 2013 acquisition of Grapple Mobile Ltd., a mobile innovation and design company, brought over a couple hundred experts in customer experience.
If banks develop a friendlier customer experience for those who are denied loans, "even if you get rejected by the bank it goes step-by-step through what you need to do to build that up and get accepted," said Crane.
Monitise's set of application programming interfaces (APIs) and software development kits (SDKs) are provided through the company's platform or integrated into a bank's platform. Monitise gets paid primarily when customers redeem offers, use rewards and perform other transactions. This is also the way it works for merchants using Monitise.
"Micro-branches won't last longer than a couple years," said Crane. "It's really good for the transition stage. It's fine and novel and a certain type of customer will use them but I think it'll really quickly get superseded."
Crane predicts that micro-branches will become obsolete with the rise of wearables, especially those that improve person-to-person interactions.
Sixty-seven percent of U.K. Generation Y consumers said mobile is their preferred method of banking, and 88% said online banking is their preferred method, according to a Monitise report.
This rise of computer-only interactions shouldn't be seen as a threat to those who work at financial institutions.
"I'm not certain that the number of staff will decline, but the mix of skills will certainly shift toward those servicing customers through technology-based or related roles," said Crane.
Staff will likely become more productive as technology assists with the quality and volume of transactions being handled.
It's "definitely not a 'computer stole my job' scenario; more like 'computers helped me get a better job,'" Crane said.