Has video finally arrived for branch and contact centre?

For as long as I have worked in financial services IT (and some time before), video has been trumpeted as the "next big thing" for retail financial services but has not taken off as predicted. Yet I wonder if this solution that Bank of Moscow has rolled out and the news week before of Bank of America is piloting video for wealth management might change that....

The vision presented by technology vendors has been compelling; the idea that an expert in a branch or in a contact centre could cover many other branches by being video conferenced in to that critical customer meeting. At a stroke travel expense could be reduced as there would be no need to have advisors moving around doing one day a week at each branch of their territory. Customer experience could also be improved radically, as no longer would a customer wanting advice on a pension (or other regulated product) be told to "....make an appointment and come back when the advisor is in".

The financial arguments have also seemed compelling. Training staff to sell regulated products is expensive and HNW (High Net Worth) and other attractive target customer groups are not the customers who frequent high street branches. My last blog post ("Where did it go wrong for Barclays branches?") went into this more detail, but there are very limited returns from basing expensive people in branch and relying on passing trade and the business marketing can drive to those branches.

To a certain extent the puzzle is why video has not been used earlier, and I think the problem has been partly technical and partly organizational.

The organizational problems are understandable. Branch managers like to be able to see their staff, and when measured on sales they want to have control over the people doing the selling. Having them physically in the branch is one of the easier ways of meeting that need. Similarly, branch sales advisors have enjoyed the status they have within the branch and moving to a contact centre environment (even a video contact centre) has been seen as a demotion. Given the low barriers to setting up as an IFA if you are already qualified, retention of qualified staff has been an issue for all the major banks. Finally, the customer experience of early video conferencing did not meet the hype, and this has stayed in the minds of many business users and customers.

The poor experience of early video conferencing solutions were largely a result of the technical limitations imposed by making any solution cost effective. Early approaches lacked common standards and, as with much in telecoms and IT, the rise of IP (Internet Protocol) has helped hugely to drive down costs and increase compatibility. IP hasn't solved everything, and there are still 'debates' among vendors (sometimes pursued to the levels of near religious war) about the relative merits of the H323, H264 and SIP protocols but common standards have made a huge difference to costs. Furthermore, IP protocols put video conferencing much more into the world of IT and software and into a world where the user experience matters. I would argue that the problem with many of the initial video conferencing solutions was that they were so focused on the technical challenges that they tended to neglect the user. The poor quality image with a slow refresh rate and of early video conferencing (as well as the difficulty and poor user interfaces for setting up calls) has been largely addressed in the solutions from today's the leading vendors. In fact user experience has been one of the key features of both Cisco Telepresence and HP Halo and may be significant factor why these are succeeding where more specialized predecessors have failed.

I find it especially interesting in the case of Bank of Moscow is that this integration is based on Avaya. Avaya are noted for their strength in contact centre, most notably around the ACD (the system that distributes calls to agents) and video is a relatively new area for them. It is a sign of the impact of protocols that Avaya (who have launched their next generation of contact centre based on SIP as a standard) are able to integrate video into what has historically been a voice environment.

In other words, the historic obstacles to video of user reluctance and technical inhibitors have been largely addressed and video can be deployed. The question, though, is will video deliver?
I believe there is one more hurdle to overcome that many vendors have not yet appreciated. The technical, the business case and the usability by non-IT staff are merely pre-requisites for video to be deployed. For video to succeed in this type of retail financial services it remains to be seen how it affects the psychology of consumers. Will consumers be prepared to take financial advice in a video session? Will the technology prove too distracting or disorientating for some demographics to engage in the integration?

These questions remain unanswered, but it will be interesting to see if video can deliver on its potential.

Where did it go wrong for the Barclays branches?

It was a surprise last week for me to see the news that Barclays was to sack 1,000 Financial Advisors from their branch network.

It’s a while now since I last worked on bank branch IT, but when I did (only four years ago) the focus was very much around replacing old branch systems and enabling branch as a sales channel. The market was full of software vendors offering everything from the RFID identification of clients to analytics engines that ensured the presentation of the best offer to clients. Many of these products also talked about their multi-channel capabilities (by which they meant internet) and a very significant focus of the market was on enabling sales in branch. Occasionally lip-service was paid to contact centre or ATM or mobile, but the main focus of the analysts, consultants and many banking executives was on branch based sales.

So where did it go wrong for the Barclay’s branch advisors? At a superficial level, being a sales person at a bank with a strong brand, at one of the few banks not to need a government bail-out and with a large UK retail market share would seem very attractive. Barclays has a good SMB business banking franchise, so that would suggest lots of small business owners to sell products to.

