Hyosung changes the conversation about branch transformation

Andy Orent estimates that, by now, between 3,000 and 3,500 video teller machines under various brands have been rolled out into the U.S. market by banks and credit unions.

As the CEO of Nautilus Hyosung America Inc., Orent is determined to ensure that his company's brand is well represented among the subsequent thousands of assisted teller units bound for both on- and off-premises locations in years to come.

This week at PayThink (formerly the ATM, Debit & Prepaid Forum) in Phoenix, Hyosung introduced its spanking new video banking drive-through solution, the MX7800i.

Orent also led a breakout session at the three-day show, discussing trends and technologies in branch transformation, a market in which Hyosung claims the lead with a 60 percent share of self-service devices. Earlier this month, the company published a research paper outlining seven concepts for successful branch transformation.

In advance of PayThink ATM Marketplace had the opportunity to talk one-on-one with Orent about endeavors by banks of every size and service footprint to reinvent the branch model, and where the company's new video teller machine fits into the picture.

Following is a condensed version of the interview.

If branch visits are declining as digital banking channels gain traction, then why not just close branches and spend on digital services instead?

AO: Even though transactions are declining, most banks will tell us that 60 to 70 percent of their sales still occur in the branch. So if the way you address this is by simply closing branches, how do you sell to your customer? ...

If you don't figure this thing out, then what happens eventually is your sales volumes will follow the transactions leaving the branches and then there will be a challenge. ...

Everybody seems to understand what they need to do at a high level — have more, smaller footprints, branches of different sizes ... but more touchpoints so the consumer can interact, so you're touching more consumers, but you're doing so in a less costly environment where you migrate transactions from human tellers to more self-service.

How does a drive-up video teller machine figure into branch transformation?

AO: The drive up we're announcing is really a branch transformation drive-up. It's not a traditional drive-up. It's an extension of this inside-the-branch transformation technology to outside the branch, allowing more and more transactions to be moved and migrated. ...

You don't turn that big expensive [video teller] device into a terminal that can only be used remotely. You want to the consumer to do as much transaction as they possibly can in the self-service environment, and only if and when they need help do you intervene. Then your intervention could be with a tablet within a branch during business hours.

At two o'clock in the morning it might be done via video. But we don't see it as all video. We don't see it as all self-service. We see it as the logical blend of assisted self-service where the customer does as much as they possibly can and only asks for help when they need it.

How is the Hyosung video teller different from others on the market?

Most of the video that's out there — it takes over the device, so if the consumer walks up to the device to do a traditional video transaction, the device won't work. It only will work with the video teller.

We don't believe in that model; we believe the consumer should be able to walk up to the self-service device that that they're reasonably familiar with, and do a basic transaction without having to engage the assistance and the takeover of the expensive device by the teller, but when they need help it's OK to make that interaction.

What do you see as the keys to successful branch transformation?

You have to rethink process in order to make branch transformation successful. ... Simply taking an existing teller with existing processes and putting them behind a TV camera doesn't really change the economics of the branch. It doesn't allow you to drive the cost out.

Knowing that, you have to re-look at all these processes; you have to look at the job roles that people have in branches and how the competition is. These aren't insignificant tasks. But people are starting to figure it out. ...

[W]e've got enough experience here in the United States, and frankly, in other markets around the world, that we can certainly help the institution understand what it is they need to look at and the kind of things they need to expect. We think that it differentiates us.

Where do you see branch transformation going — assuming that it continues to grow as a trend?

AO: We believe that next year the market will double or triple. We're not ever going to know the exact number. We believe that we are in the early stage in this market and we believe it's going to grow rapidly because the economic challenge isn't going to go away. It isn't going to get wished away.

The bottom line is that the branch is the most expensive thing the banks have and demand is putting a lot of stress on that environment because customers aren't using the branches as much as they were. So, something has to give. And we believe that varying forms of branch transformation will be that.