How Consumer Behavior is Changing
Release Date: 05/15/2020
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On this episode of COMMERCE NOW we will discuss how DN can help FI’s adapt and provide new – or maybe not so new technologies to help with how consumer behavior is changing.
Jeff Bender: 00:08 Well, this is Jeff Bender. I'll be your host for today's episode of COMMERCE NOW. We really are living in some unprecedented times right now, and the longterm impacts of COVID-19 on consumer behavior and the financial services industry in general are truly unknown. We do know that both consumers and the FIs do you want to get back to business and the FIs doing everything that they can to make sure they're helping their customers adapt to what will be this new normal in terms of consumer behavior, whatever that might actually look like. So, today I'm joined by Simon Powley who leads our Diebold Nixdorf Global Advisory Consultant Services organization, as well as Heather Gibbons, who leads our US Regional Software and Services organization.
Jeff Bender: 00:57 And on this episode, we'll discuss how DN is helping financial institutions adapt and provide new, or maybe even not so new technologies to address these changes in consumer behavior. So with that, Heather, Simon, welcome and thank you for joining us today.
Simon Powley: 01:10 [crosstalk 00:01:12].
Heather Gibbons: 01:10 Thanks for [crosstalk 00:01:12].
Jeff Bender: 01:12 Heather I [inaudible 00:01:13] the first question to you. The current situation, obviously, a lot of [inaudible 00:01:18] were shutdowns. We see that there's desire for consumers to social distance, not interact in person as much. And in some cases, obviously government is restricting the ability to actually interact in person as much. So how do you see FIs being able to maintain meaningful connections with those consumers through this pandemic and in a post COVID world?
Heather Gibbons: 01:38 Thanks Jeff. Today, we're seeing consumers and retailers across industries modify the way they're doing business. Just as you mentioned, if I even look at how I grocery shop today versus two months ago, I can guarantee that I won't fully go back to the way I did pre-COVID-19. This isn't to say that face to face or retail in-store in the cases of financial institutions and branch transactions, won't take place in the future, but more and more consumers are going to now be more comfortable using technology. And they're also going to realize that some transactions can be done in a more convenient and efficient way than maybe they were before. For financial institutions, this translates to bridging the physical and digital divide, looking at how different consumer endpoints can work better together. I often reference how Amazon and Kohl's teamed up when speaking with customers, because it's really about the physical and the digital coming together and joining forces.
Heather Gibbons: 02:35 In this case, it was for Amazon returns and it makes it much easier, much more convenient. You can pre-stage everything on your mobile device or through online. The same can really hold true. When you look at consumers and small business journeys for financial institutions. If you take a closer look at both of those journey maps, I believe it will really lead to more core integration for better data sharing, access to more information. It's also going to lead to face-to-face interaction through video, and basically a more personalized approach while increasing the types of transactions at the self service devices and through online and mobile.
Simon Powley: 03:14 Yeah, I would agree with that, Jeff, this is Simon. I think there's a lot of different things going on. I think Heather said it very well. What we're seeing around social distancing is many of the same things that retailers are doing in terms of spacing out people in their branches, certainly monitoring their ability to come in various ways, even taking their temperatures in some cases. And so, that's not the best way to establish a meaningful connection to [inaudible 00:03:37] point. So, when you look at that, I think that there's a real focus on moving the horizon forward, so to speak in terms of digital capabilities and technology. We've done a lot of research on this and people really want to and prefer to transact digitally and interact physically. And so that's been the primary role of the branches to provide those services that can't be done digitally, such as the meaningful conversations about wealth management or taking an in depth look at financial aspects of their life.
Simon Powley: 04:07 That's done more in a conversation and when we're having this, and we're beginning to see the changes here over the years, and it depends on the financial institution. The large providers, the Bank of America, the Chase of the world have really led this kind of charge. And now it's really come down to the regional banks to really look at how they want to change and interact with their value proposition and to do that, they have to make their digital channels work better and educate their employees on how to use these and how to educate their customers on those. And we've seen a lot of interesting things happen with COVID such as texting customers links to their mobile sites or tutorials on how to leverage their mobile capabilities or their online capabilities so that they can interact or places to find their most convenient ATM machine to get cash or make a deposit.
