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ATM Video Teller: Is it Right for Your Financial Institution? Jul 22, 2019

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Summary: Today, we're going to discuss when it's appropriate for FIs to implement ATM video solutions. As we all know the banking industry continues to transform and FIs have to transform along with it, but this doesn't always mean that the same solution will work for every FI. Video solutions can be tricky and may or may not be the right solution for your customers. Our panel today will discuss how you will know whether or not video is right for your environment. Related Content: Blog: Interactive Video Teller: Another Dimension of Self-Service Blog: The benefits of looped Cash Cycles: A Conversation with Volksbank Albstadt COMMERCE NOW Website Diebold Nixdorf Website Transcription: Scott Anderson: Hello, I'm Scott Anderson and I'm your host for this episode of COMMERCE NOW. On today's podcast we welcome Diebold Nixdorf's Chris Gill, Senior Director of Global Advisory Services, Dawn Winston, Senior Product Manager DN Banking Teller Products and, Brendan Thorpe, Senior Global Demand Lead for Banking Software. Scott Anderson: Today, we're going to discuss when it's appropriate for FIs to implement ATM video solutions. As well, we all know the banking industry continues to transform and FIs have to transform along with it, but [00:00:30] this doesn't always mean that the same solution will work for every FI. Video solutions can be tricky and may or may not be the right solution for your customers. Our panel today will discuss how you will know whether or not video is right for your environment so let's dive in. Scott Anderson: Dawn, I'd love to start with you to sort of set the stage here. Can you give us a quick overview on the video solutions that Diebold Nixdorf has brought to the table today from a product standpoint? Dawn Winston: Yeah, absolutely and Diebold Nixdorf is committed to [00:01:00] offering several different video teller solutions to financial institutions, banks, and credit unions and really we want to be able to offer what makes sense to a financial institution's business model and branch concept model. So if you, as an institution, are more interested in furthering your customer or member experience and making sure that you have that personal touch or the interaction with an employee at your [00:01:30] institution, then you would be more interested in something interactive video teller. Dawn Winston: And that interactive video teller, essentially, allows the teller to drive the entire transaction session with the consumer standing at a service device, with the consumer just offering input or approving transactions, and that does allow the teller to have that longer touch time with your customer or your member. So they can do things like [00:02:00] improving that customer's experience or even doing things like upselling to your customer or member. Dawn Winston: And then we do offer another solution that really is more about switching your staffing model. So maybe you want to transition some of your teller staff to do other roles like selling or marketing some of your products and you're more concerned about efficiency of your financial institution, so in that scenario they're not spending as much [00:02:30] touch time processing transactions. They really are focused on doing things like cardless authentications or overrides and approvals of checks and the transaction at the consumer's end switches back into a self-service mode freeing up more time for your branch staff or your central office staff to work on other roles within your institution. Scott Anderson: Great stuff, thanks for sharing that. And given some of the capabilities that our portfolio offers today in the marketplace, Chris, I'd like to [00:03:00] ask you from the perspective of our advisory teams and the customers you're speaking with, what are some of the more common use cases for the deployment of video by banks and credit unions today? Chris Gill: There are really three different categories of use cases that we've seen in the market. Chris Gill: The biggest one is really around improving branch operational efficiency and in this case the institutions are looking to impact the staffing costs in the branch where they're servicing the drive-up, and they may have certain tellers that [00:03:30] are servicing the drive-up. Whereby replacing the drive-up lanes with ATMs with two-way video, they can impact the staffing levels in the branch and reducing the costs of operating those branches. At the same time, sometimes, there are some branches where the drive-up area is removed from the lobby area, and it creates some inefficiencies in handling branch traffic, so a video solution there can again, help with the operational efficiency [00:04:00] and require less staffing. Chris Gill: We do see there are some instances where there are certain types of branches where the use case is more compelling. We've had a couple customers that are looking at in-store supermarket branches where they're eliminating the teller counter and replacing it with ATMs with two-way video. That way they can focus in those branches on opening up new accounts and interacting with people in the store and not doing transactions so that's kind of [00:04:30] one use case in this category. Chris Gill: Another one would be where they have branches in smaller markets or remote markets, where the low transaction volume branches, yet they still have to maintain a certain minimum level of staffing to handle transactional activity. And in those cases again, they could really eliminate the teller role but still provide the routine transaction capabilities but with video agents instead of tellers in a branch. So for the most [00:05:00] part improving operational efficiency is really the primary business case. Chris Gill: Now, I think the use case around institutions that are looking at expanding their branches into new markets or to fill gaps in their existing markets, but they're looking to do it at a lower cost. So we've had discussions with a number of organizations that the opportunity here is to build a branch where they can still provide routine transactions using video, and they [00:05:30] have a couple people in the branch that are there for customer service and opening up new accounts. So it's perceived as a way of not having to spend as much money on a new branch, but they can still provide that face-to-face service albeit over video. Chris Gill: And then the last kind of use case that we've seen is around improving customer convenience and hours of operations. So some institutions have video tellers that are available until [00:06:00] let's say 7:00 PM or even 10:00 PM, that provides a competitive advantage in the market where they can provide teller service at longer hours of service. Or we've seen a couple institutions that are in markets where they are competing against institutions that are seen in stores that are offering longer hours and so their competitive response is offering video to match their competitor's hours of operation advantage. Chris Gill: So in North America, I would say those are really the key use cases. Now in, [00:06:30] outside of the US, we've seen, typically in the Middle East, where they're using video primarily from an expanded transaction set point of view. So for example, the Middle East where they can provide greater withdrawal amounts in cash leveraging video rather than enabling at an ATM, so they can provide longer hours for that but provide that capability leveraging an ATM with video. Chris Gill: So again, in some markets they're looking at the [00:07:00] ATM with video as an opportunity to provide additional transactions that cannot be done on a standard ATM. Scott Anderson: Interesting, so lots to think about for financial institutions who are trying to make some decisions around what video might look like as part of the retail banking strategy. What do you think some of the key criteria that institutions need to consider when they're contemplating video as part of their retail banking strategy? Chris Gill: So I think there are really three different areas that institutions need to consider when contemplating [00:07:30] video. Chris Gill: Number one, is looking at their customers and members, currently serving or in the markets that they're looking at serving. So we've done some research in this area around consumer acceptance of self-service and video and not surprisingly younger consumers tend to be more self-service oriented and so they tend to have a higher level of interest in video than older consumers okay. So looking at your existing customer [00:08:00] member base, or the markets that you're in, it's important to really look at the characteristics of those consumers and are they more open to using alternative methods to doing their transactions than other segments are, so I think that's number one. Chris Gill: Secondly, is important to look at what kinds of activities are they doing, are you doing in the branches and again, to some extent, the customer mix. So are you doing fairly routine deposits and withdrawals in your drive-ups [00:08:30] or in the lobby that can be easily moved over to being done over video, or contrast, do you have a lot of business customers coming to the drive-up and they're making large deposits that involve coin, or do you have a lot of check cashing transactions at your branch where customers or members are looking for cashing checks to the penny. If that were the case then that maybe, that would probably, be less attractive as an option for a branch to deploy video. Chris Gill: And then [00:09:00] I think the third thing is you need to look at branch specific factors from a location and site point of view. So for example, if you have a branch that's located on a high traffic road where there's a lot of road noise, that may not be a good candidate for video just due to some of the issues around the engagement, and the customer experience over a drive-up ATM, maybe less conducive to an area where there's a lot of noise for example. So I think it's important to look at the characteristics of [00:09:30] your existing branches as well when determining whether it's the appropriate location for video. Scott Anderson: Great, thanks Chris. Brendan, anything you wanted to add to that? Brendan Thorpe: Just to pick up on some of the points that Chris was making. One of the key things around video is making sure that users have a great customer experience when they're actually using the video solution. There's a couple of key factors that will play into that. Brendan Thorpe: One of the key messages Chris was making was really you've got to think about what it is that you're actually going to deliver [00:10:00] using video. Typically, it's not going to be your general transactions. It's going to be transactions where something's either gone wrong or somebody needs assistance with something. So straight away you're pushing it down into some of the lower volume transactions, some of the more difficult things. Brendan Thorpe: So obviously one of the key things is once you get to that point you're either frustrated because you can't move forward, or you're in a situation where you really do need help. The system needs to be responsive, so the teller needs to be available to come online. [00:10:30] So you've got to look at the type of transactions, what the volume is going to be of those transactions, how you're going to staff it to make sure that consumers aren't standing at an ATM blocking it from other people but aren't getting frustrated because it's not getting responded to quickly. But also making sure that the teller on the other end is capable of actually delivering the transaction that they're looking for. Brendan Thorpe: If you get that mix wrong, you're going to end up in a situation where people will try video and then will fall away. They won't use it again. So for [00:11:00] video to be successful, it's got to deliver something that you can't do with a card and a pen. Something that's a little bit unusual. It maybe at a stress situation where you've lost your wallet, and you need access to cash services quickly, and it's a great way to do it or it could be, as Chris says, drive-up ATMs where typically you may have had somebody using vacuum tubes and a glass tube but now you've got a machine there. They still get the same kind of experience and it's immediate. Brendan Thorpe: However, you do it have a clear vision of what it is you're trying to deliver, the transactions [00:11:30] that you're trying to deliver, and understand how you're going to staff it and make sure that customers get a good experience. Brendan Thorpe: I don't know if you'd add anything to that Chris? Chris Gill: I think it's really important to understand typical consumer behavior and the typical consumer that maybe using video. Chris Gill: So in today's environment a customer that comes to a branch, their mindset, is they're going to either park their car, walk inside, and do a transaction at a teller or they're going [00:12:00] to drive up to an ATM lane and put their transaction in a tube. So in the latter, the first case, they're expecting to walk inside the branch and so if you've got an ATM in the vestibule that's running video, but you have a teller inside, a consumer is not likely to stop at that ATM and use that for video teller when they can walk inside and use the regular teller. Chris Gill: So one of the things that we've seen is if you give customers options, one of which they're already very comfortable with, and the other that they've never experienced, they're always going to default to [00:12:30] the option that they're most comfortable with. And we've seen some institutions that have deployed video in the lobby or the vestibule, but they also have full-service traditional teller services inside and that has resulted in very low transaction volume using video because they're giving customers an alternative or different options, one of which they're very comfortable using already. Scott Anderson: So Chris, with all of these criteria and the different options that FIs have to consider, what are some of [00:13:00] the key drivers to finding an accept rate of investment on video? Can you share some examples of what might be required to achieve an acceptable ROI? Chris Gill: So there are a couple factors there. One is really around the staffing ratio for the number of video agents per video ATM. So typically, we will see 1.5 to 2 video units per video agent. Going with that kind of a ratio you need to have some cost take out on the teller side in order to balance that. So [00:13:30] quickly we have to say for every video agent you need to reduce this 1.5 to 2 teller staff in order to get the appropriate ROI. Chris Gill: So the staffing ratio is very very critical into achieving the ROI. Yet, at the same time, critical in that if you don't have the right ratio you could lead to a suboptimal customer experience because the customer will be waiting much longer than desirable for a video agent to become available. Chris Gill: The other key factor is really [00:14:00] the scale of deploying video terminals. So what we have found is that given the upfront investments for video, it's important to deploy video at a minimum of six to eight locations, if not more, to really get that full ROI on the solution because if not, then you're looking at a much much higher cost per transaction then you would by deploying it at multiple locations.…

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Cash Recycling: Has Positive Impacts in the Branch Environment Jun 04, 2019

