Arvest Bank in Fayetteville, Arkansas, has embraced a relatively new concept in financial services: the virtual branch.
In this all-digital venue, customers can ask questions of, and exchange messages with, a personal banker of their choice. The hours of availability may be longer than at a brick-and-mortar branch, and customers aren't supposed to have to repeat their personal information and problems to different employees. These meetings can even take place over video, depending on the technology used.
The $26 billion-asset bank, a unit of Arvest Bank Group, landed on this technology when an 18-week research project it concluded in March 2020 uncovered clear divides in customer service preferences.
One finding that emerged from this research was that “transactional” customers relied on the bank as a place to park their money, while “relational” customers viewed the bank as a partner in their financial wellness.
“They both value convenience, but what that word means is different,” said Angie Garrett, executive director of strategic analytics, digital and innovation at Arvest. “For relationship customers that gravitate more to digital, or don’t have the ability or desire to come to a branch, we didn’t feel like we were showing up for them well.”
The term “virtual branch” has its critics. “It implies the best way to do things is by walking into a branch,” said Bob Meara, senior analyst in banking at Celent.
In his view, banks should take their digital channels beyond what one can regularly do in a branch. They should automate as many interactions as possible while making human-to-human conversations possible at the time, place and method of the customer’s choosing. To maximize the number of tasks one can accomplish online, the products may need co-browsing, screen-sharing, document uploads or electronic signature capabilities.
Only a few providers, including Moxtra, Glia and Jack Henry, offer such capabilities and have only emerged in the last few years. (Agent IQ was not included in a recent Celent report surveying digital engagement platforms.)
One example of a virtual branch outside of the U.S. is Citi Hello, an in-app audio and video banking platform for affluent Citigroup customers in India that launched in 2017. In 2018, Citi launched a service called Virtual Remote Engagement for emerging and affluent customers in the Asia-Pacific region that enabled live audio, chat and video banking on Citi's digital channels, as well as screen sharing and document uploads. In the United States, Citi offers a
Garrett defines a virtual branch as a centralized team of bankers available to customers digitally. Arvest’s version is a stand-alone mobile app called Arvest Banker Connect. It was built by the customer engagement company Agent IQ in San Francisco. Although the service has gone through several iterations since an initial test at the end of 2019, and is not yet marketed widely by the bank, it seems to offer just what some clients are looking for.
Plus, “it gives Arvest a chance to stretch our capabilities to see how fully we can support a customer in a digital space without referring them to other channels,” Garrett said. “It will force us to raise the bar on our delivery models for products and services.”
As of August, Arvest estimates that 35% of its customers are branch-dependent (in other words, they use online and mobile banking, but have conducted more than two branch transactions in the last 90 days) and 12% are digital-centric (meaning they use digital banking channels but have made one branch transaction in the past 90 days). The rest stick firmly to branch or online banking, or have no discernible preferences. Garrett expects that those first two groups are most likely to gravitate toward Arvest Banker Connect, preferring to work with the same banker over time and also valuing the convenience of digital.
Still, “we don’t have a good grasp on who shows up in branch because they have to and who shows up because they want to,” Garrett said.
A customer feedback survey conducted in the summer of 2020 found that 80% of users would turn to Banker Connect instead of calling or visiting a branch.
Currently, Arvest Banker Connect has 1,588 users and four to six full-time bankers. Customers who download the app can read banker profiles (typically a name, title, photo, expertise, hobbies and availability) before selecting one that appeals to them. They can message back and forth with their chosen banker, who will see a running history of their communications. The app is similar to
The next steps for Arvest will be enabling prompts for the bankers that suggest answers or content to address questions. A future version may incorporate video and co-browsing from Agent IQ. Arvest will also increase the number of bankers on the platform and extend availability beyond normal branch hours.
Agent IQ, which counts Park National Bank in Ohio, Rockland Trust in Massachusetts and First National Bank of Omaha among its customers, provides a suite of services to financial institutions, including mobile and web messaging, video and co-browsing. Bankers can save notes about their customers (for example, who wants to buy a home) and set reminders to check in with them. They can bring other experts into the conversation. All correspondence is retained with the bank.
Soren Bested, Agent IQ's chief revenue officer, emphasizes that asynchronous messaging, which his company encourages, allows for more measured answers than something the advisor dashes off on a whim.
“There has been a conflation of convenience and real-time, but it’s not the same,” he said. “Convenience is when I can ask something on my mind about retirement at 10 p.m., and instead of getting a response like ‘Don’t worry, we have some great products,’ I get a thoughtful, insightful response tomorrow.”
Agent IQ also deploys artificial intelligence to help bankers respond more efficiently within conversations. The platform will tag conversations by topic, which lets banks see what is top of mind among their customers. It can suggest answers and documents that bankers can push on to their clients, or initially take the reins of a conversation as a chatbot by listing common queries, such as how to deposit a check, that customers can click on to find answers.
Garrett and her team are also debating how proactive bankers should be in the app.
“Today it is niceties, checking in once in a while and reminding them that we are here for them,” she said. The next level may be sparking conversation by offering resources tailored to a customer’s interests, such as for sole proprietors planning for retirement.
Garrett has her own theories as to why virtual branches are elusive in the U.S.
“Our standard bank operating model is very branch-centric or even channel-centric,” she said. “We don’t see the nuance in between. When we talk to customers and understand their behavior and needs, that is when these approaches come to life.”