Simon Powley: 04:57 And we're seeing adoption being driven to those customers that maybe you didn't see value, or maybe they were laggards in technology, so to speak. They're now seeing more and more interest and leveraging these digital channels in new and creative ways. So, I think there's going to have to be continued education. And then I also see a re-inventing of marketing. I think the marketing capabilities that a lot of financial institutions have invested in are brilliant, very targeted ads. Sometimes we're even as far as [inaudible 00:05:25] based, being able to specifically target offers, that's really resonates with their particular customers, which is a really good experience for them and allows them to learn more about their products and services. We're going to continue to see that evolve and they're using it for messaging now on terms and information about COVID, how to protect themselves, but also messaging on which branches are open or how they're shortening their hours.
Simon Powley: 05:46 So those kinds of messaging. So you're going to see those kinds of interactions begin to really change where they can continue to drive their value proposition in a meaningful and convenient way for their customers in a digital channel.
Jeff Bender: 06:00 Well, that makes a lot of sense. And so Simon, how do you see that actually translating to the small business space as well? Is there a role that technology is playing there in relationship with the small business owners?
Simon Powley: 06:11 Well, sure. I'll tell you what we do know. The first is that small business owners are really the highest users of branches and are very what we'd call branch dependent on that. So they come in more often than a consumer would and in many cases that's weekly. On average, small businesses spend over an hour per week transacting in a branch. And in the same time, less than 80% of them have a dedicated relationship manager for their business and only 13% of them are really truly satisfied with their financial institution in terms of their offerings and capabilities to support them. So, there's a lot of opportunity for financial institutions specifically with small businesses. And they've got to cope with that in a number of ways. First, I think Heather talked about the journey mapping that's really gone on in the consumer space. That same rigor has not been done within the small business journey mapping.
Simon Powley: 07:03 And so, the first thing financial institutions have to look at is, how are they going to define their journey maps and what can they do to alleviate their business rules and make it more conducive for them to be able to use automation to make their deposits, withdraws. They need faster access to their cash, they don't want their cash cycle disrupted. And in many cases right now, technology does that for them. And so, how do they change their interactions with their small business customer to be able to make that more consumer friendly or more like their consumer journeys. And so, access to those cash from the business rules, locations to be able to generate more activity in those particular cases. In many cases, the hardware now is being made with a deeper throat, so to speak. So more bills can go in there to help with those journey capabilities. Software capabilities need to be able to keep up with that, to ensure that both hardware and software work together to make these journeys a little bit easier for them.
Simon Powley: 08:02 So I think that the ATM will be a viable road. I think we'll see more cardless cash activities or pre-staging transactions, so employees can interact with those a little bit easier. And what that will really do is allow banks to repurpose their staff in the branches to be able to help them with their financial needs, such as business lending. PPP was a big change and a big process given to banks in a very short amount of time to try to react to. That's going to create different relationships with their small business customer. So, freeing up that FTE to allow them to have those deep conversations is really, really important as well as changing those business rules and enabling technology and hardware for making those checks and cash deposits in a more efficient way.
Jeff Bender: 08:48 Very interesting. So competition is changing on all levels and it presents both a threat and an opportunity.
Simon Powley: 08:54 Yes.
Jeff Bender: 08:55 Heather, anything you would want to add to that?
Heather Gibbons: 08:57 Yeah. Thanks, Jeff. I think I probably just add a little bit to what Simon mentioned around journey mapping, because I do think it's really critical, which is one of the reasons why I had kind of mentioned it earlier. What we see more and more our financial institutions have a really strong focus on consumer experience. And I think just making sure to remember that small businesses is just another segment of consumer experience that they need to really look at, what I do think is interesting is a lot of times those two groups are looked at very separately. Where I think if you started to try to bring them together a bit more, you'll see that you can utilize a lot of the same technology to do the things that Simon just went through. And really when you look at those different types of business rules that I think you can get a much greater return on investment if you're looking at both groups at the same time and utilizing the technology to be able to do that.
