Many countries in Asia have been traditionally cash and brick focused: customers have been used to holding and using physical cash and visiting the brick and mortar branches. That’s changing rapidly as competitive pressures and demands from an increasingly sophisticated customer base are driving banks to create a new normal in both business model and customer interaction. A key part of that transformation will come from self-service innovation, yet self-service means different things in different countries.
In Japan, regular bank ATMs actually have limited hours of service both during the week and on the weekends. Historically this has been down to increased costs in terms of security / safety of both the machines and people and less demand from customers outside of normal business hours, especially in rural areas.
A certain subset of Japanese customers however, have, over the years, increasingly looked for “Anytime, anywhere” banking services. In early 2007, Japanese Seven bank brought ATMs into Japanese 7-Eleven convenience stores; the integration was made easier by the fact that 7-Eleven stores and Seven Bank itself are both owned by Ito Yokado. Japan actually has the largest absolute number of 7-Eleven stores in the world so now customers can withdraw money any time of day or night with their debit and credit card in more than 18,000 ATMs installed in 7-Eleven stores in Japan.
These ATMs also process remittances from Japan to other countries allowing Seven bank’s customers to send money nearly anywhere in the world, at any time of the day. It provides a convenient cash service for their customers and also satisfies their remittance needs, which means a more satisfied customer and bank.
ATMs in China have never had challenges of hours as most of them, unless they run out of cash, run 24/7 in nearly all locations. What has changed is the functionality. 10 years ago if you wanted to transfer money from one person to another, you faced a potentially hour plus wait at your local bank branch and many times had to transact in cash unless you wanted to go through the paper work.
Today you can use a Chinese ATM to directly pay anyone who has an account with that bank. Further, even if you don’t know their account number, you can even input their mobile phone number if it is associated with the account.
Although many of the changes in self-service aren’t major, they are tailored to the local customers and what might be an issue in one geography might not be in another. They can also result in increased revenue, such as the surcharge on out of hours transactions at the 7-Elevens in Japan, and decreased costs, such as fewer branch visits in China’s case, but they aren’t one size fits all.
Many financial institutions have come to Asia with this ‘one size fits all’ mentality and really struggled to gain market share and drive business. Not having the right mix can result in decreased revenue and incredible costs from poor strategies, but can also alienate customers which gives the bank a different problem: not how to move customers to self-service, but even how to have customers in the first place.
This blog is part of the Oracle / Kapronasia series on Future Finance. For more information, please visit the Future Finance blog at here.