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From video ATMs to video banking, BankOn’s Gene Pranger gears up for his newest battle

It was 2001 and Gene Pranger was seriously fiddling with video banking. ATMs were in the midst of a big upgrade cycle. Pranger’s firm, uGenius, combined software and hardware that turned ATMs into video-enabled machines so customers could chat with a bank representative upon request. Tellers, centralized in a video call center, could, in turn, activate teller-driven activities at a local machine, including dispensing cash.

The Utah-based entrepreneur eventually sold his business to NCR in 2013 and today’s NCR Interactive Teller machines incorporate Pranger’s video banking technology. It’s been a slow, but gradual process. 16 years later and the ATM is still in the early throes of becoming an ITM, or Interactive Teller Machine, enabling banks to lower the costs of maintaining a large network of local branches.

And Pranger, whose eyes still light up when he starts talking about the potential of video banking, may have sold his company but he hasn’t shaken the video banking bug. Financial Town, Pranger’s new firm, takes off where uGenius left off. Its flagship product, BankOn, is a video banking solution designed for mobile.

Like video ATMs, mobile video banking will be slow to roll out. “What’s happening with mobile video has been similar to the incubation period of 2001-2007 for ATM video,” said Pranger. “It’s taken time for the technology to catch up and really, it’s only become stable in the last two years.”

Mobile video solutions abound but what makes BankOn different is that it was designed for the workflow of bank tellers. The platform hooks into the automatic call distribution systems banks employ. It also has a user portal for support reps, so that a financial institution’s administration can monitor what’s going on. Reports can be generated into a firm’s CRM system, as well.

But what’s really different than Skype or FaceTime is BankOn’s media exchange within the app. For example, a teller working with a customer on a mortgage application can push a signature panel through to be signed by the user directly within the app. So, beyond customer service, customers can open up new accounts, sign documents, scan identification documents, and apply for loans directly through the BankOn app as they’re chatting with a teller.

“This is good news for consumers,” Pranger explained during a video chat on the BankOn app. “Now bank service staff can appear and resolve problems at a customer’s moment of need. That’s also great if you’re a sales guy at a bank and want to react and close quickly.”

According to a research report from banking association Efma and video collaboration technology maker Vidyo, 10 percent of banks expected to use video for banking services in 2016. That number is expected to rise to 50 percent by the end of 2017 and 80 percent by the end of 2018. Pranger wants a piece of it.

While BankOn’s initial product is optimized to service customers outside a bank branch, Pranger’s firm has an in-branch product in the works as part of its 2017 pipeline. This multi-channel version of video chat is intended to make the branch experience better by presenting things in a different way to clients when they’re standing inside their bank. That’s important because, while early adopters have migrated to mobile banking solutions, Bain Consulting recently found that nearly 90% of U.S. banking customers still visited a teller during the previous quarter, and nearly half called their bank.

“We have to start by changing behavior in the branch and then migrate people to start using other channels,” Pranger said. “We have to make it the best possible experience.”

It’s still early days for mobile video banking. BankOn currently has four clients in beta mode, taking a lot of time to test. Pranger said he plans a larger rollout during 2017 by setting up reseller and distributorship agreements with partners. If he’s right again, you’ll soon start to see more video banking options inside and outside your local branches.

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High Five! The top 5 fintech stories we’re following this week

5 trends we're tracking in finance

 1. Wall Street turns on the fintech heat

If 2015 was the year of fintech Star Wars, of the upstart firm taking on the big boys, 2016 could be the Empire Strikes Back.

The largest financial institutions are indeed rising to the occasion, developing new products, striking strategic partnerships, and advancing the ball.

Of global major banks, Spain’s BBVA is one of the most active investors and acquirers in the fintech space. Scarlett Sieber,who is part of the business development team for the bank’s digital business, joins us on the Tradestreaming podcast to discuss how (and why) she is building a financial technology ecosystem.