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Summary: In this podcast we discuss the utilization of self-service and teller automation technology and the implementation of recycling to drive more efficiency and to improve the overall customer and staff experience. Resources: Self-Service Reloaded Guide Diebold Nixdorf Website Blog: Rethink the ATM-Reload Your Self-Service Strategy Webinar replay COMMERCE NOW pocast website Transcription: Scott Anderson: Hello. I am Scott Anderson, senior director of Evangelism, and I'm your host for this episode of COMMERCE NOW. On today's podcast, we welcome Diebold Nixdorf's Jim Flannery, global advisor for Banking Channel Transformation and Tim Hoover, principle product manager for System Solutions. We're together today to spend time talking about how cash automation, and in particular, recycling can have positive impacts on today's branch environment. As we all know, the cost and controls around handling cash is a major factor in branch economics. [00:00:30] Tim and Jim have joined me to discuss the utilization of self service and teller automation technology and the implementation of recycling to drive more efficiency and to improve the overall customer and staff experience. Let's kick this off. Jim, I'd like to start with you. As you spend time with financial institutions of varying size and location, what opportunities do you see to streamline the cash handling processes for both customer and staff journeys? Jim Flannery: Yeah, so any cash automation is going [00:01:00] to provide tremendous upside for a bank or credit union. Something like teller automation, which has been around for quite a while, we've seen lots of customers see efficiency gains, throughput improvements not only reduce cost but also provide a better experience for the customers, shorter queues, obviously shorter wait time, so those type of things. I think it gets a little more interesting when you start talking about self service recycling. Jim Flannery: In [00:01:30] the US and in Canada, we'll say it's been a little slow for the banks to adopt that, but we're finally seeing enough cash coming in where the migration of transactions from the teller line to the device, which have traditionally been on the more costly side for the banks to do, it's finally hitting that tipping point where we're seeing an opportunity to attack that CIT cost, that high cost of cash in transit, which has been a sticking point for many FIs that they want to see maybe reduce. Scott Anderson: [00:02:00] Excellent, thanks very much. I think when we consider what's been happening over the last I'll call it five, ten years, technology has really come a long way in this regard. Tim, perhaps you can share with us your opinions around how recycling ATMs can augment the branch transaction processing. Tim Hoover: Sure, Scott, and essentially let the technology do the work. There's now, with this technology, the ability for accounting, denominating, bill fitness sorting, counterfeit [00:02:30] detection and all that can be done at high speeds like 10 notes a second through this technology. In addition, this technology is now coming on the fourth, fifth generation of product, and it's very secure, efficient and reliable. Scott Anderson: Now that we've got technology and Jim, as you've said, there seems to be a little bit of take up hear in the North American space in particular and certainly this has been very prevalent globally, especially if we look at some western European [00:03:00] countries. I think about what traffic we see in the retail branches and some of the segments who place some real heavy demand on branch cash processes, really small and medium business come to mind in this regard. Tim, what advantages do you see with technology such as recycling ATMs compared to how we typically manage the segment over the counter or even with teller automation? Tim Hoover: Well, Scot, we've seen some surveys, recent surveys that have shown that merchants now are more willing to use this self service [00:03:30] technology for their daily or even weekly withdraw needs. They would expect and they've mentioned that there would be less waiting in lines at the branch during peak hours or Fridays. It would allow for immediate credit for their cash or check deposits and then this technology ... And for merchants, there would even be the possibility even to promote for this SMB customer segment that maybe [00:04:00] the use of technology at 24 by 7 vestibules that are let's say close proximity to their business may be in malls or outlets, those types of places. Scott Anderson: Interesting, so really would I think probably improve how this small business customer would perceive the financial institution as giving them a little more access to automation to allow them to handle some of those cash deposits on a more frequent basis, so that makes a ton of sense to me. Jim, assuming [00:04:30] we have this opportunity to leverage recycling systems more holistically and to drive more transactions to self service, what positive impacts do you see for staff productivity and even consumer engagement? Jim Flannery: Yeah, so industry wide, we see roughly 30% of deposits are occurring at a self service channel, so for the most part, consumers have become comfortable with depositing checks either at the ATM or more recently on their mobile device, but [00:05:00] historically, cash has always been somewhat of a sticking point, getting consumers to deposit that cash for whatever reason was always more difficult. I think some of the it goes back to the envelope deposit days of ATMs, where the trust factor of not have a valid count or inventory of what was deposited was something that consumers just wouldn't part with. Jim Flannery: Now with recycling and having a growing set of consumers that are okay with cash deposits, we're seeing quite a few of those traditionally [00:05:30] cash deposits that were happening at the teller line or through the drive up teller now moving to the ATM. I think that really opens up two interesting points to be made is one, fewer transactions at the teller line allows the banks to be more judicious in how they staff their teller line, so being able to take potentially a small reductions in head count, which will reduce the cost of servicing. But I think the broader point is freeing up more staff time to spend with customers, having conversations, doing [00:06:00] investigative dialogue, where they can uncover potential gaps in products that consumer may be looking for, so really using that time that they're not spending head down, counting cash as a lower value transaction, now becomes an opportunity to cross sell and really have a more productive conversation that can deepen the relationship and hopefully create more satisfied customer. Scott Anderson: Interesting. Just to play on that, I think one of things we probably need to consider then [00:06:30] in the branches is some good lobby leadership so that the small to medium business customers who are coming in with bulks of cash understand that the self service devices now with larger acceptance and even recycling can support them. Anything you would add to that sort of thought process? How important is it for banks to be thinking about, banks and financial institutions, around lobby leadership and directing these consumers to the right use case? Jim Flannery: Yeah, I mean clearly you need to understand the needs and the expectations [00:07:00] of the different segments, so in the research that we do, what we find is that generally younger consumers with above average income are kind of target audience for more advanced self service transaction and then as you get into older segments, and to some degree, segments of more modest income, their dependence on the attended teller, primarily the channel that has that extra help is going to exist. Jim Flannery: Your point on lobby leadership is spot on. Being able to identify [00:07:30] who would be a good candidate for introducing or demonstrating the self service deposit versus some consumers just aren't going to change their behavior and they're going to expect that I guess we'll call it hand holding for even a routine transaction. Jim Flannery: Now I think it becomes more interesting with the small business segment because traditionally when you look at the lower end of it, it's often the principle of the business that's doing most of the banking and their time is so important because they're running a business [00:08:00] and banking is not something that they enjoy doing. And when you think about recycling and having the ability to perhaps forgo standing in line at a busy time and use that device for despot is pretty intriguing. I think it becomes even more interesting when you start looking at other things that could enhance that, whether it's cardless or one-time use pins where they can send a runner to do the deposit where they'll get some sort of notification where they don't even have to go. They can send somebody else and it can be after hours or it could be during busy [00:08:30] and you won't have that waste of time spent standing in line. Scott Anderson: That's a great point and I think it's important as the financial institutions think about this for some of those small and medium businesses, getting the message to those business owners, even if they aren't the ones coming into the branch is critical, so it's a marketing this would be important. As I think about some of the things that I've seen globally, I've had the opportunity to witness what I'd call cashless branches or branches where cash is completely automated [00:09:00] in parts of Europe and Asia Pacific. From both of your perspectives, what considerations do you think financial institutions need to be mindful of to ensure this success. Jim, maybe you can start off on this one. Jim Flannery: Yeah, so cashless branches in the US or in North America in general, they're not as prevalent for a host of reasons, but I think if you are going to look at that as a potential path for a branch network, certainly having a hub and spoke concept where you do have full service [00:09:30] branches that fill the advanced things that consumers are looking to do, but using cashless branches to serve the more routine transactions. When we look at this for FIs as a service, what we're often looking at is the demographics of the people using that branch is a location where you have that high concentration of high self service consumers that are okay with that. They don't necessarily need that additional attention for simple things. Jim Flannery: Making sure [00:10:00] that that's part of the equation, the analytics that's really going to drive the decision. I think also, at the same time, understanding if you're converting a full service branch or a traditional branch too of something of a cashless branch, deciding on the design and how the space is going to be used is going to be crucial, in particular for larger branches, where minimum going from 4,000 square feet to 1,500 square feet, so what do you do with the rest of the square footage? How do you either convert that to something [00:10:30] that has revenue generating capabilities or how do you reduce the size of that branch to reflect the role and function of that branch within the network? Scott Anderson: Interesting, and I think that's something obviously a lot of the western European banks have already figured out, because of the cost of real estate. North America's really trying to catch up on that I see your points of view there. Tim, what would you add to that perspective and cashless branches? Tim Hoover: Well, just not only [00:11:00] the advanced planning on the demographic and the placement and in the size, but then you get into another six months of planning on just the execution, so think about the cash and transit, think about the processes associated with not only cash replenishment but the cash in transit, the withdrawal of that cash and making sure that all those processes are determined, how the balancing is going to occur, because it will be different. Tim Hoover: Then even probably the bigger [00:11:30] one is just thinking about the consumer now. This will be a big change. You just don't want them to walk into a branch and see no people or just have a bunch of machines lined up and now clue what's going on. It has been helpful and we've seen in the past a greeter in a lot of cases that can talk to the consumer about, "Hey, we've changed our design. We're now self service. Anything that you could do in this branch before, you can now do through the self service. Come with me. What kind of [00:12:00] transaction would you like to do? Let me show you how you can do it." Tim Hoover: That helps in supporting certain consumer transactions if required. We've also seen, and it's been helpful, branches that have been sending out in advance, they're electronic or maybe some physical mailings talking about the changes, what's going on. You just don't want to have the consumer blindsided the first time they come into that location. In add to that even, there are on screen [00:12:30] text modifications or icons that can help a consumer actually do that transaction and we've seen even some labeling, additional labeling help with the consumer. Scott Anderson: Interesting. I agree. I think swinging the pendulum too far too fast is probably not going to be effective and you need to make sure that the consumer is feeling comfortable, that the typical tell that they've dealt with daily or weekly is still a part of the equation. They're just maybe engaging with the consumer a little [00:13:00] differently and maybe even being a little bit more advisory versus just be transaction processing. I think that's a really interesting point. When we talk about all of this though, I think one of the big elephants in the room is going to be how do these financial institutions begin to process a road map or define a road map and a return on investment for this type of technology and solution. Jim, what are you seeing, how are you kind of guiding some of these financial institutions down that path? Jim Flannery: Yeah, so the ROI and [00:13:30] the whole road map is of course extremely important for any transformation exercise that banks undertake and I think moving to something like a cashless branch is definitely a big change for an FI, so clearly being able to quantify as much as you can about the currently what's happening at that branch, what the expect ions are for how much of the volume is going to move to self service and which parts actually may move to other branches. We've often seen that when you do something extreme [00:14:00] like that, a lot of consumers will just go to the next location that has people, so you have to be a little careful making sure that the populist that's going to use that branch are the target segments that are going to embrace self service. Jim Flannery: From the ROI perspective, obviously there's some pretty obvious cost saves that most FIs are expecting to see, but I think what becomes more interesting is the things that are a little bit more difficult to measure or monetize, which I think need to be part of that conversation. I think [00:14:30] a lot of FIs get too hung up on just the cold, hard numbers, when in fact there may be additional pieces that really are overall more beneficial to some degree of just that cost saving. Jim Flannery: I'm talking mainly about the things that are around the consumer's acceptance and their satisfaction with the new space and also you ca…

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Empower Your Retail Customers May 29, 2019

