Whitepaper


Leveraging Customer Loyalty

The Keys to Retaining Customers Through a Virtual Branch Maintenance Program

Published by Appel Enterprises, original document can be found on www.appel-enterprises.com.

Introduction

Since 1995 there has been a steady increase in the number of customers that bank via online channels. This is a benefit to the financial institution (FI) as the average cost of an in-branch transaction is $1.07, while the average cost for a virtual/online transaction is only $.27. This represents a potential overall savings to the industry of $8.3 billion1. Customers who use virtual channels respond to surveys as being more satisfied with their financial institution because of the convenience and the ease of banking. Focusing on online channels will help to ensure satisfied customers, as well as increase the bottom line. Online banking also ensures that off-site equipment supplied by the FI and used by the customer is in continuous operation for convenience and customer satisfaction. This could be supported through a variety of methods. For example, preventative maintenance plans and the regular use of cleaning cards should be suggested by the FI in order to ensure uninterrupted operation.

Let’s take a look at some factors.

What is a “Virtual Branch?”

A “Virtual Branch” provides online access to services similar to those offered in physical locations. This allows customers to self-direct transactions at a time and place of their choosing including:

  • Online Banking (Consumer): Allows ordinary transactions such as balance inquiries, transfers, and bill pay to be performed remotely via a secure internet connection.

  • Online Cash Management (Business): This includes detailed account reporting, transfers, domestic and international wires, positive pay, accounting interfaces, and much more.

  • Remote Deposit Capture (RDC): The ability for a business or retail customer to make a deposit remotely using a supplied check scanner.

Impressive Results

  • Mobile Banking/Mobile RDC: An extension of the financial institution’s retail or commercial online banking, offering the similar functionality via a mobile device. Mobile RDC is similar to the RDC service described above, except that the camera on the mobile device can be used to capture the physical source document while the rest of the data is entered using an application or mobile browser.

  • Merchant Services (Acquiring Credit Card): Businesses that need to accept credit and debit cards can do so in a variety of ways. Traditionally that means swiping a card at a terminal. Newer technology allows small devices to attach to a Smartphone and enable card transactions, thus acting like a virtual terminal.

  • Automated Clearing House (ACH): This remains the most cost effective way to distribute payments (such as direct deposit of payroll or expense reimbursements) or collect them from customers (such as automated debits for utilities and other recurring payments). The financial institution provides both a user interface for capturing ACH data and a file transfer service for those companies that can build their own ACH files remotely.

What Maintenance Does My Virtual Branch Require?

Today’s online services often involve a physical piece of equipment to enable electronic transactions. The two most common are the check scanner, used by both businesses and individuals, to capture check images which result in remote deposits, and the Point-of-Sale (POS) device, which is used by businesses to record credit card transactions.

A POS terminal has a slot through which a card is swiped. A magnetic read head picks up the information on the magnetic stripe of the card. A check scanner, on the other hand, has rollers, belts, and pulleys that direct a document (i.e. a check) through a path where MICR (magnetic ink character recognition) readers and cameras can capture an image and transaction data from the document. In both devices dirt, dust, oils, and other contaminants accumulate which can reduce the machine’s effectiveness. Without periodic cleaning, these devices may stop producing accurate or completed transactions, and may have to be sent off for maintenance at an authorized repair facility. This requires a replacement device to be provided. The impact to the customer and their respective clients could be higher service costs to facilitate the repair, higher per-transaction cost, delays in processing and certainly lower customer satisfaction and confidence.

There are ways to avoid these types of issues from occurring.

Periodic Scanner/POS cleaning

    1) Provide a periodic preventative maintenance program using specifically manufactured cleaning cards.

      a. Educate your customers on how often equipment requires cleaning. Using cleaning cards created with Waffletechnology® ensures that all areas of the device are properly cleaned. Every major manufacturer of check scanners and POS devices has an associated cleaning card. Contact your manufacturer or your distributor and ask them to provide you with the recommended Waffletechnology® cleaning cards specifically designed for your device.

      b. Each manufacturer has a recommended maintenance schedule that is usually related to transaction volume. In a situation involving high volume transactions, or the introduction of ink, devices should be cleaned daily. With normal volume, cleaning at least once a week is recommended.

      c. The key is to implement a cleaning card program which ensures proper usage by the customers. You should only use a cleaning card once and then discard it. A used card will reintroduce dirt, dust, oils and other contaminants into the device and this should be avoided.


    2) Establish a program for ensuring that the cleaning occurs.
      a. Provide the customer with a supply of cleaning cards and correct operating procedures along with periodic reminders to perform the maintenance. A regular notice via email from the FI will bring the cleaning issue to the attention of the appropriate personnel. The higher level of compliance will ensure positive results and the greatest possible ROI.

      b. Provide a consistent shipment of cleaning cards with a reminder to perform the cleaning. It is the best method for long-term success. Customers that receive an envelope with a cleaning card along with instructions on how to clean their check scanner are more likely to clean in a timely fashion, versus just receiving an email notification.

There are benefits to be gained in reaching out to customers with periodic cleaning reminders.

      a. Customized cleaning card envelopes and instructions bring additional brand recognition of the FI to the customer.

      b. Regularly scheduled cleaning messages, either physical or virtual, provide a touch-point for the financial institution to “communicate” with the customer even though they no longer come into the branch.

      c. Reaching out to customers also provides reassurance to the customer that the FI is fully supportive of their efforts. This ensures that transactions occur in a reliable and accurate manner, while increasing both loyalty and trust.

The profitability analysis of providing maintenance.

Without proper maintenance, any system that involves equipment will eventually break down and cause customer dissatisfaction. The issue is, how much does preventative maintenance cost, and is it effective in ensuring that maintenance is performed? The cost effectiveness of using a fulfillment service may be difficult to fully quantify, but identifying the savings for implementing a periodic cleaning program is easier to calculate. According to Steve Creviston, President of CSoft (an authorized repair vendor for most check scanners), the average cost to repair a scanner that has not been periodically cleaned exceeds $250. This does not include the cost to provide a replacement scanner to the customer during repair time or take into account the goodwill lost by the customer. A typical scanner cleaned twice per month with Waffletechnology® cleaning cards is less than $50 annually.

Conclusion

With more businesses and individual consumers turning to virtual banking, it is imperative for a financial institution to offer the best services they can to keep their customers both satisfied and educated. It is a cost savings to the FI and the customer when off-site equipment such as check scanners and POS terminals are maintained properly and cleaned with device-specific cleaning cards.

 

1 Statistics courtesy of Gemini Consulting
© Appel Enterprises 2012