What happens when the largest credit card issuer partners with the largest gas retailer? JPMorgan’s Chase Pay landed a deal with Shell, giving the upstart digital payments platform access to 20 million daily customers.

Barclays revealed plans that showed serious intentions about banking Africa, bringing potentially 1 billion unbanked folks into the financial fold.

2. Fintech is competitive and, sometimes, destroys value
Wall Street has a lot of work to do – for example, today’s brightest are less likely to want to work at hedge funds. (That’s not deterring Goldman Sachs, though, from rolling out a new video format for on-campus recruiting).

Also, it can’t be easy heading up the largest player in the actively-managed funds space, either. BlackRock’s Larry Fink has a ringside seat, witnessing the outflows of actively managed capital, flowing into passive strategies. Active managers are feeling the pain of watching more productive revenue streams evaporate.

Right now, it seems servicing clients and protecting long term franchises is a good start.

3. Why video banking is the fintech trend to watch

More so than bitcoin or other sexy fintech technologies, video banking is already here and changing the way customers, and banks themselves, interact with financial services. We’re quick to (falsely) compare video banking to a Skype-powered teller, but it’s really so much more.

Video banking is about creating real experiences, putting a human face on digital banking. It’s good for customers and that shows — video banking still has some of the highest conversion metrics of all channels. So, in addition to creating operational efficiencies, video banking also has important security implications. Lastly, video banking technology is also helping some of the underbanked — like people with hearing disabilities — get serviced like other bank customers.

4. With new bank partnerships, TransferWise tries for transparency

As customers clamor for more from their financial service providers, small players of the big financial game are responding with their own versions of transparency. Transferwise is the horse to beat in the online money changing business with over 600 routes in 35 different currencies. The startup claims it has over a million customers conducting $750 million worth of transfers per month.

But that’s peanuts compared to the $5.3 trillion in forex transacted daily. Transferwise has big aspirations and to get there, the firm launched a new partnership strategy that would bring the company’s currency exchange tools to other online banking platforms. So far, it looks like that strategy is working.

5. The new virtual reality of shareholder communications

Berkshire Hathaway is known for its lively annual shareholder meetings, featuring everything from a ping-pong match between chairman and CEO Warren Buffett and Microsoft cofounder Bill Gates to discount jewelry shopping. A sign of the times, the firm live streamed its event this year. Communicating with investors has come a long way.

When it first launched its virtual shareholder meeting services in 2009, four companies held such meetings. This year, Broadridge Financial Solutions is expecting to facilitate meetings for 200 public companies, 80% of them virtual-only and 20% hybrid, or a mix of in-person activities and an online broadcast, like Berkshire Hathaway did.

 

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Why video banking is the fintech trend to watch

It’s hard to get excited about video banking. Skype, the free IM and video calling app, is celebrating its bar mitzvah this year, and for its 74,000,000 users worldwide, Skype, as both a noun and a verb, is a matter of course. However, comparing video banking with video calling does the former a disservice. Like the near universally lauded blockchain, video banking is poised to disrupt the finance industry in terms of efficiency, reducing cost, innovation, and security.

Here’s how video banking, unlike the nascent blockchain technology, is already having a major impact on incumbents and consumers.

Video banking is the human face of the digital banking revolution

In order to be cost effective, more and more banks are axing their brick and mortar branches and migrating their services online. However, this rapid transition from human agents to digital leaves behind a conspicuous service gap, one that only video banking can fill. “Video banking shows customers that behind the bank, there is something,” said Grzegorz Młynarczyk, vice president of virtual banking services provider LiveBank. “There are people that can actually help you. It’s not like talking to a machine, it’s like talking to a real person.”

The key selling point of video banking is the clear benefits to the banks themselves: video banking increases upsell of financial products, and lowers operational costs by at least 50%, according to the firm. “Among all of the existing channels, face to face communications still have the highest conversion rates,” remarked Młynarczyk. The fact that 48% of US millennials would like their banks to offer video banking suggests that this platform can really be a win-win investment for banks.

