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August 8, 2016

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Smart banking: is it inventive or just goofy?

I haven’t actually walked into a bank for a long time.

In most of my previous visits, I had to take a number and wait in a long queue for 30 minutes or more just to do a simple transaction. I sat plugged into music on my iPod while I waited with irritation for my number to come up.

ATMs and online banking services have soothed the pain for many bank customers. The young generation, used to using new technologies, embraces options like Alipay or Tencent Pay mobile payment systems, but for elderly savers wedded to tradition, the old style of money management is time and energy consuming.

Lenders are trying to transform services within bricks-and-mortar banks by creating so-called “smart banks.”

The concept is based on the idea of banking without human staff. The inside of many banks are now equipped with rows of upgraded teller machines or even android robots replacing bodies at counters.

Of course, saving labor costs is an important factor for banks trying to improve their balance sheets as profits cool.

But one does have to wonder who really benefits from this new banking system. Younger clients are already equipped to do banking online, while the elderly often don’t know how to use all the digital gadgetry and get easily confused.

Maybe it’s not as bad as I think. Maybe customers actually like the new impersonal services. Maybe this is just the future of banking, whether anyone likes it or not.

I decided to test out some of the new services to see whether they really deliver what they promise.

I first tried my luck with Jiaojiao, a 90-centimeter robot receptionist that went viral on the Internet after Bank of Communications, the country’s fifth-biggest lender, installed it as a lobby manager last December. There are now 11 Jiaojiao spread around BoCom’s Shanghai branches, and I had a conversation with one of them.

“What kind of questions do people ask you?”

“They ask about my name. I can tell that they like me very much because all of them want to take pictures with me.”

“So you are saying that customers come to you for photos, not advice on banking services?”

“They come for photos and drop by for services. What kind of banking service do you want, by the way, big sister?”

“I’m okay. I just come here to check out how you are doing.”

“Oh, you come for me! I’m super happy. Since you are here, why not apply for a new credit card? New card holders can get a 50-yuan credit back on every 100 yuan spent.”

“I’ve already had one, so…”

“Then you can apply for a debit card. You can pay back your credit through the debit card online, automatically.”

“Well, I have a debit card, too.”

“You are so awesome! How about some wealth management products then?”

“Okay, what do you recommend?”

“I can take you to sister Yang. She can tell you more about it. Come on, let’s go!”

The child-like voice of Jiaojiao made me think I was conversing with a 5-year- old. However, I was amazed at how she answered my questions with humor and skillfully guided me to bank services, as she is supposed to do.

But my marveling at Jiaojiao vanished when developer Ecovacs Robotics told me later that the whole system is controlled by staff working out of sight from a back office.

“It can handle simple conversations based on a pre-set program, but the technology is not mature enough to enable it to deal with other languages or more complicated transactions,” said Ye Xia, a manager in the marketing department of Ecovacs.

She told me that, on average, one staff in the back office takes charge of two robotic models.

“We have sold nearly 1,000 robots like Jiaojiao to China’s banking institutions,” Ye said. “We understand that using robots to completely replace human at a bank is not possible at the moment, so Jiaojiao is more like an assistant that helps respond to customers’ emotional needs in banking.”

Over a hotpot meal, I discussed my experience with Jiaojiao with my friend Yolanda, who works for regional lender called Bohai Bank. She said she’s a firm believer in the banks’ smart strategy on robots.

“Isn’t that just a voice amplifier of a lobby manager?” I asked her. “And it doesn’t save much labor cost if it needs back office support. What’s the point?”

“Of course, there is a point,” Yolanda argued. “Look at Alpha Go. It has a machine-learning process that can evolve based on big data. Once Jiaojiao gathers enough dialogue information, it can react just like a human. Don’t hold blind faith in foreign technology. China can make it happen in a decade or even sooner.”

I don’t doubt China’s capability of developing high-end technologies, but I wonder whether Chinese banks will invest in expensive Alpha Go-ish technology to save on operational costs.

The soup in the hot pot turned steamed up the air, blurring my vision of Yolanda and the hypothesis of robot-driven “smart banking” at this stage.

I suddenly thought: maybe virtual teller machines (VTMs), not robots, are the real game changers for the banking industry.

So I headed for the city of Wuxi on a weekend outing with my Hong Kong friend Wendy. China Merchants Bank, a commercial lender known for its customer service savvy, has its first “smart bank” there equipped with VTMs.

The branch has six self-help VTMs in the middle of the bank and two standard counters further inside. I counted seven staff.

VTMs were first adopted in China by Guangfa Bank in 2012. Customers can get deposit and credit cards issued, and receive investment and financial management services by talking to bank representatives from the video available device.

Wendy and I sat at one of the self-service counters with an iPad and card censor sitting in front of us. A sliding screen finds services that can’t be conducted through the website.

“Maybe I can try to change my mobile number linked to my debit card,” Wendy suggested.

But she was denied access from a Hong Kong ID on her first try. I couldn’t find anything interesting to do from the services listed on the iPad screen.

Just about that time, a woman in her 20s alked in to get a new bank deposit card. She approached a lobby manager and started to fill in paper forms at the counter, as if all those VTMs were invisible and useless.

“Why didn’t you use the VTMs over there?” I asked her, after she received her card.

“I didn’t know how it works,” she told me. “Rather than spending time learning how to use the machine, I prefer the counters.”

CITIC Securities estimated earlier that the demand for VTMs will continue to grow, with volume reaching 9,000 sets in China. Guotai Jun’an Securities said that the market size of VTMs could grow to over 8 billion yuan, approximately two or three times that of the ATM market.

But the lady customer was a reminder that customers aren’t familiar with this new technology, even as banks rush to embrace it.

In the end, I wasn’t convinced that robots or VTMs are really making banking any smarter. Those who love technology might embrace these new systems, but the question remains: will everyday consumers take to it?

If banks lose their focus on customers, their smart banking may not be so smart after all.


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