Show notes

Summary: Listen in as Diebold Nixdorf's Jerry Langfitt and Carl von Sydow, discuss how retailers are empowering their customers to shop and check-out the way they want, faster and without friction. Resources: Transforming Your Retail Business with DN VynamicTM Retail Suite Retail Homepage Join the StorevolutionTM Transcription: Jerry Langfitt: Hello, I'm Jerry Langfitt, and I'm your host for this episode of COMMERCE NOW. On today's podcast we welcome Diebold Nixdorf's Carl von Sydow, Director of Self-Service for Retail in the Americas. We will discuss how retailers are empowering their customers to shop and checkout the way they want. Faster, and without friction. Welcome, Carl, it's a pleasure to speak with you today. Carl von Sydow: Thank you Jerry, the same to you. Jerry Langfitt: Before we get moving can you tell us a little bit about your background? Carl von Sydow: Yeah, well, my background is I've been working with retail for [00:00:30] 20, 25 years, and the last 15 has been very much focused around self-service. I've been working with retailers on self-service, from Australia all the way through Europe, Asia, and now I ended up in the Americas. I moved to Columbus, Ohio, last year. I'm from Europe, as you might hear on my accent, but I've been all over the world, talking serf-service. I'm really burning for that concept. I love the fact that the checkout process is something that everybody [00:01:00] is doing every day, but it's still something that evolves. It's a great challenge for the retailers to do this in a good way and meet the customer's expectations. Jerry Langfitt: Okay. Well, let's dive in. I'd like to start off by talking about consumer behavior and how it impacts self-scanning. There seems to be a lot of journeys being done at grocery stores now. I can do curbside pickup, I can do delivery, I can do self-scanning. Why do I see an explosion of different ways to shop? Carl von Sydow: Well, [00:01:30] I always like to put myself in the shoes of the customer or the shopper and look at the customer journey. I'm really happy that we are starting at that point as well. We are not talking products the first thing we do, we're talking about customer journeys, and what makes a customer journey attractive for a customer. If a retailer can meet that then the customers will come to their stores. They will go where they can have their best shopping experience. For me, self-service in general is [00:02:00] of course a very attractive customer journey, and there are many different versions of self-service in customer journeys. Depending on which retail vertical you're in you have different pros and cons for different solutions, but the topic for today, hand scanning, for me, within grocery, it's the ideal customer journey. From a customer perspective, to start with, but also from a retailer's perspective. Jerry Langfitt: Let's describe it real quick, just to make sure, since I've just experienced it recently [00:02:30] at a local grocery store. Let's just quickly, for the audience, what is hand scanning? Carl von Sydow: The concept is that the customer enters the store and at the point where you enter the store the customer will take a device in a bracket in the entrance, and there are two options there. You could have a loyalty-based solution, where you swipe your loyalty card or identify yourself somehow, and you will get a dedicated device with your name on it, basically. It says, "Hi Carl, [00:03:00] welcome to this store." Or you have a different solution where you can pick any device, and you're anonymous when you go through this customer journey. I prefer the first one, of course. There are many benefits with a loyalty-based solution. But you get this handheld device provided by the retailer. You typically could have a bracket on your cart where you can put this device, so you don't have to carry it around when you're shopping. Carl von Sydow: On that device you will have a big screen, [00:03:30] like on a smartphone, and on that screen you will have what we call a virtual receipt. On that virtual receipt you will see every product that you're shopping. You have an article description and a price and you have a summary and everything. What that means is that the customer will have full control of the transaction. The customer will always see and be aware of how much of my budget have I spent right now, with the products that I have in my cart or in my basket? As you go shopping you pick one item [00:04:00] from a shelf, you scan it with this device, and you put it in your bag. When you have done shopping you go to a pay station. That pay station could be a standalone pay station or you could also go to a normal checkout and pay, but what you do then, depending on the solution, you scan a barcode at the end, or just put this device that you have been carrying around, you put that device back in the bracket on the wall, and then the system [00:04:30] automatically will recognize you and your transaction, and you will pay at the pay station and leave. Jerry Langfitt: Now, that seems pretty interesting, because I know that when I'm shopping I rarely keep track in my head what I've put into my cart. This really does provide the consumer information that directly affects their purchase. Do they buy more? Do they buy less? What do we see in the industry? Carl von Sydow: Well, across Europe, hand scanning is very a known concept. It's difficult almost [00:05:00] to find a retailer in Europe that do not have hand scanning as an option. There have been a lot of different studies made in Europe about hand scanning. There are a couple of significant messages in these reports, one of them being that the average value of a transaction in hand scanning is between 10 and 15% higher than a normal basket in a normal, manned checkout lane. We see the same [00:05:30] trend in hospitality, where we have kiosks nowadays where you can go and order your hamburger. Also in hospitality, with self-service and kiosks, where you have also full control of your transaction, you can do all the different up-sale ... modify your burger to whatever you want. We see a higher increase in hospitality, between 15 and 20%, actually, on the average transaction value. [00:06:00] Empower the customer with the transaction to feel in control, that will increase the transaction. Jerry Langfitt: It really seems like it, because I know if I'm shopping with my wife and we're putting stuff in the basket we're usually surprised at the end, going, "Oh my god it costs this much," but if we had a running tally I'd be more apt to go just over. It does give myself, just knowing the information, I think I would probably [00:06:30] buy more as well, because now I'm fully aware as I'm going through this. It can affect my journey probably to the betterment of myself, and the retailer. Carl von Sydow: That's one of the great benefits with hand scanning is that you're in full control of your spending. You know exactly ... if you have a budget, you can follow it. With hand scanning I can go on forever talking about this, this is one of my favorite solutions for self-service. There are two other main benefits, one very important one being that [00:07:00] you only touch ... whatever you buy, you only touch the item once. That's when you take it down from the shelf and scan it and put it in your bag. If you go through the store in a normal way, to a manned checkout, if you count the number of times anyone, someone, touch your items, it'll be anything from three to four times. You will put it in your bag and you will put it on the lead-in belt at the checkout, then the cashier will scan it, and then you will have to bag it or someone will have to bag it. At least four times, [00:07:30] compared to one time when you do hand scanning. Carl von Sydow: The other benefit of that is of course ... and if you are a trained user in hand scanning you know all this ... so if you do, as you pack your bag, so you can have the heavy items first, like the milk packages or whatever, and then you put the produce at the end on the top of your bags. You can plan your bagging process yourself, instead of feeling very rushed at the end at the checkout, or have someone else [00:08:00] bag your stuff for you and the eggs are broken when you get home. It's another benefit. Carl von Sydow: The second big one is that the whole payment phase of a shopping journey is eliminated to like a minute, because the only thing you do when you checkout in hand scanning is that you pay for your transaction. You don't scan any items, or you don't do anything really, you just go to a pay station and you pay with cash or with card. That [00:08:30] typically is less than a minute. Overall, hand scanning is by far the fastest customer journey through a store, independent of number of articles, I would say. If you buy five or 50 it's still the fastest. Jerry Langfitt: Now, doesn't this give us an opportunity for either promotion or personalization if I'm using a device and a loyalty program? Carl von Sydow: If you have a loyalty-based hand scanning solution all options are [00:09:00] available for you. To push advertising to the individual user based on shopping behavior, or previous shopping behavior, or if you scan a particular item and then you have a sale, buy two pay for one, you can push that immediately to this device. You have immediate possibility to push for up-sale, or you can have offers based on shopping experience or previous shopping [00:09:30] behavior. Jerry Langfitt: I did see that one, and my experience was it was if you buy four of a particular item or a brand of item, and it showed on the device and said, "Okay, you have one of four, if you buy three more," and when I hit those next three the discount automatically engaged and I was able to get that. That just seems like it's pretty powerful from the grocery store, and the consumer products goods, to be able to push things. Carl von Sydow: That's a good point, Jerry, because ... I shop with hand scanning. That's my preferred solution. I don't keep [00:10:00] track on all the offers in the store. I'm not that kind of person. When I scan something, I just take a quick look at the display and see if the price was okay. Then, as you said, if they have an offer for the product it will come up on the display. You have bought one, if you buy a second one you will have this discount. Then, yeah, well, I'll buy another one. Without even thinking about it I just bought an item extra because I have this opportunity you told me [00:10:30] on the display. If I would go shopping in a normal way I would never done that. I would never know it. Jerry Langfitt: I would see the discount maybe at some point, but the instant gratification you do get going oh, I'll get that, and then suddenly I have four tubes of toothpaste. Carl von Sydow: And everybody has been at the point of checkout and then the cashier tells you that, well, if you buy another of these you will get a discount. Well, at that point, the shopping journey is ended. I don't want to break that and go and fetch another bottle of [00:11:00] Coke or whatever it is. Then it's too late. It has to happen during the shopping journey. Not at the end. Jerry Langfitt: And the coupons they give you afterwards I rarely use, because I don't remember to bring them, but the fact that I have it instantly I am more apt to, well, if I get this then I'll get four more. Let's talk about implementation for a second. Europe is doing it way better, or at least it's implemented more. What is a retailer have to consider when they're doing it here? Carl von Sydow: Yeah, and longer. [00:11:30] As with everything it's a learning experience. Hand scanning, the first installations, I'm sure it's like 10 years ago or something. The first versions were not as good as they are today, of course. There were some learnings over the first few years that the retailers and the solution providers in Europe have taken into consideration and implemented now in the solutions that are available today. It has taken a few years to come [00:12:00] to the point where we are today, and today the solution is very mature. It works, it has been on the market for 10 years, thousands of stores in Europe are using hand scanning, and they know how to implement it. It's very important ... human beings in general are a little bit reluctant to change behavior, so if you add a new shopping journey as an alternative you have to hold the customer's hand through the [00:12:30] first few times. Otherwise, the customers will not try it. You'll always go with what you are comfortable with. Jerry Langfitt: Right, what you know. Carl von Sydow: What you know. That's very- Jerry Langfitt: It's certainly not about just installing tech, you really need to think this through. Carl von Sydow: ... You have to think this through, and explain to the customer why it's so good, also, for the customer. The customer is not ... like self-service always often hear that you're doing the [00:13:00] job of the cashier and you don't get anything back for it. That's very wrong. As I said, if you use hand scanning, there are a lot of benefits for you as a customer or a shopper by using this system. You have to understand them and someone has to hold your hand through the first journeys, so educating the customer how to work through the first times is very important. Carl von Sydow: One challenge with self-scanning, or self-checkouts in general, but [00:13:30] particularly for self-scanning, is how you manage produce, where you price the item based on weight. In a traditional self-checkout you have this weighing scale at the point of the checkout, and you pick your bananas from the icon on the screen and then you pay for it. With hand scanning, you have to move that part of that process to the produce area. You have to have a weighing scale somewhere in the produce area so the customer can do that at the produce area. Scan [00:14:00] the item, get the barcode, and then get the right price on the barcode. Carl von Sydow: I have seen several different attempts here in the US to solve this. Funnily enough, I don't know if they have ever seen how it works elsewhere, because some of the solutions here are very complicated. They are not intuitive, more contra-intuitive some, even. If you have an obstacle like that the customer next time will avoid to go [00:14:30] shopping with hand scanning. If it's too difficult to understand or too difficult to use I won't use it. Jerry Langfitt: Yeah, first couple times, and someone's just going to wave off and never do it again. Carl von Sydow: Then you're done. So it's critical that you implement this from a point where you see ... you have to take away all the pain points during the customer journey and make it as easy as possible for the customer to do these things. Jerry Langfitt: Now, doesn't staff really come into it? Making sure that when you're going to do a new technology, [00:15:00] again, you don't just drop a box into a store, you really have to, one, pilot it with the staff because they're going to be the bridge for the consumer. The consumer's going to go to them first. We should train them quite a bit, should we not? Carl von Sydow: The staff has to be like super-users. They have to know this in and out. They have to recognize and know where the usual pain points are for hand scanning. When they see someone struggling [00:15:30] at their weighing scale at the produce area…

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Rise of the Venture Studio Apr 17, 2019

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Summary: In this episode of COMMERCE NOW, we are joined by Steve Gotz of Silicon Foundry, and we discuss how banks are increasingly creating new environments and structures to pursue innovative ideas and build new capabilities. We explore one specific kind of innovation structure: the Venture Studio (also known as a Company Builder). Resources: Silicon Foundry LinkedIn: Steve Gotz Twitter: @stevegotz Blog: The Rise of the Venture Studio Transcription: Amy Lombardo: Hello again to our listeners. This is Amy Lombardo, your host for this episode of Commerce now. Today I am joined once again by Steve Gotz, of Silicon Foundry, who is a known expert at helping organizations navigate the complex world. Amy Lombardo: So today we're going to discuss how banks continue to increase and create new environments and structures to pursue innovative ideas and build new capabilities. Amy Lombardo: So Steve, welcome back to COMMERCE NOW. Steve Gotz: Hey thanks Amy, excited to be here. Amy Lombardo: Great. So it's been couple months here since we spoke last. So what have you been up to here lately? Steve Gotz: So, just quick refresher for everybody, my background. I spent a long time launching new ventures for corporations. I've done that as an investor, an entrepreneur, university researcher, and a corporate executive. And most recently I was co-founder and COO of Pivotus Ventures, which was a venture studio I created with Ray Davis at Umpqua Bank. And coincidentally was acquired by Kony recently. Steve Gotz: Currently a partner at Silicon Foundry, where I advise large corporations on their new venture strategies. In that role that we're talking about some of the ideas today. Amy Lombardo: Got it. Okay. So in our last podcast we focused more on transformation strategies. We gave examples, both from banks and even other industries on when they kind of when they hit that wall, that roadblock, and how they partnered with new and other types of organizations [00:01:30] to think about what's next. Steve Gotz: Yeah. Amy Lombardo: So let's shift our conversation here and talk about what an organization knows they need to transform. Kind of this idea of migrating to a new business model, a new environment, and really the intent of Venture Studios. Amy Lombardo: So maybe we can start with discussing the evolution of this idea of like the Accelerator Business Model. Steve Gotz: I think Accelerators is an interesting place to start. So Accelerators, as we know them [00:02:00] today, have been around for about a decade. And they were started during this rich period of famense, right? So it was 2005, a couple years after the dot com bubble. And in many ways, the Accelerators that started back then, and that was Y Combinator, Techstars, would be great examples, they laid the foundation of what's to come today, right? Steve Gotz: And Y Combinator recognized that there were some economies of scale to be had by launching start-ups in a different way. And the Accelerator Model [00:02:30] is young teams, lots of bets, and a little bit of money. And when you do that well, you get really interesting companies. Steve Gotz: And that's what we've had for the last decade but I think what we're seeing now, is things are starting to change. Technology is starting to change. Corporate strategy is starting to change, which is why now we're starting now to talk about the rise of Venture Studio. Which is a new forum that organizations are using to build new things. Amy Lombardo: Mm-hmm (affirmative). So does the Accelerator Business Model, does it kind of [00:03:00] compliment the Crowd Storming Idea? Steve Gotz: Yeah. So, Accelerators as they started a decade ago, really about bringing young teams together to pursue big opportunities. And at that point if you think about it, right after the dot com burst there was a lot of opportunities so there was a lot of opportunities that the infrastructure had been laid to build things in a cost-effective way. So companies are using Accelerators as part of their innovation strategies. Steve Gotz: Now what's happened in the last decade is [00:03:30] a lot of that low-hanging fruit has gone away. The ability to launch a business to scale quickly. The dynamics are slightly different in the current day and age. Because startups need data, they need distribution, they need access to capital. So what we're seeing is that traditional Accelerator Model evolved into the Studio Model. And Studios are different in a couple new ways that we can talk about them but we're entering this period of change when it comes to innovation strategies. And the Studio is just one manifestation [00:04:00] of the change we're seeing. Amy Lombardo: So talk to me a little bit about this change. Dive into that for me and just kind of talk to me about why and how. Steve Gotz: So I think, in Silicon Valley, the era of "Move Fast and Break Things," is over. I think what we're starting to see are more diverse teams, in a broader sense, gender, age, background. I think there's a recognition that launching new ventures requires a diverse skillset. And it needs new kinds [00:04:30] of partnerships. Steve Gotz: Launching a start-up by itself as an Accelerator doesn't work as efficiently as it could. Launching a new start-up in collaboration with a corporate that gives you data, that gives you distribution, that helps you access customers. That's really powerful. Steve Gotz: So what we're seeing is more and more start-ups. More and more entrepreneurial teams and Venture Studio is coming together, launching new ventures in collaboration with corporates. And that's a really interesting dynamic that we're starting to [00:05:00] observe. Amy Lombardo: So is it still in these high-tech areas like Silicon Valley? Or where is the Venture Studios? Where are you having the most luck? Steve Gotz: Hmm. So this is what's really interesting, right? So Accelerators largely, when they started, were concentrated in Silicon Valley, right? Y Combinator, in the Valley, Techstars in Colorado. What we're seeing with Studios is a dispersion, right? We're seeing Venture Studios crop up [00:05:30] across the country, across the globe. And oftentimes they're locating themselves close to large corporations. Steve Gotz: So, High Alpha, one Venture Studio, and they're located in the Midwest. Primarily because the companies that they're building new ventures with are in the Midwest as well. There's another studio in Seattle called Pioneer Square Labs and they're up there and they're looking at really interesting consumer ventures, direct consumer ventures. Steve Gotz: [00:06:00] So I think you're seeing the capabilities moving to the most natural place. And that may not be Silicon Valley. That may be somewhere else across the globe. Amy Lombardo: So even though these corporations might be in these major metropolitan areas, is the talent there as well? Or are these innovators being found then all over the world based on what the need there is? Steve Gotz: Yeah, so, it's across [00:06:30] the world, right? Amy Lombardo: Okay. Steve Gotz: It's where is the need? Amy Lombardo: Right. Steve Gotz: And it's launching ventures as close to the need as possible, right? Steve Gotz: So a good example would be Heidelberg Cement. So, Heidelberg is one of the World's largest cement companies. They have operations in virtually every continent. And they're launching a Venture Studio and what they're doing is really smart. They're building new ventures in country. Steve Gotz: So the problems that you have with cement distribution, say, in Latin America and Brazil, [00:07:00] are fundamentally different than some of the challenges you have in a place like California. So it's natural to take your best people and put them at the edge. Put them close to those problems and say, "solve these problems and do it different ways." Amy Lombardo: Right. So clearly I know nothing about cement, so I can't even think of the next question. Steve Gotz: Nor do I. Steve Gotz: But think about this, right. Because there's a lot of similarities between the cement business and the banking business. [00:07:30] Right? Amy Lombardo: Oh both are important, here we go. Let's get what you're going to say here. Steve Gotz: So look. These are both largely commodity businesses, and they're easily swappable, right? You could get a bank account from Wells Fargo, B of A, or any one of the 7,000 or 8,000 banks in America. And largely the product is the product. What can you do with that? Steve Gotz: You can innovate around that experience. That's what Heidelberg is doing and that's what most banks are doing today. They're innovating around the experience. [00:08:00] And to innovate around the experience you need to be close to your customers, right? Steve Gotz: So creating a banking experience, or a cement experience, in Brasil, is fundamentally different than the kind of banking, or cement experience you want to create in California, right? Did that work? Amy Lombardo: Wow, wow. Okay. I'm a believer. Because if you were going to go down some path of like brick and motor cement shops closing, I was going to be like, "we're going to be [crosstalk 00:08:28] now because we're not even [inaudible 00:08:33] here." Steve Gotz: [00:08:30] And this is why I think banking executives can learn a lot by expanding the aperture and looking outside of the industry for best practices. And it just so happens that what I'm setting is in cement, but we also see interesting things happening in food, interesting things happening in agriculture, right? Steve Gotz: So I think there's more that we can learn like breaking down some of the silence and sharing ideas. Amy Lombardo: Okay so let's go to some examples. [00:09:00] Let's jump ahead there. Steve Gotz: Hmm. Amy Lombardo: You know for people unsure of our business model is, we're working with banks and retailers, can you give me any specific examples of Venture Studios working with banks and retailers? Steve Gotz: Yep. Yeah so there's a couple of really interesting examples. So, yeah, one of the ones you know, springs to the top of my mind is what BBVA has done with Dennison. So, three years ago BBVA hired an entrepreneur and said, "we want to build a new business." Steve Gotz: They didn't tell them [00:09:30] where he should build a business, they just gave him the free reign to do that. And fast forward three years, and what we have today is Dennison. Which is global bank for expats. So in three minutes or less, as an expat, I can open up a local currency account of one in 20 countries. And if you think about what Dennison has done is they've innovated the customer experience. And that allows them to do really interesting things with global remittances, global payments, currency transfers. Steve Gotz: So [00:10:00] a really interesting example of a big, incumbent corporation, like BBVA, saying, we're going to create new ventures, we're going to put structures in place to allow us to build things that probably wouldn't be possible inside of the normal organizational structures. So that's BBVA. Steve Gotz: Standard Chartered Bank is doing something similar in Hong Kong with their digital bank there. They just recently received their digital banking license from the regulator, so that's an interesting experiment. Steve Gotz: [00:10:30] In the UK, RBS has done really interesting things with S&Me, which is their small business lending platform. So there's a lot of examples and I think what's at the center of all of these examples is corporations coming together with partners to launch new things. Steve Gotz: And I think the opportunity for dVault and dVaults customers is to come together and say, "how do we create new experiences, right? How do we take a few bits of the interesting capabilities that dVault has, sprinkle [00:11:00] in a few bits of the interesting relationships that your banking clients have, to create a new kind of customer experience? That delivers value." Amy Lombardo: Right and you know we think it's always about the touchpoints that a consumer has within a day. And if you think about just financial transactions, it isn't just this one-to-one, I'm going to a bank, I'm taking out cash, I'm depositing checks. Whatever it might be. Amy Lombardo: It's that you touch [00:11:30] transactions in so many different sets through a day, so how is it that bank can complement that. Steve Gotz: Yes. Amy Lombardo: And provide you with a seamless experience. And those examples that you gave are spot on to that. I love the one about the expat because that could be something that's so laborious, challenging for a consumer, but the bank is adding value there. Steve Gotz: Yeah, absolutely. Right. And if we step back a little bit and kind [00:12:00] of think about what's happening here, it's the replatformification of the bank, right? We're creating new ways for the bank to be consumed by customers. Amy Lombardo: Right. Steve Gotz: At a fundamental level, fluctuation doesn't matter for the customer. The customer doesn't really care if you're using distribute ledger or cryptocurrencies to clear the transactions on the back end. They care about what's the experience. And are you making my life easier. Steve Gotz: And I think Dennison's a really good example of solving a very complex problem [00:12:30] in an elegant way. Amy Lombardo: Exactly. Can I get an immediate access to cash? Can I get an immediate access or, you know, what I need to live my life, right? Steve Gotz: Yeah. Yeah. And what's really... What I find interesting about Dennison is everybody talks about the unbundling of the bank, right? And transfer-wise, it's often one of those perfect examples that people cite, that you've basically decoupled international payments of remittances from the bank. Steve Gotz: [00:13:00] What we're starting to see with Dennison is a replatformification, we're rebundling the bank in new ways that the consumer can then consume. Amy Lombardo: Got you. Touching on that, unbundling, almost like a macro, [inaudible 00:13:14] talked about it so much in our business models. Steve Gotz: Yeah. I think this is a good/. it's good area for you guys. Amy Lombardo: Okay, so let's say, I'm Mr. Banking Executive and I'm sitting here, and I'm scratching my head saying, "gosh, I [00:13:30] don't know where I need to breakthrough and transform my business. I'm stuck," and I go to you, Steve, or you know the partners that you work with. Amy Lombardo: How do they begin this process? Steve Gotz: So I think there's a couple of points I'd like to make. And so I think the first one is so a general observation, and this isn't restricted to the banking industry, but corporations in general, have a hard time knowing what they have and knowing what the opportunities are. And that's not because [00:14:00] they're deficient, it's just the nature of human biases. Right? Amy Lombardo: Mm-hmm (affirmative). Steve Gotz: When you work at the same place, in the same industry, for a long time, you start to see things in a certain way. The way you break out of those biases is to bring in people with new perspective. Bring in organizations with new perspective. Steve Gotz: So I think the first place to start is increase the aperture of your conversations, right? Don't spend time with your peers. Spend time with organizations and executives [00:14:30] that are different from you, right?…