I think part of the answer is that the target market is still attractive and still there. The number of individuals just below High Net Worth (HNW) status continues to grow and these individuals need advice. The true HNW demographic that is targeted by the Barclays Wealth division, part of Barclays Capital, so although there may be some overlap the branch advisors had a significant number of potential customers. The branch advisers were meant to target individuals who were below the £500k asset threshold required for Barclays Wealth, but I suspect the advisors didn’t for a number of reasons.

Firstly these higher earners or asset significant individuals do not regularly visit branches. I’m prepared to bet that most Finextra readers (especially those who live & work outside a city centre) have not been to a bank branch in a long time and this seemed to be the case for many Barclays branch customers.

This misalignment between the demographic the advisers were meant to target and the demographic that actually was accessible in branch accounts is perhaps one of the significant factors in the decision to end branch based advisers. My suspicion is that it was this misalignment that partly contributed to the investment advice failings that led to the FSA fining Barclays £7.7m and requiring Barclays to pay up to £60m in customer redress. On the retail banking side, that is a significant sum, especially when added to the not insubstantial cost of maintaining a staff of financial advisers and paying for the associated training and compliance.

Additionally, as Barclays acknowledge, buying habits have changed substantially and as Barclays say the reduction in branch advisors is “…reflecting a growing trend of customers purchasing and managing their investments online”. The problem for Barclays is that the wealthy middle class individuals who they most want to target are some of those who have most readily adopted the internet as a comparison shopping channel. The growth of UK financial services comparison sites (Go Compare, Money Supermarket.com, etc…) has had a profound effect on insurance (I last wrote about it in this blog post on Aviva 2008) and clearly is catching up with retail banking. There seems to me little point marketing to customers on the basis of brand when most customers can purchase products without engaging with any of the brand value propositions and can instead buy more easily on price, on line. Barclays are acknowledging some of this reality with the launch of their online "Investor Zone" and all their retail investment services will now go through this route on a non-advice basis.

The problem is I’m not quite sure where these leaves branch banking. Advisers in branch were expensive, but were always justified as necessary for selling the higher margin, usually longer term products. The trouble was that branch advisers were not necessarily that well utilized and many of the more aware customers preferred to use either on-line purchase without advice or the service of an Independent Financial Advisor (IFA). I thought Barclays had the right idea with their centralized Barclays Financial Planning team when they had that operating as a central team, based from a contact centre. That model, where an IFA qualified adviser could remotely cover the branches too small to have a dedicated financial adviser seemed to me to combine the necessary level of coverage and scale that was necessary to be cost effective. However, the model didn’t seem that successful in practice and I wonder if that was due to the maturity of the technology. At the time, multi-channel was not easily possible in an integrated manner and this made things very difficult when trying to run a sales business that was regulated by both OfCom and the FSA. Longer term, I wonder if video could be the solution for the centralized adviser model (though it’s been talked about for long enough) or whether we may seem some of the ideas Bradford and Bingley toyed with, of having an IFA in branch who is more independent than the traditional tied financial advisor. The one area this has always neglected is how the internet channel can be supported by advisors in the contact centre and that, with or without video, strikes me as the best future for low cost advice.

Contact Centre impersonation arrives in the UK

I wrote yesterday on the problems the Commonwealth Bank of Australia was having with a phishing attack that caused customers to call a fake contact centre that impersonated the bank's centre and captured their credit card details ("Phishing fraud steps up a new level with fake bank IVR & contact centre").

It now seems that this fraud has reached the UK. The BBC is reporting here that the Bank of Scotland has been targeted by fraudsters who have been able to divert customer calls. There's few details in the BBC report other than that the calls were diverted and that there is a theory that a former contact centre employee may be involved. An inside job does seem a strong possibility, and the infiltration of call centres by organised crime is a real risk. Although it wasn't widely covered, the BBC reported back in 2006 that Strathclyde Police believed that perhaps one in ten call centres had been targeted by organised criminals (article here). Normally, though, crime in contact centres has been opportunistic and carried out by individuals. A typical example was when the Barclays Chairman, Marcus Agius, had his details and money stolen by one of his own employees (covered on the blog in the post "Security, Call Centres and Fraud").

It is a worrying development if organised crime has, well, got itself more organised, and moved up from individuals stealing details to systematic attacks from the inside on the banks' contact centre systems.

Despite the credit crunch, still call centre growth at Barclays

An interesting story on Finextra that Barclays are to create over 200 new call centre jobs in Liverpool.

