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PCBB Banc Investment Daily June 27, 2014
Banc Investment Daily
June 27, 2014

Djo It Yourself (DIY) Or Self Service

Coin-operated vending machines that dispensed post cards were first introduced in London in the early 1800s. It wasn't long until similar machines started popping up in the U.S. toward the latter part of that century. Early on they were installed on elevated subway platforms in New York City and they most commonly dispensed gum. We are sure janitorial staff hated the gobs of gum they had to clean up back then. Nowadays, there's virtually no limit to what you can purchase from a vending machine whether it be stamps, soda, fast food, mashed potatoes in a cup, caviar or even live lobsters.
There's no question that people today are looking for convenience. It helps explain why vending machines have exploded in popularly, along with other trendy timesavers like microwavable dinners, ATMs, online banking and online grocery shopping to name a few. At the same time, we wonder whether the trend toward self-service in banking is as sustainable as some pundits would suggest and whether reports of the pending demise of bank branches are overblown.
Consider another self-service initiative that initially showed great promise, but later petered out due to any number of missteps. A decade or so ago, self-service lines in grocery stores were all the rage, yet they didn't pan out like retailers had hoped. Some shoppers loved the idea of ringing up and bagging their own groceries, but in practice, self-service lines caused more problems than they solved. Between technical glitches, difficulty using coupons and misidentified products, things were pretty choppy. These issues ultimately required human intervention to fix as many customers grew fed up with this innovation. As a result, many grocery stores responded by pulling the plug on self-service and ramping up traditional clerk coverage instead.
At this point it appears the majority of consumers are still old-fashioned when it comes to banking. This is particularly true when it comes to depositing large sums of money. To drive this point home, consider a study last year by Mercator Advisory Group that found 61% of respondents would chose to deposit a $1K check with a human teller, while only 20% would do so at an ATM and only 12% were comfortable enough to scan the check with a PC or smartphone.
Of course, the scales are tipping more toward automation so banks must continue to adapt. In the 2012 study, for instance, 68% of consumers said they'd choose to deposit the same size check with a teller. Meanwhile, 17% of respondents in 2012 said they would choose to use an ATM and 9% said they would prefer to scan the check with a PC or smartphone. Times are changing.
We don't doubt that over time even more people will be sold on the idea of banking by ATM or on their smartphones. We're also confident community banks will be introducing more technology into their daily operations to make transacting business even more seamless for customers. Only time will tell.
In the meantime, consider the many ways banking is best done in person. At least at this point, no machine can fill the human void when it comes to financial planning, small business management, college financing, trust and estate services or retirement discussions. That is good, but it may not last as machines get more and more sophisticated so bankers must stay on their toes and keep adapting.
There is no point in decrying technology, so embrace it as you continuously search for ways to heighten the in-person customer experience. Putting the personal in personal service is more than a mantra and certainly at this point more than one can reasonably expect from any type of self-service machine. Now, where did we leave our change as we need to buy a candy bar!