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Moving C-Stores from A Fuel-Plus to a Plus-Fuel Model Apr 04, 2019

Show notes

Summary: In this special episode of COMMERCE NOW, we team up with Pymnts.com's Karen Webster and Diebold Nixdorf's Uli Seeman and discuss convenience stores (C-stores) and how consumers who only ever pause for gas, and never even set foot inside the store, are a major lost opportunity for additional sales. Content: Pymnts.com Feature Article: Moving C-Stores from a Fuel-Plus to a Plus Fuel Model Blog: Three Ways to Improve Loyalty in Fuel and Convenience Transcription: Speaker 1: Some convenient stores are great when it comes to innovative experiences. But according to Diebold Nixdorf's head of service station and C-stores, the majority of them aren't. In this payment's original podcast, he tells Karen Webster that while the independent operators that dominate the industry want to innovate into the digital age, they are held back by the lack of off-the-shelf products that make that transition possible. Karen Webster: [00:00:30] Uli, thanks so much for making the time to be with me today. I'm excited to have our conversation about innovation in a very exciting space in retail, the convenience store. Thanks again for making the time. Uli Seeman: You're welcome. Looking forward to it. Karen Webster: Okay. So let's take a trip down memory lane here, and talk about when convenience [00:01:00] stores first hit the scene. So actually two dates of note 1913, way long time ago when in Pittsburgh, there was a gas station, the Gulf gas station, which became the first gas station to sell food, so that technically checks the box. But from the standpoint of convenience stores that I think many people regard as the C-store experience, that was actually in 1927, when in Dallas, [00:01:30] the Southland Corporation, now 7-11, opened a store, small format store, to sell bread and milk and other things that consumers needed to buy, but couldn't buy because grocery stores had very different hours back in 1927. They weren't open on Sundays and closed very early. Karen Webster: So the name, convenience stores, were open longer hours and seven [00:02:00] days a week to provide that convenience. So here we are today, and the environment's different. So there a lot of places that are open lots of different times, seven days a week, for consumers to buy things that were once only available to them at these smaller format stores. Karen Webster: And I guess my question to you, Uli, to start things off is, how do you think convenience stores have evolved to keep pace with that change? Uli Seeman: My view to it, [00:02:30] truly, yeah. You mentioned that they started very, very early, providing convenience, providing not only fuel to their customers, but past the implementation of paying at the pump, which is a kind of self-service, they lost a little bit of pace and did stop leveraging innovations and leveraging IT for the advantage. So yes. They are open in many cases 24 by seven, but it's still [00:03:00] the old-fashioned format: forecourt is selling gas, you can pay there, you cannot purchase anything from in store at the forecourt, you have to walk inside and you do your purchases. Uli Seeman: No support of anything. Lately they are starting implementing mobile payments and loyalty schemes, and some kind of advanced technology but it's still far behind the rest of the retail industry. Karen Webster: Yeah I would agree with you, and there are certainly some chains [00:03:30] that have done a good job of trying to integrate that experience and use mobile technology, to do that, and encourage through things like coffee and other convenience items, the loyalty and repeat purchasing by consumers. But why has this wave of innovation left this format behind? Is it that they got comfortable with being [00:04:00] convenient? Because people were stopping for fuel, and therefore they had an opportunity to convert some of the people into consumers in the store, and they didn't think they needed to do any more? Why stuck in the past? Uli Seeman: I believe, we have a few very, very good examples of advanced C-stores, like Bucky's to name a few - Karen Webster: Yep. Uli Seeman: They have plenty of more. They are really advanced, [00:04:30] they provide complete different user experience, than the store on the corner. I believe one of the key reasons they are all large enough to have capabilities to implement these newer services. Because, in many cases, these larger chains are using IT environments, IT solutions, which are coming out of, more out of the retail world than out of the C-store world - where the focus is only to the forecourt, or [00:05:00] mainly to the forecourt and very specific solutions have been installed. So these more advanced ones, they have higher sophisticated solutions, and with tremendous effort in many cases of professional services and customization, they can provide the services they have at the moment, which are exceptional. Uli Seeman: They provide kiosks, they provide order terminals, but they are customized and limited to their chains, and [00:05:30] the adoption into the other piece of the industry is quite difficult. Although keeping in mind that about 50 to 60 percent of the C-stores, gas stations, you have are owned by single owner. Karen Webster: Wow. Uli Seeman: So they don't have an IT company, or IT capabilities like the ones I mentioned before, these larger chains. For them it's very, very tricky, to get into such advanced technology. Karen Webster: So, how are they [00:06:00] able to do that? Because yes, I agree with you that the large chains have embraced technology - mobile apps, and are doing lots of things to engage consumers and to habituate that experience. Not only when people stop to fill up, but for purely the convenience of being able to pop in and pick up things, including now better food than what used to be the case back in the 1970's. But the 50 [00:06:30] percent of those who aren't that fortunate, how are they able to keep up and compete? What kind of technology should they be thinking about? Or are they thinking about? Uli Seeman: First of all, to take a little comment on what you said healthier food, food in general - so all of them have the challenge, that they need to find compensation for the declining sale in tobacco. And in some areas which are the margin carriers, for these stores. So they are trying one way or the other to come up with food, with healthy food, with prepared food, in order to maximize their business. So, now looking on the implementation side, on the solutions side, the focus is for them to find providers with more box solutions. Means where the implementation effort to adopt it to that particular owner or, [00:07:30] small chain is very, very limited and where they can do even where there are low capabilities of IT management. Uli Seeman: And where they can do an adjustment in order make it, to customize their solution and have a look and feel for their particular store. On the other side, the IT, that solution provider, they are slowly following that trend, but many are coming out of the larger retail environment, larger retail customer scene, so they're [00:08:00] used to have a model, a business model, which is based more on professional services than on solution sales. So this gap is slowly getting closed, but it's very slow. That's why you don't find any implementations, many self check-outs, or kiosks in this smaller store format today. Karen Webster: To the point about margins, and the considerations for making these investments. I mean I think we all know that, margins on fuel purchases are quite thin. And so the [00:08:30] opportunity, is to drive people from the forecourt into the store to make higher margin purchases. On top of that there are obviously the labor cost associated with staffing these stores. So there is a lot of appeal, you would think just based on the numbers, for a self service environment. I think it could perhaps even help some of the brand imagery of some of these stores, that need to signal that there are [00:09:00] new innovations awaiting inside. Karen Webster: But is there such a thing as a turnkey self solution, for these independently operated players who have the most to lose frankly? Because people will stop to get gas but that's about it? Uli Seeman: Slowly evolves in this direction. So coming from this big implementation into, like I mentioned before about solutions. Some of the providers [00:09:30] are looking into this, there are some first solutions in the market which are focusing truly to a low cost implementation, in order to enable them. Like you said, you're absolutely right the challenge ahead at the moment is the wage increase. In many cases everybody's discussing this fifteen dollar wages - in many cases it's already there, if you see the signs we are hiring, an attendant is making already in some metropolitan areas thirteen dollars and more, an hour. Uli Seeman: [00:10:00] So they have to overcome this hurdle, and new technologies are providing from my perspective, quite sophisticated solutions in order to lower implementation costs, and in order to give them a high flexibility - although, in regards of that business format yeah? One is selling burgers, the next one is selling pizzas, so even that kind of adaption needs to be addressed on a very simple way, to give them the opportunity [00:10:30] to basically buy this kind of solutions off the shelf. And yeah, my perspective is yes, it's moving in that direction, although if you see now in other areas - in other food areas for example - McDonald's is big time - Karen Webster: Yep. Uli Seeman: Emerging, self ordering kiosks systems. And this is driving the industry, from my perspective in the absolute right direction. And it's also showing some good opportunities if you look in food, in quick service restaurants, what kind of basket size increases [00:11:00] they recognize by using kiosk systems. Having not a human being in front of you, asking you if you want to super size something, is really driving the basket size. Which is coming back then, to a benefit for the convenience stores as well, and it's returning the investment into this equipment way faster than they anticipated at the moment. Uli Seeman: On the other side, obviously you need to check the store format. Does it really have the capability to provide the option to implement something like kiosks and self check-outs. Not every [00:11:30] store will have that - that size, that format that clientele, which will accept these kinds of new services and touch points. Karen Webster: So looking at, the broad landscape of C-stores, not just the smaller format guys, but the large chains as they think about competing with...not just other fuel operators, but grocery stores, and the smaller format stores like we're seeing pop up from Amazon and [00:12:00] others; are they looking to other retail categories for inspiration on how to engage with customers? Where are they looking for models, if you will, to bring into their environment? Uli Seeman: They truly, they do look into other formats. And they have to look into other formats. If you go to groceries or home improvement or fast food, they all implemented one way or the other, self check-outs [00:12:30] or kind of, kiosk services. And what they also try to do is to have one platform for all their different touch points to their clients, so that it feels convenient to use them and you don't need to adapt yourself to the different user interfaces, touch points. That's how we call them here. Uli Seeman: On the other side, that's exactly the area today's convenience store owners are looking into as a reference. They finally, [00:13:00] from my perspective, recognized they have to move in a more modern, more adapted world. Otherwise, they will have a significant issue to attract the younger population. If I talk to my kids, to their kids, what is getting you into a convenience store? Well it's not only the light anymore, it's over some kind of, following the term 'convenient'. When I go in there I don't want to sit in queue, and wait to pay my [00:13:30] candy bar - I want to have the best possible service. The kids are used to go, to a Starbucks for example and pre order a coffee. So how can I transfer that format into a convenience store? That's what the convenience store owner also looking for. You can see that, if you talk to them, yeah Diebold Nixdorf's, you'll see there is a demand, there's really a need and they want to be more innovators. Karen Webster: It's interesting what used to drive me as a kid into convenience stores were the Slurpee's. From 7 -11. I mean it [00:14:00] was very product driven! Not so much convenience driven but, you know, I think we laugh about this but...you are seeing, where convenience stores are trying to parley convenience plus their own type of product hook to bring consumers in - whether that's coffee, or other food items, I think you're starting to see that kind of affinity and loyalty being [00:14:30] introduced into these formats, or perhaps re - introduced. Uli Seeman: Yes, absolutely. And what - we have here a little term, inside of our company; it was in the past fuel, then it became fuel plus - as you mentioned very very early in the conversation here - it was early in the 1900s already, but now it's plus fuel. So you go there, because hopefully, in future, you create a kind of destination to make people go in there. One of my most favorite examples [00:15:00] and best examples, is if you come to Texas or it's going now in the states around here, is Bucky's. They created more or less a destination for people to come; not only because of their clean bathrooms, but also it's more a shopping experience if you go in there for food and other items, than only the gas. Karen Webster: Interesting. Uli Seeman: And I truly believe and see that the trend in this direction is going. [00:15:30] You provide special food in order to drive your customers to your C-store and fill up the car. Karen Webster: Yeah. Uli Seeman: In the other way around, you have to go because the demand is there to fill up the car, and this is the next convenience store. Karen Webster: Yeah that's interesting. Uli Seeman: Yeah I believe that is the trend we will see, in the upcoming years as well. And maybe there will be a little bit of consolidation as well, because like I said the very small format owner - they're [00:16:00] maybe not capable to follow that trend, but time will prove, yeah. You don't see it yet. Karen Webster: Yep. What is the impact, Uli, do you think of mobile in driving this change, and perhaps putting pressure on C-stores large or small to rethink delivery and this plus fuel mantra that you've identified as the [00:16:30] future? Uli Seeman: I see mobile as an opportunity to be honest. Because, at this point many of them have to invest a lot of effort into upgrades, to follow the rules, the EMV compliance - Karen Webster: Right. Uli Seeman: The EMV PCI 5 compliancy. So all around payment. Mobile in the future, will probably give them the opportunity to slowly migrate rather to mobile payments, than to payment [00:17:00] at the pump. And mobile will also give the opportunity if you are in the app, to embed functionality to pre order or order items out of the store. And maybe then, self check-out is the bridge into that - where you either have a kind of same format application running on your mobile, and you can complete your transaction. Because you can pick up stuff at that device, or [00:17:30] you can make a final check out or final payment at that device. So the whole journey is a little bit easier and it's more like you used to d…

