Is Video Banking the Future? What Credit Unions Need To Know
by Marty Aquino
Video banking is a big step towards an ideal hybrid of in-person branch and digital banking. Telephone banking and chatbots proved extremely popular for end users during the COVID-19 pandemic because of the additional human interaction with “live people” at their bank or credit union safely and conveniently. Research from GlobalData found that from 2017 to 2020, the number of active telephone banking customers almost doubled, and mobile usage saw a 15 percentage point increase.
According to Sean Harrison, lead banking analyst at GlobalData:
- The number of active telephone banking customers has almost doubled since 2017, indicating that digital channels are not strong enough to resolve consumer problems.
- Mobile usage is also growing. This channel saw a 15% increase between 2017 and 2020.
- On the other hand, online banking saw a 9% decline over the same period, which suggests the digital channel is not yet ready to handle major consumer inquiries.
- Globally, active branch users declined from 30% in 2017 to 22% in 2020. At the current trend rate, active branch users will be just 16% in 2023, half the amount of 2017
Video banking has the potential to be the nexus of where those statistics converge. Video banking gives your user the power to speak with your bank or credit union’s team members digitally with a much more human touch. Previously perceived-as-traditional banks are blurring the line between old and new with effective digital banking innovations including video. These innovations are increasing their respective retail market share by attracting what will likely be representative of the majority of post-pandemic banking end users.
For example, U.S. Bank jumped from fourth to first place in Insider Intelligence’s 2021 Mobile Banking Competitive Edge Survey as it rounded out its customer service features. Its mobile app offers some of the most sought-after features: the ability to converse with a human agent in-app and authenticate via the app when calling customer service.
What Is Video Banking?
Branches are still relevant in this age of digital banking. However, digital avenues may be evolving faster than ever due to the COVID-19 pandemic. “Banks have planned for years for disaster recovery if their technology failed but have never planned for disaster recovery if their buildings closed,” says Chris Skinner, leading influencer and champion of digitalization in finance, in an article from The Economist. “This is the big lesson of the crisis.”
According to a Forbes article, branch transactions fell 30%-40% between March and November 2020.
In the United States, 38% of respondents still preferred the branch as the dominant channel for their banking needs. McKinsey called this subset “security seekers” — consumers who sought their local branch or at best an ATM for all banking needs because they had low trust in remote and automated channels.
Video communication can help bridge this chasm between digital and in-person banking. Video banking platforms allow technology to connect users with your bank or credit union with a more personal touch. Remote office work via Zoom or Microsoft Teams paved the way, during the lockdowns, for multiple generations to be comfortable with video banking sessions. These video sessions or meetings might encompass any of the following or even combinations thereof:
Using the existing video streaming technology allows banks and credit unions to have a face-to-face interaction with their users.
Screen sharing or video co-browsing
Co-browsing allows users to share their screen with a banker to view and navigate online and mobile banking together with the user. This is particularly helpful to those who need extra assistance or aren’t very tech-savvy.
Users and bankers can combine the above aspects to do a multiplicity of tasks together virtually, including:
- Enroll in online banking.
- Download and set up specific apps.
- Set up direct deposit or bill pay.
- Discuss specific financial solutions.
- Open new deposit, credit card, credit, business, or investment accounts.
- Bring in second opinions from product specialists, quickly and regardless of location.
Benefits and Drawbacks of Video Banking for Your Bank or Credit Union
While digital banking adoption is clearly a powerful trend with no signs of abating, the pandemic has also shown us that users can miss out on certain nuances available via in-person meetings. Video banking can dramatically increase user satisfaction and loyalty through these personalized interactions. Here’s a non-exhaustive list of video banking benefits:
Broader user attraction
Video banking brings back human interactions to those users who are skeptical of digital services. Offering video meetings can increase your organization’s attractiveness to today’s digital-savvy user and tech-challenged user alike.
Financial specialists, such as mortgage bankers or certified financial planners, can now be available across more than one branch location at a time. During a user video or in-person meeting, your bank representative can quickly transition in (or out) one or more specialists — making for a much more powerful user experience.
Video recordings of key conversations make it easier for your team members to address issues and incorporate upsell opportunities.
Nudge on-the-fence clients
Offering financial advice via video as a part of your customized digital banking solution set can provide the missing link for your tech-savvy users who still need to meet in-person but like the convenience of digital banking.
Does video banking seem too good to be true? Here are some potential drawbacks to be ready for when implementing your video banking platform:
Cyberattacks are on the rise on all digital fronts. The FBI’s Internet Crime Complaint Center received 2,474 complaints identified as ransomware in 2020, with adjusted losses exceeding $29.1 million, an increase of 225% over the prior year, according to the agency.
“It’s not the technology that is a barrier. Having a video session is a pretty straightforward thing. It’s not a big deal to add that function,” says Chris Maher, CEO of OceanFirst, an $11.6 billion-asset bank operating 58 retail branches in New Jersey. “Adding dozens of bankers at OceanFirst who know how to do video and how to connect in a professional and engaging manner, that’s the barrier, and that takes years of hiring and development and recruiting to build up a cadre of people that are good in that medium. Not everybody’s comfortable with that. You have to be able to look through the camera and connect with people and listen.”
The Future of Video Banking
Banks and credit unions should consider taking advantage of video banking, especially as it pertains to virtual reality (VR) technology. Often referred to as the metaverse or omniverse, the related virtual and augmented reality technologies will likely influence nearly every part of the digital world.
According to an NPR analysis,the metaverse can be described as “the internet brought to life, or at least rendered in 3D…a virtual environment you can go inside of — instead of just looking at on a screen. Essentially, it’s a world of endless, interconnected virtual communities where people can meet, work and play, using virtual reality headsets, augmented reality glasses, smartphone apps or other devices.”
Meta (formerly Facebook) is spending $10 billion on metaverse development and acceleration this year alone, according to a new forecast on profit and expenses Facebook offered up to investors in its third-quarter earnings report. And that $10 billion figure, Zuckerberg told later analysts in a conference call, will only likely increase in the years to come. Zuckerberg intends to direct a healthy portion of Meta’s $30 billion in annual profit to fund metaverse expansion, stating:“We believe that the metaverse to be the successor to the mobile internet. We think it’s going to unlock a massively larger creative economy than what exists today,” he said Monday, erecting “an important pillar of our company over the next decade.”
How does this affect video banking? The metaverse is, at its essence, a virtual, 3D space for people to interact with each other as well as businesses. Interestingly, Bank of America announced that it will launch VR training for its employees in nearly 4,300 financial centers nationwide. As with analog real estate, clear benefits go to those banks or credit unions who have first-mover advantage. Start claiming and expanding your virtual real estate now.
Marty Aquino has been a passionate writer on venture capital, technology, forecasting, risk mitigation, wealth and entrepreneurial topics since 2009. He is the founder of Carbonwolf Energy, a venture-capital firm specializing in world-changing and status-quo-defying technologies and people.
Insider Intelligence – The Disruptive Trends & Companies Transforming Digital Banking Services in 2021
Economist Impact – Forging New Frontiers: Advanced Technologies Will Revolutionise Banking
Banking Dive – Why Some Lenders Are Going All-In on Video Banking
FBI – Internet Crime Report