Customer Loyalty, to Coin a Phrase
The sight of a customer strolling into a bank with a sack full of coins might prompt groans among tellers. However, a recent report suggests that automation can help turn those mounds of metal into an important revenue stream.
The once-common practice of tellers counting up and cashing in coins for customers has been abandoned in most banks as overly time-consuming. Since the mid-1990s, the retail industry exploited the loss of that service by introducing automated coin-counting machines in supermarkets, which charge a fee based on a percentage of the coins deposited. According to a report from TowerGroup, many banks are missing out on a chance to provide these convenient, lucrative machines for customers.
"TowerGroup believes that the banking industry will benefit from a second look at the self-service coin-counting machine in light of the inevitable evolution of the branch in today's delivery channel strategy and the role of automation in the branch," says the report, which surveyed an unspecified number of banks of various sizes.
With banks facing a changing landscape of declining check volumes and a greater focus on sales, the report suggests that embracing automation in the seemingly trivial form of coin machines and other technology can support the needs of both customers and banks, and play a major role in the future of banking.
As customers increasingly expect quick automated solutions for routine financial transactions -- ATMs, online banking and so on -- the common bank strategy of requiring people to count and roll coins themselves in order to cash them can seem outdated, and has zero financial incentive for the bank.
Yet according to the report, bank customers cash in $6 billion in coins each year, while $3 billion is cashed in at retail-based coin-counting machines, which charge a fee of up to nine percent of the change deposited. Installing those machines in banks, and charging the same fee as supermarkets, could be a $500 million market.
"The self-service coin-counting machine represents an interesting opportunity for banks to evaluate as part of their delivery channel strategy and could have a significant impact on customer acquisition and organic growth strategies as well," the report says.
Unlike most automated banking strategies, coin counting machines don't have the disadvantage of discouraging customers from actually entering the bank. The machines still involve a face-to-face interaction with a teller to get their cash, and theoretically provide an opportunity for acquiring new customers and cross-selling existing ones.
However, the few banks surveyed by TowerGroup that did have coin-counting machines mostly tended to only charge non-customers for using them, and reported few new customers by adding them. The report thus urges banks to target new coin-changing customers and make the machines part of their marketing strategy.
"For self-service coin-counting to fill a strategic role in the bank's growth plans, the bank needs to develop marketing and sales plans (and supporting technology and processes) associated specifically with the coin-counting machine," the report says. It goes on to note that the self-evident convenience of the machines, even when they involve a fee, is a relatively easy marketing sell.
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