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Emerging Trends in Services Mar 26, 2019

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Summary: Devon Watson and Thomas Karakalos discuss emerging trends in retail and banking services. Resources: Blog: Services for a Connected World Diebold Nixdorf AllConnectSM Services Transforms Bankdata IT Strategy Diebold Nixdorf Website: www.dieboldnixdorf.com Podcast site: www.commercenowpodcast.com Transcription: Amy Lombardo: 00:00 This is Commerce Now. Devon Watson: 00:14 My name's Devon Watson, chief marketing officer at Diebold Nixdorf. I'm joined this week by Thomas Karakalos, who's our head of the services business in Asia Pacific. So Thomas, why don't you give us a quick background. Who you are, what you do out here. Fantastic to have you on the show. Tom Karakalos: 00:30 Thank you, good to be here. So I've been with Diebold Nixdorf for the last three years. So prior to the integration with Diebold, heading the managed services business for Asia Pacific. Devon Watson: 00:39 Okay. Tom Karakalos: 00:39 My history, my background is deep in the systems integration room. So, heavy in tier one, systems integrators ... did a decade there, then moved into more niche kind of data storage security. Devon Watson: 00:50 Okay. Tom Karakalos: 00:51 Working in a global role, driving engagement, driving sales, driving project management. From there, a little entrepreneurial blood in the system. Devon Watson: 00:58 Fantastic. Tom Karakalos: 00:59 So then moved out, did my own thing. Still having in the background, but then it got to the point where I said, "Okay, next challenge." The next challenge was, Diebold was transitioning at the right time. Jump in really help move this ship towards services. Devon Watson: 01:11 Fantastic, fantastic. Tom Karakalos: 01:12 Yeah. So the focus is all about managed services, yeah. Devon Watson: 01:14 Great and that's a perfect segway. And I love the fact that you have an entrepreneurial background because, as I look at how banks and retailers are going to have to navigate all this change that's happening around them, you need some entrepreneurial blood there. Because we're solving new problems, we don't even know sometimes what the next problem's going to be and how to kind of navigate all these forces. Devon Watson: 01:32 So talk to us a little about what you're seeing is kind of the emerging trends in the services business in managed services and how our customers, in Asia Pacific in particular, are kind of looking at the partners, like us, that they have to help drive their business. Devon Watson: 01:48 What is it they're trying to get out of this general shift towards services? Tom Karakalos: 01:51 Well, as we know the whole industry is transitioning. It's transforming at the moment. So an organization, be it either in the financial industry or a retailer, is really thinking about, "What is core to my business?" There are so many moving parts, there are so many technologies and input points that they're interacting with their consumers, that they really have to take a seat of, "Okay, I cannot do everything, I cannot be everything to all men. I need to really focus on what is my core business and I need to trust partners that can come in and support." Tom Karakalos: 02:16 So, there is a tendency and an increased tendency towards outsourcing, that's something that we're seeing heavily in the region. We're seeing it on two sides, we're seeing organizations that have never ever outsourced anything that are actually saying, "You know what, I've finally realized, take the whole thing because it really isn't part of my core business." And we're also seeing a lot of organizations come together as consortiums and think, "How can we drive the investment that we've already put into either solution or product or technology," to bring high utilization, a better card holder experience for their people. Tom Karakalos: 02:46 So that situation is opening a lot of conversations with us because, from a managed services perspective, when we come in and give them a business outcome, that's exactly what they're looking for. So, they're great conversations what we're having. Devon Watson: 02:57 Absolutely, absolutely. Obviously, that storyline around focusing on your core competency and then taking the things that are ancillary to that and pushing them over into the partnership landscape, right to those subject matter experts, like ourselves, that can take that on. It brings a lot of operational efficiency of course, but one of the things that I think is particularly interesting, and I'd like to have you add some color to this, is the agility that that brings, right? So in particular, one of the things that I know we're working with customers around the world on, is things like branch and store lifecycle management, total implementation services, things like that. And to me that's also the cost story and it's a lot more of an agility story. So, maybe shed some color on that. Tom Karakalos: 03:38 Absolutely. Well, I'll hit the retail one to begin with because that's more predominant. So if you think about store lifecycle management and our offering, which is new store opening, this is something that is accelerating our customers' ability to go out there and actually dominate and participate in new markets. Tom Karakalos: 03:54 So, even here in Asia Pacific, we've got customers, be it H&M, be it Decathlon, be it whoever it is, where, the fact that we're in there with a cookie cutter way of basically getting them from an initial thought on, "I'd like my retail store to be there," to an up and running VIP night, is painless. It's cookie cutter, it's risk free, and we can do the whole thing while they're concentrating on, "Where do I put my products? And which VIPs do I organize for that event?" Tom Karakalos: 04:19 So, it is very much a risk component that they're able to shift across to a company like us that has done it time and time again, where we don't have those issues whatsoever. Devon Watson: 04:29 Got it. I love that storyline because, to me, that's really taking your physical infrastructure, those branches and stores, and almost turning it into an as-a-service model in some ways, and ... If I think about how our customers are going to compete with online incumbents, right? Being able to take that physical distribution, that physical infrastructure, make it more agile, make it more responsive, change adaptation to the market demand, we can help them do that. That seems incredibly powerful. Devon Watson: 05:00 So, we talked a little about the efficiency side, we talked about the agility that we're bringing to our customers ... Maybe give our listeners a just little flavor of what's new, what's top of mind. You know, what are you really gunning for? Tom Karakalos: 05:13 Well, one of the big ones that we're really trying to head out there, in terms of being a forefront of power in the industry, is to give a complete end-to-end integrated solution to our customers. So, ATM as a Service, or Store as a Service is something that we're heavily pushing. We've spent a lot of time investing in building this offering in a way that is extremely robust, that gives you the flexibility that you need to deal with the nuances of each retailer and financial organization. Tom Karakalos: 05:36 So, an end-to-end solution where they don't have to think about the asset, they don't have to think about the technology, they can disconnect themselves from some of those IT, technical decisions, and they can basically take the position of, "The business outcome we want is x." Tom Karakalos: 05:50 We can assure everything, so we can give them the business outcome they need, but we can manage behind the scenes. Everything, in terms of how the technology comes together, how the software layer integrates with the hardware layer and all that kind of stuff, without them having focus on it. Tom Karakalos: 06:01 I think that's something that's going to radicalize and really change the way that they go to market. Devon Watson: 06:05 Got it. And, if I'm a customer hearing about this for the first time, it's a pretty new approach, right? They probably haven't heard a lot of other partners out in the market place talking about this kind of soup to nuts as a service model. Devon Watson: 06:19 So, if I'm a potential customer thinking about that, who are the right people within my organization to bring to the table to explore that with us? Because it's a different way of thinking about an end-to-end problem and an end-to-end customer journey, and that's something that we've talked to the customers a lot about, is thinking about, "What is it you're trying to enable across the spectrum, for the consumer." Devon Watson: 06:40 So, what's the right time to engage with us? Tom Karakalos: 06:42 So, I think there are a number of people in both banking and retail, where, from a banking perspective, you really need your CTO, your CIO, a lot of that C-level. I mean, these are senior-level conversations that you need to have, right? Because it means that the company has to ... to make a decision as to how much it wants to hold parts of the pie that it will hand across to you. Tom Karakalos: 07:02 So, having the technology part of the business, the business itself and having the innovation and information part of the business coming together ... They're the ones that we need to have that effective conversation. Tom Karakalos: 07:15 From the retail side, it's really looking at ... the people that are involved in driving the expansion of that business out, and looking at, both the profitability of the stores but also the site location, the placement and the markets that they want to enter into. They're the ones that we want to be speaking to. Tom Karakalos: 07:29 If you look at the spectrum of solution that we're providing, it is something that is soup to nuts. It's everything, right? So, a lot of times what happens is, you commence the conversation at a senior level, so that, from a vision perspective, you're seeing eye to eye. And then you see very quickly it trickles down. So it really means that we partner at every level of the organization, be it at a direct, technology level, at an infrastructure level, at a solution level. Even at a business vision level. Devon Watson: 07:53 To me that's such a great way of going to market and engaging because, really, it's their team powered by ours, right? And that's just a great storyline. Tom Karakalos: 08:02 Powered by Diebold Nixdorf, absolutely. Devon Watson: 08:04 Fantastic. Well Thomas, thank you very much. This is a great conversation. Really appreciate the time. I hope our listeners are learning from these and look forward to seeing you again somewhere else around the world.

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Technology Revitalization Mar 12, 2019