Cultivating banking efficiency

Video banking isn’t a replacement for other types of digital banking – far from it. Solutions like LiveBank’s virtual branch combines video, internet, and mobile banking to provide a tightly integrated remote banking solution. “It would be useless to provide video banking to perform simple tasks, like making a money transfer,” said Młynarczyk. However, if customers making international money transfers have trouble filling in the necessary forms, video banking allows them to co-browse with an agent, and have that agent fill in the forms on behalf of the customer.

For now, at least, navigating banks’ bureaucratic inferno requires a human Virgil – a bot won’t cut it. Thanks to video banking, the customer can now access a helpful bank representative from anywhere and at any time.

Groundbreaking technology means better security

One compelling reason for banks to partner with companies like LiveBank to develop video banking as opposed to developing it in-house is that LiveBank’s IT department is constantly adding new security features to the product, such as facial recognition, digital signatures, and voice biometrics.

By pursuing higher security standards, video banking is inadvertently disrupting entrenched banking processes. April Rudin, founder and president of brand consulting firm The Rudin Group, singles out lending as one banking field that has been rocked by video banking: “Witness Ping An, a Chinese company that provides banking and wealth management services,” she wrote in an email to Tradestreaming. “Using their facial recognition software, they have reduced the loan application time to 6 minutes!”

Even without these innovative technological advances, video banking is still more secure than telephone banking, in which calls can be easily tapped or even taken over. In contrast, video banking solutions like LiveBank’s are fully encrypted and run on the banks’ own data systems.

Video banking has important social implications

If satisfying customer wants and developing transformative technology weren’t enough, video banking has also become a catalyst for social inclusion in the UK. SignVideo, a British Sign Language (BSL) video interpreting service, has facilitated thousands of BSL video calls across the financial services sector, with an almost tenfold increase in call volumes over the past 3 years.

“Lloyds was the first financial services institution to recognize the need for inclusion and equality of the British Sign Language (BSL) community by making video BSL an integral element of their customer services operations,” says Mark Hudson, SignVideo’s managing director. The whole of the Lloyds group has adopted the service, while Santander UK and HSBC are also among SignVideo’s clients.

The BSL community has had a tremendously positive response to the service. According to Hudson, Santander and HSBC have experienced “demand levels from their [deaf] customers in a matter of weeks in comparison to earlier launches which took months or even years to achieve.” Meanwhile, the movement has spread beyond the financial sector — UK’s early adopter of BSL video support in the enterprise market — to other industry sectors, like government, utilities, and emergency services. Video banking is thus “opening communications accessibility and inclusion for the Deaf BSL Sign Language user like never before,” says Hudson.

The service could similarly make banking more inclusive for other disabled populations as well, such as bedridden adults or movement-impaired elderly.

Video banking’s challenges

One challenge that LiveBank has come up against is anticipating cultural differences. For instance, in countries with strict religious codes like the United Arab Emirates, it’s important that a male caller speak to a male representative and a woman caller speak to a woman representative. However, as long as LiveBank is aware of these requirements in advance, the company is able to implement the necessary directives into the system in advance to avoid any unpleasantries before they arise.

Another video banking challenge that Młynarczyk cites is a result of what we here at Tradestreaming like to call “Pajama Banking”: people want to video bank from home in pajamas, but don’t want to be seen in their pajamas by the bank representative. Luckily, Młynarczyk has a solution to this crushing moral dilemma: turn off your computer camera.

The Future of video banking

From community banks to megabanks like Barclays and IndusInd, incumbents are beginning to realize that video banking is an integral banking feature. For bank employees, of course, video banking will likely lead to more branch closures and more downsizing. But employees chosen to work with the video service should look on the bright side – they can at least wear pajama bottoms to work.

Photo credit: Travis Isaacs via Visualhunt.com / CC BY