Why video banking is the fintech trend to watch
- Video banking is already disrupting the finance industry
- Great potential to up incumbents' corporate responsibility
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