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Summary: Anna Istnick, Marketing Director of Global Banking Solutions at Diebold Nixdorf discusses self-service retail banking strategies with Diebold Nixdorf’s Brand Evangelist, Scott Anderson. Resources: ATM Solution Fitness Assessment Blog: It's Time for Your ATM Solution's Annual Checkup: Take the Assessment Transcription: Anna Isnick: 00:00 Hello, and welcome to COMMERCE NOW, your source for fintech conversations, along with emerging trends in the banking and retail industries. I'm Anna Isnick, marketing director of global banking solutions at Diebold Nixdorf. I will be discussing self-service retail banking strategies with Diebold Nixdorf's brand evangelist, Scott Anderson. Welcome, Scott, and thanks for joining me today. Scott Anderson: 00:21 Thanks Anna. It's great to be here. Anna Isnick: 00:24 To begin, would you mind telling our listeners a little bit about yourself and your background please? Scott Anderson: 00:29 Sure. My background, I actually came from a retail banking history. I spent 10 years in a large financial institution, spanning everything from branch, call center, product management, you name it, and had a lot of great experience from a banker's point of view. I kinda get where they're coming from. I've probably spent the better part of 20 years in the self-service industry and working with folks like yourself over the last handful of years and looking at ways to help banks be more relevant in their consumers' minds. Anna Isnick: 01:00 That's awesome. With that breadth of experience that you have looking at things, Scott, from the view of the banker, what role do you see the self-service solution, or ATM, playing in the market today in 2019? Scott Anderson: 01:12 That's a really great question and I think there are a few different lenses that the industry and bankers in particular, or even ATM deployers in general, can really look at the ATM, or self-service channel, through. First and foremost, I think the self-service channel is becoming way more strategically important to financial institutions. In particular, as they look at ways of engaging their customers on what is probably the most frequent touch point, that the customer engages with them physically. In addition to that, there are other financial institutions and deployers out there who really look at their ATM channel as a utility. It essentially dispenses cash. It was sort of the first branch transformation, if you will, 30, 40 years ago. I think what's really important when we think about that, equally to both camps, the importance of the ATM is critical, and the availability of that ATM and that trust factor that unattended 24/7 environment is going to be able to fulfill that consumer's need. Anna Isnick: 02:11 Do you see it focusing more on the self-service as an experience? Or you called it a utility as an expense for a financial institution. Scott Anderson: 02:19 I think it can be both and I think it is both depending on who you talk to and where those financial institutions or deployers are in their journey of bank transformation. My opinion is that it is a strategic asset to a bank. If we look at the world of fintechs today, they are grasping at ways to enter the physical space and the physical world of their consumers. Banks have this huge opportunity to leverage one of their best assets, which is their physical presence being the ATM. Anna Isnick: 02:50 So true. How do you feel like, from a security standpoint, that FIs are looking to really ensure that that experience is secure? Scott Anderson: 02:58 This is one of those areas where banks are grappling with very limited resources to be able to do what they need to do on a day-to-day basis. Security and protection of their brand in their consumers' eyes is critical. That's why I think it's important from a self-service channel perspective that not unlike having a vehicle, we don't let that go without being serviced on a regular basis. We don't let it go without rotating the tires. Most of us aren't even driving cars that are more than five or six years old. I think the ATM channel, because of the importance that it plays as a utility to dispense media and to accept media, but also as a strategic touch point, security and being up to date with security and making sure that that channel is fundamentally trusted by the consumer is critically important. Anna Isnick: 03:50 I totally agree with you on that. I was reading recently about cars and how they said now the cars may slowly decline in the world today because with Lyft and Uber and everything going on that there's gonna be fewer cars. Do you see that analogy with ATMs, or do you see them more as that strategic thought? Scott Anderson: 04:08 I think there's a little bit of both going on there. My point of view is, until that last note or dollar is out of circulation, there really is going to be an ongoing need for ATMs. The management of cash and the ability to automate some of those processes instead of having that manual intervention that we have traditionally seen in the branches, the ATM will play a critical role. I don't think it's gonna go away. The operating model may change slightly. It may be, instead of owning it outright, maybe I rent that capability. Maybe I outsource that capability. Ultimately, the importance of that channel, both to fulfill the consumers' needs for cash, but also as that critical touch point in the strategic digital engagement model is still paramount. Anna Isnick: 04:54 You mentioned that cash and how cash is still relevant today. Taking that channel and making it more efficient, do you feel that recycling will continue to grow across the globe and maybe get some pickup in the United States? Scott Anderson: 05:07 Yeah. That's a really interesting place. I know you spend a lot of time thinking about this as well and talking to some of the customers that you interface with on a regular basis. If we look outside of North America, recycling has really gotten a very large foothold. Because of the fact, most of the branch optimization, most of that getting automated processes off a teller line has taken place. Therefore, the ATM does a lot of heavy lifting for cash. As that becomes more and more prevalent in a certain environment, or an area, of the world, obviously cash management, cash in transit, all of those things that go along with more transaction through put on an ATM require us to think differently about how we manage the cash and the cash cycle with self-service. Scott Anderson: 05:55 Therefore, I think cash recycling is a critical component to that, not only to reduce operational costs and the like, but also to ensure that when a customer wants to receive cash out of the machine, it's available for them, instead of having to worry about whether or not that ATM is out of cash, it's a long weekend. Looking at the business model to drive ways to say, "Hey. Recycling makes sense in these locations, maybe not this location," I think is gonna be very important going forward. Anna Isnick: 06:24 Yeah. That's a great point. I feel that cash is so relevant still. I was just spending some time in Europe. You could see there was a queue at every ATM that we went to, 'cause you always need cash. There was always this queue. When you get up there, you realize that they have different ATMs, the financial institutions: one for recycling, one for dispensing Euros, one would dispense US. It was all different currencies. They had different applications for each. I'm sure that banks are going to start looking at how do we make this more efficient and make more recycling possible. Scott Anderson: 06:57 That's a really interesting point that you make because most of the industry would look towards Western Europe and the Nordics as saying, "Hey, they're going cashless." To your point, not so fast. I'd say that's a desire, perhaps, for a lot of payments in that environment, but cash still plays a very relevant role in most consumers' day-to-day lives. Therefore, it's important that there's a vehicle that is automated, secure, available 24/7 to be able to deliver that capability. Anna Isnick: 07:29 Right. I know that we do a lot together as we follow what they call the dash from cash going forward. We've seen, if you agree, Sweden, Africa, India, Asia, some of them are moving fast, but then they get slowed down a little bit just because of the regulations that have to go around and implementing it. Do you think that that is something that will impact the digitization of cash moving forward? Scott Anderson: 07:52 I think, again, my crystal ball is cash is gonna be around for a long time. Will it be the predominant payment vehicle in every geography in the future? Probably not, but I do believe that it's going to continue to play a role. We have to look for ways to optimize that so that it's A, easy for the consumer. They don't wanna have to think about how, when, and where they're going to get cash, or make deposits for that matter, which is also critically important. Also, from the deployer's perspective, they need to look at ways that say, "How do I make this a more efficient channel for me? How do I take cost out of the equation?" And turn that model around to say, "Hey, this is actually a strategic value to me because as long as that customer needs to receive cash or deposit cash, it's an opportunity for me. It's a set of eyes on my brand to talk to them and to engage with them in a different way." Anna Isnick: 08:47 That's so important, the ATM's role. What do you feel about the financial institutions and the branches themselves? If their branches are going down are they right sizing and then the role of self-service in that? Scott Anderson: 09:00 Yeah. You and I have talked at length about this and the importance of self-service as a transformative strategy for financial institutions. If we think about what's happened in other geographies that are, perhaps, a little bit more advanced than North America with transformation, such as Europe, the ATM is a bit of a utility in the sense that it's predominant factor is to manage media, so cash, both in and out. When we look at the opportunities are in front of the financial institutions in North America, we are still very much grappling with cost of the footprint, whether or not there's financial viability for a branch in a certain location or certain town. I think the ATM plays in a critical role, because it can be a part of that transformative branch footprint while that branch is operational. Therefore, it's part of being in the branch as part of the cash mechanism and engagement model. When that branch is either right sized, optimized, maybe even closed, it's a great leave behind strategy where the ATM can actually be the branch. With the connectivity that the ATM now offers with middleware capabilities and transaction engine-like capabilities, the API world, we can now connect into various parts of the bank without being bogged down by that legacy of having just a standard protocol to a switch. Anna Isnick: 10:29 Wow. You said that beautifully. That's a lot of things that we feel really strongly about, is the ATM in the branch or does it serve as the branch? Serving as the branch, do you feel that with the open APIs it's gonna make automating of more transactions, not just focusing on cash, but really migrating other services and interactions to that self-service device as a more cost efficient way for the FI to operate? Scott Anderson: 10:52 Absolutely. I think this is where it becomes that strategic touch point, because if it is the leave behind strategy, or if it is the market entry strategy for some FIs who are looking to expand their footprint, it can't just be about cash and dash. It needs to be about an engagement model that says, "Allow me to interact with this physical presence as I would in my digital world with the bank, or even, perhaps, with a face-to-face person in the branch." It needs to have that connectivity to all aspects of the financial services organization. I'd take it one step further. It's more than omni channel in this sense, because we need to start thinking about that consumer may wanna do other things with other third parties, or other apps. The ATM can then be that vehicle that ties it all together and allows them to interact with their financial institution and peripheral or support services and offerings that may be outside of the four walls of the bank. Anna Isnick: 11:50 You mentioned something interesting there. You mentioned face-to-face. As our consumers are out there engaging with their financial institutions, they want a lot of different things at a lot of different points. What are your feelings about the video interaction with the ATM and face-to-face? Scott Anderson: 12:06 Yeah. Look, I think video has a role to play in certain, very specific, use cases and very specific deployment models. I don't think it's a solving equation for mass movement of transactions out of a branch that are card-less. There are other, better ways of doing that, and frankly speaking, more cost effective ways of doing that. Video plays a great role if it's an advisory capacity, if it's an onboarding capacity, or if there were very specific use cases where having that human presence to handle exceptions, to do things such as provide overrides, or even to onboard a customer and validate identity. That's where I think video can play a role. I don't think it has to be a long term strategy for a financial institution to roll that out on mass. Scott Anderson: 12:55 I think it can be quite prescriptive to say, "Hey. Here's a business challenge that I have and in the short term, video will fill the need while I build out infrastructure in the back to support a more programmatic way of engaging customers who may or may not have a card and PIN to process with, who may be onboarding with my bank or who may just wanna have some of that more human touch as they interact with the self-service terminal." Anna Isnick: 13:19 Looking at all that from FIs perspective to get that strategy down and think about all those different points that you made, do you feel like there's still a lot of possibilities to be unleashed? Do you feel that FIs today are leveraging these and are they doing it in a modern way? Because sometimes the life cycle of an ATM can be out there longer than is needed to meet requirements and security as things evolve. Do you think banks are ready to look at that and make decisions? Scott Anderson: 13:47 Yeah. This is probably the catch 22, because I think a lot of business minded people in the banks, a lot of business owners in the banks, would like to move forward much faster and be able to deliver on some of those journeys and some of those capabilities that we just talked about. The challenge, the dichotomy, that we have here is there's a lot of legacy mired into the channel, mostly from a connectivity perspective and how the ATM is managed for transaction processing. Scott Anderson: 14:16 I think what's also critical important is hey, if we wanna do some of these strategically important things and engage our customers in more meaningful ways, I need to have an infrastructure in a physical box that is up to snuff, that can actually handle some of this heavy lifting, that I can rely on, and that I don't have to worry about the age of the terminal or security layers on that terminal or the processing capabilities of that device to be able to support consumer demanded engagement, which is much more robust, much more like mobi…

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Bank Innovation in a Digital Age Feb 15, 2019

Show notes

Summary: Banks’ investments are leaning heavily toward technology upgrades – especially those that make self-service, digital banking easier for customers, as Karen Webster with Pymnts.com discussed in a recent conversation with Diebold Nixdorf Vice President of North America Solutions Heather Gibbins. Resources: Pymnts.com Article: Diebold Nixdorf: Why Bank Branches Need to Move Beyond the Transaction Blog: Is Your Bank Embracing These Key Mega Trends Why Digital Is Important Right Now The Future of Payments is Fast Evolving, but the Direction Might Surprise You How Innovative is Your Banks Culture? COMMERCE NOW (Diebold Nixdorf Podcast) Diebold Nixdorf Website Transcription: Amy Lombardo: 00:00 Hello, and welcome to COMMERCE NOW, your source for emerging trends in the banking and retail industries. Karen Webster: 00:14 Heather. Thanks for joining me today. I'm looking forward to our conversation about branch automation, migrating transactions, and the role of technology in making all of that smooth. Thanks, again, for making the time. Heather Gibbins: 00:28 Oh, thanks for having me. Karen Webster: 00:29 So, Heather, I want to start with an interesting proposition. So, it's clear that financial institutions are using data, they're using new tech to keep pace with expectations that their customers have about going digital. Yet, so many studies that we've done of consumers and their preferences for financial services say how much they really love the branch, and how important the branch is to those consumers in making decisions about who they actually want to bank with. Karen Webster: 01:12 Why do you think there is such a dichotomy between wanting technology to help consumers be more effective, yet the role of the branch in helping them navigate their financial situation? Heather Gibbins: 01:27 So, I'd probably say a couple things with this. One, when we hear about branch automation, itself, what we're definitely hearing and seeing is that it means different things to different financial institutions, and then what that effect actually has on consumers, itself. I would say in general, the role of branch is transitioning to be less based on transaction, with more of an emphasis on becoming a trusted advisor. And, I think that's where some of the study and research and information that you come back to kind of shows this dichotomy between the two items. Heather Gibbins: 02:03 So, you have financial institutions that are saying like, "Listen, let's migrate these transactions over to more of a self-service platform." Customers like technology. They're willing to use the technology, but at the same time you've got customers that are saying, "Hey, we want you to help us make better financial decisions for ourselves. Set us up for the future, think about retirement and planning, so that we can manage our finances in a better way." Heather Gibbins: 02:31 And that's a lot of the research that we've heard and seen, as well, is consumers are looking for financial institutions to basically help guide them and make better decisions with their money moving forward. So, they no longer want them to just hold their money and keep it safe, and maybe get some sort of return on it. They want them to give them their expertise and knowledge to make a better decision moving forward. Heather Gibbins: 02:57 And, I think that that's where you kind of sometimes have a difference between maybe the actions that are perceived actions that financial institutions are taking versus what you hear in research, but they really compliment each other. It's just really then at the end of the day what's the role of those face-to-face interactions in the branch, itself, going to be moving forward. Karen Webster: 03:18 Yeah, it makes sense, and your point about self service, I think, is a good one. Not only are consumers comfortable with self service, but they can actually use the services on their own time, so after more traditional banking hours, weekends, holidays, et cetera. So, I agree with that. And given that, that self-service capability is creating less of a responsibility for the branches to engage in those transactions. Karen Webster: 03:49 You're saying physical branches are really being transformed to create these more one-to-one interactions that build trust and loyalty. What specifically do you mean by that? Heather Gibbins: 04:00 One of the things that I would say is meant by that is what we're seeing more and more is the role of the branch changing to be, one, trusted advisor, but also to be able to spend more time with what we would consider commercial customers or small business customers. But, you'll see customers like that that are coming into the branch. So, there are these small businesses that are actually getting workspace within the branch. They can conduct meetings in the branch. You've got others that are trying to use the branch space to be more of an inviting place for community members to be able to come in. And, some of them are even showing the local sports games and stuff that are on, holding after hours events there in that space. Heather Gibbins: 04:44 So, it's becoming much more of a community space, and one that can drive more business within small business owners, itself, or small businesses in general, so that they can have strengthened relationships there and also increase in activity with those businesses moving forward. Heather Gibbins: 05:04 So, I think that's a lot of what we're seeing when it comes to that, and when customers and financial institutions are thinking about what is that "branch of the future" really look like, those are some of the considerations that they're taking into play as they're designing what that setup looks like versus what you would have seen in the traditional branch in the past. Karen Webster: 05:25 So, Heather, are these big banks, small banks? I mean is what you're describing, which sounds awesome by the way, something that is particularly characteristic of one type of bank versus another? Heather Gibbins: 05:36 I think we're seeing it across the board, and some of the larger top ten banks that are out there, they've been playing with this over time, especially in the US, and have been making some headway. Heather Gibbins: 05:46 We've also seen some that have more of like nische kind of clientele in the market that have gone and moved forward with these types of branches. Where we're seeing a lot of our activity right now, in North America specifically, is in those smaller regional and community banks because number one, they've got to keep up with what some of the others are doing; two, they're trying to figure out how do we really differentiate ourselves from what the competition is doing. Or, maybe how can we kind of get ahead of what they're doing. We are talking about really catering yourself to small business types of clientele and also the community. Heather Gibbins: 06:26 A lot of that is a way for some of these smaller financial institutions and credit unions to be able to kind of have that personal touch that can give the type of experience in consumer or business journey that these small business owners are looking for that's beyond what maybe some of the larger financial institutions have been able to achieve. Heather Gibbins: 06:47 And so, it gives them a way to really look at this from a differentiation and competitive advantage moving forward. Karen Webster: 06:54 Yeah, that makes sense and I think the whole point of the smaller regional community banks is to become more a part of the community and the fabric of businesses. So I can see where that would be something they'd want to really wrap their arms around. But, as with so many things, Heather, technology which is enabling a lot of these things to happen certainly can't happen just because technology is making some of these automation ideas reality. Karen Webster: 07:32 What are the things that people and business process need to do in order to really fully embrace the capabilities that technology can provide? Heather Gibbins: 07:43 Yes, so I think that's probably one of the number one things that we tell all of our customers that we're talking to is, if you think that you're just going to put some technology into place and that's it, most likely you're not going to be successful. Karen Webster: 07:57 Right. Heather Gibbins: 07:59 A couple of the biggest things that come around that are really like the people and the processes, and probably more important than that, the training that goes along with it. So, a couple of examples, and even in just some of these branch automation or branch of the future type of concepts, a lot of what we talk about as a part of that, yes, technology comes into play there, but when you talk about having meeting spaces and the more open area, and you've got some people that are doing coffee bars and big screen TV's and all that kind of stuff, a lot of it doesn't even involve technology. Heather Gibbins: 08:33 So, when we get into this more consulting and advisory services, a lot of times they're taking what you consider your tellers and they're becoming more sellers, right? Or, advisory consultants. The thing with that is they must have information at their fingertips when someone walks through the door to be able to enable them to be successful. So, a big part of that that comes into play from a technology side, but maybe less than from what you would traditionally consider is really data. You have to be able to share data from all of your different systems in order to enable what you want your people to be able to do moving forward. Heather Gibbins: 09:10 The other thing you have to really think about is the training aspect of that of how you want them to interact with customers, how you want them to greet customers, how you want them to take them around, what your new branch looks like. But, also to make sure that they feel comfortable using the technology that you now have into play. I can guarantee you that if you walk into a lot of financial institutions, credit unions today and someone comes in and wants to do just a check deposit, that teller's going to take the check and do the deposit just like they do every day. Heather Gibbins: 09:43 More than likely, what a lot of executives are probably wanting those tellers to do is to actually either: a) show them how to do it on the ATM so that they can do it themselves, or open up a mobile banking device, show them how to download the app and show them how quick and easy it is to be able to do that transaction at home. And there's so many customers out there today, and consumers out there today that don't even know that their financial institutions have that as an option. Heather Gibbins: 10:13 A personal story, we had a friend and she made mention that she owns a couple small businesses and she couldn't go to the bank to deposit some checks because they weren't open. It was a Sunday, and I just kind of looked at her and said, "Who do you bank with? I'm sure that you can do it on your phone." And she literally, I walked her through how to do it, not even a member of that bank or anything like that, and she said, "Heather, this is like life changing." Karen Webster: 10:36 I was just going to say you changed her life. Heather Gibbins: 10:39 Yes. Exactly. So, it's just those simple things that sometimes some of the financial institutions need to think about, like hey, how do we make sure we're training our people to get the expected behavior we want from consumers, but also makes it a better experience and more convenient for them? Karen Webster: 10:58 So, you mentioned two things. Tellers as sellers, I thought that was awesome. And there's a training process around that, and that is just any other change management training process, it takes time and it will eventually be successful. But, data sharing strikes me as something that could be a bit more problematic. Karen Webster: 11:19 How are the financial institutions you deal with addressing that, and getting the right data in the hands of the right people so that all the things we talked about are possible? Heather Gibbins: 11:31 Yeah, so I think it can go in various stages or phases. Just to give you a real quick example, too. At one point I needed to get pre-approved for a loan. We were going to buy a new house, and I was shopping around from different providers and I decided to take one of my local financial institutions, and go online and fill out the form. And a few days later I had realized I still had not gotten any information back, and I thought oh my gosh, did I just give all my information to someone and I have this security problem now. Heather Gibbins: 12:06 So, I picked up the phone and I called the call center, and when I called that call center they were like, "Heather, we don't have any information that says that you did this." They said, "Did you fill it out online?" And I said, "I did." And they're like, "Oh, well yeah if you fill it out online, we're not connected to that system. It's a completely different group and so we can't help you. You need to email the person and maybe they'll help you." Karen Webster: 12:30 What?! Heather Gibbins: 12:30 So, again, my consumer's journey was not the greatest. I ultimately did not go to that financial institution. But, I think that this is very common. Karen Webster: 12:40 Right. Heather Gibbins: 12:40 I don't think it was specific to this one financial institution. So, some of this is just behind the scenes, if that teller can go on and be able to log into the system to see information. Some of that is just a very simple sharing of data. It's not the best use case, but they need to be able to have access into systems to see information. Heather Gibbins: 13:01 We've got other financial institutions that are saying, "Okay, we want to have full, let's say CRN integration", so when someone walks into the branch, if they go to the ATM, I can see on my tablet exactly who's at that ATM, if there's maybe some sort of value add service that I could offer them, to be able to disclose to them. If they have a CD that's coming up for expiration, and I might be able to go help them renew that. That it gives them the information they need to help. Heather Gibbins: 13:31 So, we've got many that are saying, "Okay, let's figure out what's the role of these tellers moving forward?" In many cases they're calling them something else, maybe they're a concierge or that type of thing, and giving them a tablet that can help them have better interactions moving forward. Karen Webster: 13:47 Is part of this, too, training consumers and small businesses that this is just as effective as walking into the bank? I know that sometimes people think that if they go to the bank, somehow service is expedited or availability of funds is faster than if they did something electronically. Is there some of that that needs to be dispelled, too? Heather Gibbins: 14:13 I think there's some of it in some cases, but at the end of the day when you look at consumer behavior today and think about who are some of the strongest ... And I go to retailers when I think about this, too, and I talk to customers about it because the interactions that consumers are having with retailers, whether it be people like Amazon or even mobile applications that they're using, like Uber, or walking into the Apple store, they're comparing you to that on a daily basis. Karen Webster: 14:45…