A lot of reasons why this is interesting. On is that with the credit crunch it's good to see that the world hasn't ended and that banks are still going about (some) of their usual business. The other aspect that I thought interesting is that these are primarily outbound agents.

The blog looked at the problems Barclays has been having with outbound in my last post (see "Barclays, silent calling & we've been here before... ") and I suspect that Barclays was determined to get this fixed. I know in my last post I was dubious about how important reputational risk was. I have revised that judgement, and I'd now say 'reputational risk is really important if you upset voters and there is a chance the government may become your largest shareholder'. I know Barclays has so far not needed any assistance from the UK government, but I can see that it would be tactful (as well as good business) not to fight with Ofcom or any other government body in the near future....

Barclays, silent calling & we've been here before...

So Barclays, or at least Barclaycard, have just been fined the maximum Ofcom (the UK communications regulator) can manage for making silent outbound calls. The story is well covered here on Finextra.

What is perhaps more surprising is that the maximum fine is £50,000 and that even in a credit crunch this is not going to inconvenience Barclays hugely. There is the argument of reputational damage being a punishment and the media have done well highlighting the story (see "Regulators stuck in a fine mess" in the Times today, for example for really hostile coverage of Barclays) or BBC Business News leading with the story on the day the fine was announced.

Unfortunately I don't believe that reputational risk alone is enough. Finextra mentions that Abbey National, Complete Credit Management and Carphone Warehouse have all been fined for breaching the silent calls rule and that's just for starters. The frequency of these stories of outbound calling making life painful for consumers and damaging brand suggests that reputational risk isn't working.

In July I wrote about the BBC highlighting the use outbound calling by UK banks for debt recovery ("Banks criticised by BBC for automated calls "). It might be an effective way of collecting debt (I've got no evidence one way or the other) but even if it does little for your reputation, the impact of the fine seems low compared to the potential value of a recovered debt.

I've blogged a lot on outbound as it's the area that makes people most aware of and most dislike call centres. As a result, I suspect that outbound calling in the UK is an industry that will soon be dead. The details are in posts like: "Abbey National fined £30,000 by Ofcom & the future of Outbound in Financial Services" or "Outbound, an explanation of the technology" and "Outbound - industry reputation, branding and regulation", but from the feedback I've had, the irritation outbound causes is still not well understood in the industry and the industry is not adapting.

This may though be irrelevant as the number of consumers registering with the Telephone Preference Service suggests that consumers are making their views clear and are making themselves increasingly difficult to reach.

Phone Banking vs Facebook banking

I was very interested to see two good stories on Finextra today.

The first was that around half of Facebook users want to be able to bank through Facebook. The second was that 91% of British adults had concerns about fraud on their phone accessible bank accounts.

It seems to me a pretty bizarre set of contradictions. Facebook is a very nice application, but I'm pretty dubious that banking through it is a good idea. There are issues over some of the Financial Services advertising (see the BBC "Facebook users warned about ads") and I'm not convinced that data privacy issues are fully resolved, or in line with the standards set by banks (again the BBC with "Facebook 'violates privacy laws'" and "Facebook faces privacy questions"). It may be that as Facebook matures these issues will be resolved to everyone's satisfaction, but I know many remain dubious about entrusting their details to an organisation that has already had to apologise for how it has used them.

By contrast voice technology is far more mature and security concerns should be on a different level. There are weaknesses but they are more to do with processes than the underlying technology. A good example was the case I covered at Barclays (see "Security, Call Centres and Fraud") where there was nothing wrong with the technology, but the processes were not as robust as needed to be against identity theft. At this point (although the research is funded by Nuance a speech technology vendor) I'm inclined to agree with the article that speech recognition and biometrics could make a difference where pass words have been stolen or an identity otherwise compromised. Certainly it had the potential to make a difference in the Barclays case.

The scary thing about Facebook is that if a Facebook banking application were to be compromised, the chances are that the fraudsters would have access to so much personal information that any future identity recovery could be very difficult. By contrast the telephone channel at least offers the prospect that even if your identity was stolen you would only be authenticated by who you are, not what you know.

Call centre worker gaoled for data theft

An interesting article on Finextra about the recent theft at a Royal Bank of Scotland call centre.

This isn't the first, and certainly won't be the last, example of security breaches from staff. There's been a lot of recent focus on the risks of external attack and how biometrics can help deal with this but the internal threat has been neglected. I've posted on the external attack on Barclays ("Security, Call Centres and Fraud"), when fraudsters stole the identity of their chairman for a credit card application, and there's been some good posts on Finextra (see "Biometrics - what's that all about then?" by Dave Griffiths and "Who's in your Wallet?" by Jarvis Kandik both last month).