Heather Gibbons: 09:53 And Simon even mentioned one really good example of that is the pre-stage transactions. It's not a secret, my family owns a small business so, I kind of see what they go through on a day to day basis. And small business has the words [inaudible 00:10:08] it because it's one of the biggest things that they have to consider because they just don't have the resources that other organizations have. And they want to be able to do things remotely, do them much more quickly, do them in a much more efficient way. These are the types of things that really help out small business owners, because they're just busy trying to handle their customers and their day to day operations that they have.
Heather Gibbons: 10:32 Interestingly enough, when I kind of look at it from that perspective, to me financial institutions with COVID-19 are now kind of finding themselves with some of the same concerns as small businesses. Limited resources, they need to have virtual access to services, to data, along with really reprioritizing the need to transform how they conduct business and really serve their customers on a day to day basis. And I think the key to all of that really comes around automation and doing that through technology. So that's where again, we get into these concepts of CRM integration, core integration, looking at recycling cash at the self service devices to be able to give more access to it for both consumers and in small businesses.
Jeff Bender: 11:21 And Heather, how does that translate to the roadmap? I know you're in front of customers a lot, you and your entire organization. What are you hearing from them right now in terms of how that's impacting the areas in which they're investing today?
Heather Gibbons: 11:34 I would say we're having more and more customers that are looking at the ATM channel a little bit differently. This is something that every time we go talk to customers, we straight up ask them, how do you look at the ATM channel? Do you look at it as a strategic end point or do you kind of look at it as a necessary evil, you just it to dispense cash and be available at all times. And other than that, you don't see maybe as much use for the channel. What we're seeing with all of this as self service and being able to do things remotely or through digital channels is really having them look at it as a critical connection point between the physical and the digital channels. It's becoming much more important to them. And they're trying to think of ways that they can utilize it maybe a little bit differently than the ways they have in the past. And also look at what they're going to do with it in the future.
Heather Gibbons: 12:26 We're seeing many FIs that are going back to the drawing board, looking at their strategic initiatives, kind of doing sanity checks on those. In some cases they're reprioritizing or speeding up some of the projects that they were maybe looking at for the future and other cases they're revisiting solutions or options they once had passed on. Video, core integration, marketing are all really good examples of that.
Simon Powley: 12:51 Yeah, I would agree with everything Heather said. What I'm seeing again is moving that horizon forward. I think that the need for technology has never been stronger. I think COVID is proved that out even to FIs that felt like maybe their value proposition wasn't to leverage technology in the way that they're now being forced to, or their customers need to. We're seeing a couple of different things. I'd kind of formated three different buckets. One is what's happening now? From now is what are financial institutions can do and what can they do in a very short amount of time and realistically purchase and implement, to be able to move their financial instance forward and to make this happen, maybe even faster for them than what they expected. And those are low hanging fruit, like deposit automation, right? Teller automation, those kinds of things, or video that Heather talked about. Rather, those are the things that we can implement very, very quickly for a customer and make that come to life for them in a very, very quick period of time. And then on the roadmap, it comes kind of what's next?
Simon Powley: 13:50 And so next is okay, what are the things that we need to put on the roadmap? It may take a little bit longer than six months for us to be able to completely implement and design due to capacity, or what have you. And then, that's really the core integration. Things that really bring all of these things to life. Certainly the cardless and the contact is there or the recycling. And that's really where I think small business fits into that as well as how do we really gear up and get the functionality ready to go so we can implement that. And then finally, I'd say is then what? What's kind of on the longer term roadmap and what do we put out there and how does that change based upon COVID and that's more as a service models or open banking, digital integration with specialists. Those kinds of things that really need to be done, but you have to of course stagger these things for financial institutions. So, I would say those three buckets are kind of what we're seeing financial institutions reposition as.
Jeff Bender: 14:40 Oh, that makes sense.
Simon Powley: 14:40 Mm-hmm (affirmative).
Jeff Bender: 14:41 Anything self-services are going to be a priority in this day and age right now. Now Simon, just kind of building on that, what are the ways that DN is helping FIs reinvent how they serve customers? It's all about convenience and availability today. So what new capabilities is DN bringing to market to help FIs adapt to the new consumer norm?