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Retail Wrap-up 2018 Jan 30, 2019

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Summary: In today's topic we're going to discuss the very interesting year of 2018 in the retail industry and we'll talk about what's to come in the new year. Resources: Blog: How Self-Service is transforming Fast Fashion and In-Store Retail Experiences Our Mobile Shopping Innovations are headed to EuroCIS COMMERCE NOW (Diebold Nixdorf Podcast) Diebold Nixdorf Website Transcription: Amy Lombardo: 00:00 Hello and welcome to COMMERCE NOW, your source for emerging trends in the banking and retail industries. I'm your host Amy Lombardo, and in today's topic we're going to discuss the very interesting year of 2018 in the retail industry and we'll talk about what's to come in the new year. I've got a special guest joining me today. It's Andrew Busby, one of the UK's most influential retail analysts. Hey Andrew, thanks for joining us. Andrew Busby: 00:27 Hi, Amy. It's great to be here. Amy Lombardo: 00:29 Good. Let's talk a little bit about your background first. You have a 20 year plus career in the retail space. How did you get started? And talk to us a little bit about your passion? Andrew Busby: 00:40 Amy, my career, I guess started about 20 years ago. I joined Kingfisher, one of the major retailers in the UK, and I was working there for a number of years. Retail I think, is really one of those things where you either love it or you're not so keen on it. And I just love the sector. It's so relevant to all of us. Unlike some of the others, we have relationships with our favorite retailers or brands that we don't necessarily have with utilities or telcos or whatever. So, they become part of our lives, and I think that for me is one of the great things about retail. And also particularly now as I'm sure we'll talk about, there are just so many things that are happening right now in retail, and lot of things which will common both in the US market and here in the UK and Europe, and I think a lot of the retailers are going through the same issues and challenges. Amy Lombardo: 01:36 Very good. Talk to us a little bit about those challenges. 2018 was a pretty interesting year here. You saw so many different store models go digital, offering different convenience options for consumers. With that said, how would you define the 2018 year for retail? Andrew Busby: 01:59 I think that what we're witnessing ... and it is happening. I think this is a real watershed moment in retail that we're going to look back on. I think 2018 and going into 2019, what we're witnessing in front of our eyes is a transition from what I refer to as old retail into new retail. What I mean by that is that the old model, the more traditional retail models are quite hierarchical. They're commanded and controlled from the center, they're top down in a way that they're organized. Andrew Busby: 02:31 And of course they were founded long, long before the Internet was ever around, let alone this online shopping and e-commerce that we see today. They've had to adapt. And of course then you get the new retail that doesn't have all the burgage, if you like, and the old and out of-date infrastructure that old retail has. They can build their systems, which are absolutely ... and also their structures, which absolutely fit for purpose around what they want to do. I'm thinking in particular of the pure play online brands, which have a ... I guess have a sense of purpose about what they are in business to do that some of the others perhaps don't, if that makes sense. Andrew Busby: 03:17 I think that we're really seeing this transition, and it will continue over the next couple of years. I don't normally like to look too far than two or three years out, because I think the pace of change is so rapid that it's almost impossible to look further than three years out. We simply don't know quite what's going to happen or what's going to be adopted by the consumer. In one word, I would say that it's change, and in five words, I'd say it's change, change, change and more change. That's what we're seeing at the moment. Amy Lombardo: 03:51 It's interesting that you say you can't predict that far out because there are so many storylines that hit the new cycle this year that you never anticipated. We have everything from smart fridges and locker concepts and then you think, "Okay, well what's possibly next?" And have we created this society that it's almost become so convenience based. Will we ever go back to a simplistic retail model? I don't know. Andrew Busby: 04:20 I don't think we will. I think we've got so used to the ease and convenience, which we're seeing right now. But of course the thing to remember there, which I think you were alluding to, is that that's getting even more convenience. Take payments for example, which is in some ways the most exciting part the retail landscape, but also its scenario, which is developing quite rapidly. And we'll get the point within the next few years where we'll see far more invisible payments. Whether you'd be filling your car up with gas, you'll just fill up and you'll drive off because it's automatically been ... payment's been taken. Andrew Busby: 04:57 We're seeing far more frictionless experiences. Of course there's Amazon Go, which we know about, and we'll see more of that. I think ease and convenience in whatever way and forms that it takes is going to continue. And of course online and having deliveries to not just at home but to wherever we want, that will rapidly become the norm. And I think for ... one of the biggest challenges for retailers is having the supply chain and logistics capability to deliver very, very quickly to pretty much ... and by very, very quickly, I mean almost within the hour to almost any location. Andrew Busby: 05:36 In order to be able to do that, they have to have in real time 100 percent, or as near to that visibility of their inventory, which almost without exception, none of them currently do. Some may come reasonably close to that, but ... so I think that's an area that we're going to see a lot of development going into. Amy Lombardo: 05:55 It's interesting, we were talking Christmas time, and I think one, two years back, whereby at the beginning of December, you get the messages that say, "Okay, if you haven't placed your order, it's not going to arrive to you by Christmas." Well, that's not the case today. You probably could still get an order on the 24th. I'm sorry for that delivery man or woman who's bringing it to you, but you can still get that delivered in time, right? Andrew Busby: 06:22 Absolutely. Yeah. Yeah, but actually one of the other aspects that, which we're already starting to see has come forward is ... and we don't notice it over here, but I understand that the 19th of December for the first time this year, was the national returns day where the volume of returns for the year peaks. It used to be I think one or two days into the new year. That is a reflection on the amounts of trading that happened over Black Friday, Cyber Monday and so forth. Andrew Busby: 06:50 But also, it's a really interesting thing for me because that sets quite an insight into us as consumers and our behavior. Returns are increasing, and that puts a huge strain on retailers. I personally happen to think that it's not a good thing, but the problem is it's a question of who blinks first. And of course nobody's going to. In other words, everybody wants ... they want to offer free returns, free shipping, et cetera, et cetera, but it is driving a level of consumer behavior which is quite alien. We're treating our own bedrooms and our living rooms as our changing rooms, and ordering ... and I've spoken to people who order quite regularly up to 20 items and they'll return 18 of them. Amy Lombardo: 07:30 That's so fascinating that you are saying that, because I know I've adapted to that style here in my own home. I'm over buying things because I'm like, "Well, it's really easy to return it. I don't have to go to a store.", Or for Amazon, I can just drop it off here at their local UPS station." But I wonder what the facts are. Do you have any information on that? Is it more advantageous to the retailer when consumers are overbuying, or does that shipping just totally negate that overbuy? Andrew Busby: 08:01 For retailers, it's a complete nightmare for them because a journey of a returned item can be quite torturous, and it can go through up to seven touch points and can take not hours or days, but sometimes weeks to get back to where it should be, if you like, depending on how it's returned. And that volume, that peak that I referred to from my understanding, in the US I think it was 1.5 million parcels were expected to be returned, and during December, a million per day, which is huge. Andrew Busby: 08:32 And as I say, for retailers what it means is that their inventory is all over the place, but they're still expected to be able to know where that inventory is to be able to make those commitments to next day delivery when people are purchasing. It becomes a vicious circle for them. But you think of it as a roundabout, and it's spinning ever faster. But it's going too quickly now for anybody to jump off. So yeah, you just got to hang on. It's an interesting one. Andrew Busby: 09:01 And as you said from your own experience, yes, it is far too easy, too many ways to return because that's being seen as part of the overall customer experience. It has to be easy to return. You mentioned Amazon. In the summer, they launched their Prime Wardrobe, so you order three or more items and it's delivered free, and it comes in a box, and it comes with a returns delivery label already there. You try on, and you keep what you want at, then you pay for it, and you return what you don't and you just leave the box outside your front door. So yeah, very easy, very convenient. And that's what people expect. Amy Lombardo: 09:37 Right. One of my favorite case studies right now is Rent the Runway. Because if you think about things, "Okay, I've got to then dryclean an outfit", or "Oh, now I have to think about return timeframes and such." This is an all-in-one experience of pick the clothes, pick the style, look at the reviews, and your purchase includes everything. It comes to you clean, you're sending it back clean, you have a certain timeframe to do it. It's such an easy, frictionless, seamless experience. That buzzword that we said earlier. Amy Lombardo: 10:09 That's where I want to dive a little deeper into here, because frictionless, seamless, moving transactions into meaningful connections. Those have been such some strong words that retailers and even vendor partners have been using over the last year. Can you give some recommendations here on how a retailer can still maintain that customer, that consumer experience, but still introduce these types of digital and frictionless transaction sets? Andrew Busby: 10:44 It's interesting because just a word on frictionless. I think the majority of transactions, we welcome that, and particularly the type of transaction. In other words, there'll be certain types. For example, throwing a dinner party, but you haven't got one particular item, whatever. Dash out, because you need it there and then, to the grocery store. You want that to be as frictionless as possible. You want to get in and get out as quickly as possible because you've got a deadline of when your guests arriving and that sort of thing. Andrew Busby: 11:12 Then there'll be other transactions. Let's say that you're buying ... I don't know, a watch or jewelry or something like that, where you actually welcome an element of friction in ... and I mean friction by fact that the whole transaction can be slowed down. You're wanting, you're expecting to have more engagement with the store associates, those sorts of things. But from an experience point of view, it's interesting. What I would say in answer to your question, my recommendation so forth is don't let the technology lead in itself because we're all human and we're all driven by emotion, and we make because we are able to have emotions. Andrew Busby: 11:56 What I say to people is first of all, think about and understand your brand and what it stands for and what are the brand values, if you like. Once that's very, very, very clear, then and only then when it's understood, can you then make the sorts of decisions you want about what technology you want to deploy, and what perhaps isn't quite so appropriate for your brand. Because there'll be some which would be absolutely lend themselves perhaps to augmented reality, virtual, mobile and so on and so forth, but there may be others which lend themselves more to much more of a human interaction. Andrew Busby: 12:34 But having said that, I think that ultimately, as I said, we're all human. We all want to have a relationship with retail brands on an emotional level, which is why I said at the beginning that retail is an exciting sector to work in. I would say always human first, technology second. Amy Lombardo: 12:53 Right. It's such an interesting way to position it. The emotion and the relationship side of a retail purchase, or say your favorite store closes in your neighborhood. That is such a letdown because it becomes part of your norm. And yeah, I just think that's a fascinating concept to think about. The emotion tied to it. Andrew Busby: 13:12 I think so, because in some ways we're creatures of habit, but in other ways we're not. We're not as loyal as our parents' generations that have gone before us. We do behave for more promiscuously when we're shopping. We jump from brand to brand. But at the same time ... I know it myself. I probably navigate the supermarket when I do my shopping in pretty much an identical fashion every time I go in, and I will go for the same brands of whether it be ... I don't know, shampoo or washing powder or whatever. I'll go to the same, and I wouldn't be drawn to other ones. Andrew Busby: 13:49 With a store closing down, you suddenly then are taking away parts of our lives, and we might have to travel a bit further, or we don't go to that particular retailer any longer. So yeah, it is an emotion driven sector in that way. Amy Lombardo: 14:05 With the traditional brick and mortar branch and that style changing, whether it's hybrid type locations, smaller footprints, specialty shops. Are there opportunities then when retailers can actually partner with other verticals within retail to be able to offer this ultimate consumer experience? Like, "Hey, you can get the two in one now. I can offer you this and that." Are you seeing that there over in the UK? Andrew Busby: 14:35 Yeah. I do get what you're saying, and I think that we could well start to see that. But what I am starting to see evidence of is people are starting ... and this is talking about the in-store experience and the role of the store. We know there's all the pressure from online, and that the percentage of their sales is only getting greater and greater. None of us really know where it will plateau out, but we do know that it's continuing to grow at the moment. The role of the store is under the fiercest scrutiny. But what I am starting to detect is that people are rethinking the role. Andrew Busby: 15:09…