In fact, inside threats are perhaps as serious as the risk of external attack. In 2006 HSBC lost £233,000 after it's Indian call centre suffered inside attack (here for the BBC report). Last year the BBC also reported how HSBC and HBoS had been targeted by an organised gang which both penetrated the banks and laundered the proceeds of their crimes.

An internal threat is nothing new - fraud from dishonest employees is something that banks have had to deal with almost from the start of banking. What is new is the level of the threat and its organisation. As an example, Strathclyde Police (who cover the west of Scotland where many call centres are located) believe that organised gangs have infiltrated perhaps one in ten of the call centres there (full report here).

In the end, as I've argued with biometrics, the criminals will be beaten by process, not technology point solutions. If the defences against external attack are strong, then criminals will seek to get on the inside. The correct response is not to strengthen the exterior with biometrics (though I'm not sure biometrics do strengthen it), but instead to make sure that staff are vetted, exceptions or unusual activity is identified and monitored and good management is in place.

Process is not terribly exciting, but it will be the element that determines whether technology defeats criminals or not.

Security, Call Centres and Fraud

Fraud, especially around identity theft, is one of the hot topics in the UK at the moment.

Obviously, the UK government department HM Revenue & Customs losing the data of 25 million people has made it a more commonly discussed topic than it was before. Then this week, anyone in the UK who still didn't think loss of personal data was serious now has the example of Jeremy Clarkson to consider. Clarkson (a television show host & newspaper columnist) was so sure that the impact of lost data was over-exaggerated that he published his bank account number and bank sort code in his weekly national newspaper column, claiming that there was nothing to fear. As is now reported, he did have something to worry about. One of the readers of his column used his details to set up a monthly £500 direct debit from his account, as the charity the British Diabetic association is one of the many organisations that does not require a signature when setting up a direct debit.

All of which is jolly good knockabout fun, but risks obscuring a more interesting and more serious story (and one more relevant to the European Contact Centre blog).

Also this week, in a less reported story, an identity fraudster managed to persuade Barclays call centre to issue a credit card to an existing customer called Marcus Agius. This identity fraudster then used the credit card to withdraw £10,000 pounds from a Barclays branch. The more startling point of this is that Marcus Agius is not any customer of Barclays but is the chairman of the bank and has been on the board since September 2006.

I'm not surprised that a call centre agent didn't recognise the chairman by name (though alarm bells should perhaps have rung when he found at the employer during the application process!), as new or junior staff may not be very interested in executives at that level. The two things that do stand out for me in the Barclays case are that firstly the card could be applied for and sent out to an address that was (at best) open to interception and (at worst) totally different from that used normally by an existing customer of the bank. The second is that security measures like passwords failed completely to verify the applicant.

Now you may assume that in a call centre environment verification will always be a problem when a physical signature can't be presented and you can't see the face of the applicant. This is not the case.

I've written previously about Natural Language and Automated Speech Recognition (for example "Speech market share - the role of non-European languages"), and identity verification by voice is a natural extension of this technology. The problem with passwords is that they verify what you know, not who you are. Should what you know not be only known to you, then that knowledge ceases to become verification as to who you are.

Voice prints, or similar techniques of deriving a unique identifier from a voice, offer a much better way of verifying identity. I've mostly had experience with IBM and Nuance in this field but lately I've been very taken with the approach of VoiceVault. VoiceVault do seem to have taken a purer security approach to the problem of voice verification and I rather like that. There do seem to be significant variations in how each vendor approaches the verification problem and so far (though this is early days), I've been very interested in how the different approaches produce results. All of these potentially work with voice portal technology (though I'm primarily interested in applying them with CVP, the Cisco Voice Portal).

The big advantage of voice portals is that they provide an environment where applications can be combined and hence you can have layers of security. So for example, it's unlikely that speaker verification alone would be adopted, even if it could achieve 99%+ rates of verification. Instead, a combination of password, speaker verification and other measures could be deployed relatively easily in a portal environment to provide layers of security. That way even if one security measure is defeated others are likely still to work.

Would speaker verification alone have been enough to prevent the Barclays situation? I doubt that it would have prevented the situation by itself, but it could have highlighted the anomaly of the situation to the agent, and could have triggered further security checks and processes. In the end good processes will provide the security, what technology can do is enhance them and make it harder for them to be defeated.