Simon Powley: 14:59 Yeah, I think this is just a great time to be a part of the organization, I think and exciting from my perspective. We really value our partnerships and I think we differentiate ourselves in the market pace by really looking at every FI individually and helping tailor things specifically for them. And what I mean by that is not only with our advisory services group to come in and take a step back and help consultant and look at these roadmaps through that all the way into our teams and the way that they really go into investigate, ask questions and really find out what the pain points are for financial institution. And what we're really finding coming out of those things is things such as ATM as a service.
Simon Powley: 15:38 Again, those model really changing that and allowing... Not only just shifting the capital expense to operational expense, but really allowing them to focus on their core business. I think from what we've learned over the last several years, that's been trending, that's now just being impacted even more dramatically is banking is very complex and what they really want to focus on is their core business and allowing good partners to come in and help them operationalize. Some of these things certainly change the expense parameters around those things and take some of that weight off their shoulders so they can really focus on their customers and their core business is really critical to them right now.
Heather Gibbons: 16:16 Yeah. And Simon, I think some other things that I would maybe add to this are, the one thing that we've really learned from going and meeting and partnering with all of our customers and really listening to them is, there is no one size fits all model for all of these different financial institutions. You range from banks to credit unions, from customers that have one ATM to 16,000 ATMs. So, there's definitely differences around the goals that they have, objectives, key priorities, resources. So, what we've really been trying to do as an organization is to make sure that we can help them wherever they need it and however they need that. And Simon really alluded to it with some of the different business models that we have around how customers can really consume the offerings that Diebold Nixdorf is putting out there today.
Heather Gibbons: 17:10 So, we've mentioned many of these items and we have customers that really look at hosting and owning on-premise solutions to be able to do things like video and marketing and pre-stage transactions. But what we've really found is there's a subset of the marketplace that that's not what their core competency is. They want others that are the experts in those areas and in this case, we would say, Diebold Nixdorf is the expert when it comes especially to the ATM channel. And with that, they want to hand it over all to us and say, "Hey Diebold Nixdorf, we'd like to really outsource these types of services or capabilities to you." That can range anywhere from software updates, through remote distribution to the ATM, handling the cash management at the ATM. We had a customer in the global solution center and he said, when he handed over cash, it was one of the greatest days of his life. His family immediately within a week noticed the difference in him because he wasn't having to take phone calls all the time with cash at the ATMs and the branches.
Heather Gibbons: 18:15 Security is another major concern, something that we outsource, customers can outsource to us, and we provide managed services around that. And then of course monitoring the overall availability of the terminals as well. What we also see if we've got customers that really have a mixed bag of the offerings and how they want to see them. So, that's something that we've really tried to do with the portfolio itself is to make it flexible from a [inaudible 00:18:40] model perspective. If they want us to handle certain items of the operations of the ATMs, we can do that. They can be as hands on or hands off as they want.
Heather Gibbons: 18:51 And then we're also offering cloud based solutions. So, what this is doing is really making access to more of the advanced technology and solutions that we have much easier for financial institutions and in a more affordable way so that they don't have to really work about the maintenance of servers and the security around all those servers, that they have the ability to really control the solutions and have them work the way that they want and make adjustments on the fly. If that's something that they want to be able to do.
Jeff Bender: 19:21 That's excellent. Just a good lead and there's a lot that we covered today in this podcast and a lot of different topics, different delivery models, different priorities for different size institutions and Heather, Simon I appreciate you being here. I'd really like to hear more. And in fact, I'd like to tee up for our listeners to tune into a on-demand webinar from Wednesday, May 20th. During the webinar, our DN Global Advisory Services team covers how you can stabilize the operations of your environment, how you can establish a plan of action? And then also how you can continuously assess your execution against that plan? You can listen now at dieboldnixdorf.com/COVID-19. And as always, thank you to our listeners for tuning into another episode of COMMERCE NOW. Until next time, please keep checking back on iTunes or however you listen to your podcasts for new topics on COMMERCE NOW.