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Navigating a Complex World Jan 15, 2019

Show notes

Summary: In this episode we'll discuss how organizations can keep up, and what is expected in order to stay ahead of their competition. Resources: Blog: Services for a Connected World Silicon Foundry LinkedIn: Steve Gotz Twitter: @stevegotz COMMERCE NOW (Diebold Nixdorf Podcast) Diebold Nixdorf Website Transcription: Amy Lombardo: 00:00 Hello again. This is Amy Lombardo, your host for this episode of COMMERCE NOW. This year we've seen some significant technology trends, and we know the knowing your audience and increasing the level of personalization is key to the success to this ever changing digital world. But this can be easier said than done, right? So, in this episode we'll discuss how organizations can keep up, and what is expected in order to stay ahead of their competition. So, listeners I've got a real treat for you today. I'm joined by Steve Gotz who is an expert in working with executives to create impactful corporate innovation strategies. He has over a 20 year background working with a range of global organizations such as AT&T, General Electric, and Symantec, and one thing that you'll be most interested in is his recent work with Umpqua Bank, which we'll touch on a little bit in this discussion. So Steve, thanks for joining me today. Steve Gotz: 00:49 Thank you. I'm glad to be here. Amy Lombardo: 00:50 Wonderful. So let's start a little bit with your background, and just really what keeps you up at night. Steve Gotz: 00:57 I think what keeps me up at night is relevance. So, my background. Quick intro. So, 20 years working with big companies like you said in industries that are undergoing change, and a really interesting thing is it doesn't matter what the industry is. Corporations are really in a race for relevance, and whether you're an entertainment company, whether you're a movie studio, whether you're a bank you have to think about ways to be relevant to your customers today and into the future. Amy Lombardo: 01:23 So, that's an interesting comment. Okay. Race for relevance. Could you dive into that just a little bit more for me, or maybe give me an example of some recent work you've seen on how someone has caught up or stayed ahead maybe of the race for relevance? Steve Gotz: 01:35 Yeah. So, I think a really interesting one that I can point to is AAA. The automobile club, right? So AAA is an American institution, and their business model up until now has been predicated on your car breaking down on the side of the road, you're picking up the phone, you're calling them, and them sending somebody there to help you. Now, a couple of years ago they recognized that they're sitting on a dinosaur. That business model isn't going to exist 10, 20, 30 years from now. We have autonomous vehicles, when we have cars that don't break down with us behind the wheel, their business model needs to change. Steve Gotz: 02:11 So, what I think they've done is really interesting, right? So they're investing in infrastructure and thinking about how can AAA be relevant inside of the home, and I think that's a great example of an incumbent corporation that's saying, "You know what? We're going to face this head on, and we're going to drive this change. We're going to drive this disruption rather than waiting for us to be disrupted by the market." Amy Lombardo: 02:32 That's such a great example because AAA is something that I just rely on so heavily in my own life, but I haven't thought about yeah what would be next for a business like that, or thinking back to the stories of like Kodak or Blockbuster or something. Why it did or did not work for them because their business models needed to change with the rate of pace of change here. Steve Gotz: 02:53 Yeah. So, the last couple of months for me I've spoken to maybe 200 executives. So these are CEOs, Chief Digital Officers, Chief Technology Officers, entrepreneurs about what's changing in their business, and what's really interesting is we've kind of gotten through this first era of innovation. So, every corporation talks about innovation being one of the most five, one of the most 10 important things that they're focused on. But if you look at the number of ideas that have come from an innovation lab that have found their way to production inside of big corporate, that number is pretty small. But I see happening now and with people are talking about is this second wave of innovation. This more impactful, this more intentional strategy to say, "We are going to build things that are going to change our business." Steve Gotz: 03:41 And change our business in a way that is going to make us relevant into and beyond the 21st century, and this is different, right? So I think you said at the beginning. When I started my career, I started at AT&T labs in the music industry, and this was at the beginning of the rise of digital distribution before we had iTunes. When we took this, basically AT&T invented something underlying technology to iTunes, right? Secure digital distribution. And when we took it to the labels, the music labels at that point, their response was really telling. The response was, "We're not interested in this. We sell things. We sell things that spin. We're never going to sell our music over the internet." Steve Gotz: 04:20 So, this was in the late 90s, and that was your classic Kodak response from an incumbent. Fast forward 20 years, and when I talked to bank CEO's, they don't talk like that anymore. What they talk about is, "Yes, absolutely. We need to change. We need to create new experiences, and here's how we're going to do that, and here's where we are doing it." Right? So, this idea that the banking industry is facing a Kodak moment, I'm not an advocate of that line of thinking, right? I think the banking industry is responding very differently than some of those other traditional industries that have been disrupted. Amy Lombardo: 04:54 Right, okay. No, that makes sense. So, in some of my research on you, the work you've done, you've talked about this idea of the innovation theater, and is that what you were speaking to earlier, which is kind of this innovation 2.0? Steve Gotz: 05:08 Yeah, that's exactly it. So, if you look at kind of the last 10 to 15 years of innovation, it's very clear that companies are recognized they need to be more innovative. However, the tools, methodologies, and frameworks they've deployed, they resulted in what some people call innovation theater, right? It's really pretty, you go into the innovation lab, you see an interesting application. But then when you pull back the curtain to say, "Well, what's the path to production?" Right? How many customers are using this? That's where you tend to realize there's not much substance there. I think a lot of people have recognized that, and now they're thinking about, "All right. How do we do that?" Steve Gotz: 05:45 Right? So, we're seeing this kind of growing kind of drive. An increasing number of corporations that are sending out new company builders, new organizations designed to create things, and scale things up, right? Don't just show me something in the lab, show me how you take what's in the lab, and get it in front of all of our customers, and make us more relevant. Amy Lombardo: 06:08 Right, right. So, the example Steve you're giving about this innovation theater, almost like the innovation smoke and mirrors, I'm also kind of thinking in banking terms now of what Chase has done with the everyday express branch, and Capital One with the café branch, I mean these are realistic examples of innovation- Steve Gotz: 06:30 Yeah. Amy Lombardo: 06:30 That has now been brought to life, and the results and at least the studies show that consumers are gravitating quite well to these concepts. Steve Gotz: 06:38 Absolutely, and especially around banking. The Capital One café, it's a really interesting idea, and I think it kind of gets to this point that physical is still important, right? Being able to bridge digital experiences with physical experiences, that's kind of the next competitive battleground. And I think Capital One, Umpqua Bank, I think we ... And even Amazon with Whole Foods. I think we see an increasing number of organizations getting much more sophisticated at spanning the omni channel experience. Amy Lombardo: 07:10 Right, right. So you mentioned Umpqua, and that is such an interesting case study here. So, tell us a little bit about the work that you did with that bank. Steve Gotz: 07:18 Right. So, Umpqua is really interesting. I got connected up with Ray Davis in 2015, and Ray is kind of an iconic figure in the banking world. He grew Umpqua from $100 million in assets to about $24 billion in assets, and he was really driving the industry, and created a unique customer experience, right? So, for Ray they're not called branches, they're called stores. In those stores, there's a very unique experience when you go in. A store are part of the community, a store holds coffee hours. People could use the store as a co-working space. So, Ray and Umpqua is really kind of the leading edge of the ideas that we're talking about today, and so much so the now Capital One is kind of borrowing some of the ideas that Umpqua pioneered a historic concept. Steve Gotz: 08:04 So, I got connected up with Ray in 2015, and in the first conversation he was like, "Look, the bank I built for the last 20 years isn't the bank that I need for the next 20 years, and I need some help to figure out what that new bank is." So, the mandate was figure out how to pivot the bank, right? Ray is a gentleman who likes to name things what they do, so it wasn't a digital adventures lab, it was Pivot us. Easier to pivot the bank. So, we started down this path, and what we got to fairly quickly was the banking relationship is a unique relationship. Money is such a loaded topic for people, for consumers, and 20 years ago the banker was your neighbor. Steve Gotz: 08:41 The banker knew your first name, they knew your kids, they gave them a lollipop when they walked into the store, right? There was an experience attached to that, and when we fast forwarded today, and we the state of digital he said, "It's impossible to create that really personalized digital experience right now with the technologies that were available." So, the question was how do we engineer the human in? How do we create that personalized experience through a digital channel? And that's what we set out to build from. Amy Lombardo: 09:11 I think that's so interesting that you say that because a few years back we had this interesting study, that was how consumers could differentiate their toilet paper brand over their bank brand, and I say that. And of course, the source is escaping me, but- Steve Gotz: 09:29 Right. Amy Lombardo: 09:30 But it was all around the fact that banking had become this emotionless interaction. No, really it was more the transaction. You need to move into an interaction here, and your examples here of putting the human element bank in is a perfect way for banks to be thinking about this. Can you give our listeners some specific technology examples if those are relevant and okay to [inaudible 00:10:00] out here? Steve Gotz: 09:59 Yeah. So, before I do that going back to your idea of kind of toilet paper brand and banks. Amy Lombardo: 10:07 I know you didn't think that what was going to come out of my mouth. Steve Gotz: 10:12 If you kind of step back a little bit, and you kind of look at how the industry go to where it is today, what you see is in the pursuit of cost efficiencies, the customer experience has been lowered significantly. In the last 20 years, the industry has done what it should have done, right? Which is use technology to be more efficient. But in the active being more efficient, they've created a customer experience that's not that great, and by lowering that bar so far it's now become really easy for two kids in a garage in Palo Alto to create a new mobile banking experience that can run circles around most of the existing incumbents, right? Steve Gotz: 10:55 Now, the opportunity is to change that. There's no reason that two kinds in a garage in Palo Alto should be able to create a better experience. Incumbents can do that, which is where we get to this idea of, "All right. How do we create new teams? How do we create new environments to build these things?" And that's kind of really what we did at Umpqua. Ray's mandate to us was don't go give us some prototypes. It was figure out how to keep us relevant. So, that started with the customer relationship. We said, "How do we take that in-store experience that we have today that really personalized experience when you walk into the store, and create that, and then catalyze the experience in an additional channel." Steve Gotz: 11:35 So, when we looked at the technical landscape, what we said is, "The future of the industry is chat based. It's dialog based systems." So, let's think about how we engineer the human in, and do that at scale. Let's think about how we can deliver a chat interaction, a highly personalized chat interaction with a human. So, what we started building is eventually we started using WhatsApp, and some of the existing chat platforms. But very quickly we ended up building our own application primarily for security and privacy reasons, right? So, if you're using Facebook Messenger as a bank to service your customers, if you're using WhatsApp there are potential privacy implications that come along with that, that we were uncomfortable making. So, we ended up building our own technology stack. Steve Gotz: 12:24 And essentially what we did was we put a device in the hands of our employees, of our associates in the store, and said, "You now have the opportunity to chat with customers." So rather than make this a call center initiative, we pushed it out to the edge, and the response was phenomenal both from customers, and from our employees. Amy Lombardo: 12:44 Now, was that a cross-channel application to where that chat feature was available both on mobile, and online? Steve Gotz: 12:52 Yeah exactly, and the idea of it. So everybody talks about getting customers to come into branches, and the question is we can't get customers to come into branches now. I don't think we're going to get them to come into the branch in the future. One interesting kind of dynamic that we observed is if the customer knows who they're going to see in the branch, who they're going to interact with, there's a higher tendency to come in. So, the idea was we can use the chat, right? We can use the online interaction with the customer to pull them into a physical experience. So, if the customer needs to have a more in-depth conversation. Maybe the retirement planning, 401k, 529 plan. Steve Gotz: 13:30 We can say, "All right. Maybe it makes sense just to sit down and have this conversation in the store, and we can get something scheduled." So, the human interaction becomes a really interesting way to pull people into the store for more engaged conversation. Amy Lombardo: 13:43 I love the example you just gave me because it speaks so much to what we believe and strive to deliver to bankers, and retailers here at Diebold Nixodrf by delivering connected commerce. This idea that you have this seamless journey throughout various touchpoints that it doesn't have to seem like, "Oh, I'…

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