• Shinhan Bank has sought to improve digitisation, automation, and self-service capability by launching a full service biometric-enable digital kiosk
  • The kiosk is capable of real-time video interaction with financial experts for advanced banking transactions
  • The kiosk is a customer-centric and self-service channel that takes away the load from branches, enabling bank to reduce operating costs while retaining customers

Young and tech savvy customers are expecting a differentiated and digital experience from their banks. Institutions are exploring innovative and alternative channels that not only offer digitally-enabled services and improved customer experience but also facilitate a reduction in manpower, operation, and distribution costs. To achieve this, Shinhan Bank launched Korea’s first fully functional biometric and near-field communication (NFC) enabled digital kiosks with rich functionalities, high security, and personalised interactions.

Key challenges
Shinhan Bank has sought to improve digitisation, automation, and self-service capability in an environment where the number of brick and mortar branches is slowly being reduced. It has reduced its physical footprint from over 1,000 branches to about 800 branches to reduce cost. However, the bank still faced some challenges including how to manage its service capability and retain its customers.

Furthermore, competition in the country has risen even further due to the emergence of fintech and new ‘internet-only’ banks. Incumbent banks are looking at customer service avenues that can digitise and expand their service capabilities to compete with new entrants.

To meet these challenges, Shinhan Bank decided to invest in innovative digital kiosks.

Features of the digital kiosk
These kiosks are loaded with some unique features that have labelled it as a ‘first’ in the industry.

The machines are highly enabled, multi-functional, and self-service devices that can complete almost 80% of teller window transactions. The features include ability to open a new account, issue debit cards, print bank statements, manage funds through online banking, pay fines and taxes using QR codes, and management of fund. The kiosks also allow NFC-based payments. With these functional capabilities, customers will just have to visit physical branches for advanced products such as mortgages and specialised investments that require human interaction and unique documentation.

Shinhan Bank gets the credit of being the first Korean bank to implement new digital banking system that allows users to authenticate themselves without visiting a brick and mortar branch. The innovation came in the wake of a new guideline released by South Korea’s Financial Services Commission that allows customers to verify their identity using other means aside from a face-to-face interaction.

Opening an account no longer requires a customer to visit a physical branch. This activity can be effectively and quickly achieved using the digital kiosks through a real-time video communication with a remote staff. In addition, this innovation has allowed the bank to offer fund management advisory services to a customer who can directly connect with a fund manager.

Another notable feature of this kiosk is the embedded and biometric-enabled security feature through palm vein authentication, which allows customers to authenticate their identity even without any identification cards or documents.

Shinhan Bank first introduced these kiosks in December 2015. Today, there are 27 kiosks placed in Seoul and other selected areas where demand for extended hours and weekend operation is high. The bank aims to gradually put these kiosks in more locations nationwide.

Technology
These machines have multiple modes of authentication including biometrics through palm vein scan capability, ID card, one-time password (OTP), and NFC authentication. The bank plans to add Iris biometrics (through eye contact) into its machines aside from the existing palm vein biometrics.

Each digital kiosk is also equipped with a ‘customer present indicator’ that allows the machine to automatically log out whenever the user moves away from it. It is also capable of issuing instant debit cards and printing documents.

Shinhan Bank designed the kiosks and worked with Nautilus Hyosung in developing these smart banking machines. However, the patent remains with the bank who has exclusive right on these kiosks. After such period, the vendor has to pay the bank to sell the machines to other institutions.

Business impact
Shinhan Bank’s digital kiosks have brought significant impact to the bank in terms of customer, operational, and channel strategic values. The kiosks are able to provide financial transactions after operating hours, which provided unique service differentiation to woo customers. They operate from 9:00 AM to 9:00 PM on working days and from 12:00 PM to 6:00 PM on weekends and the bank has plans to operate it 24 hours a day.

Furthermore, such technology lessen customers’ dependence on brick and mortar branches for advanced services such as financial consultation, account opening, card issuance, and fund management. In return, this allowed branch staff to build relationship with and provide higher value services to customers. In addition, biometric and real-time interaction enablement provides higher level of security in transactions done through the kiosks.

From an operational and channel value perspective, the bank has reduced its manpower and the branch-related expenses such as real estate costs. The unmanned kiosks can potentially take away significant volumes of low value transactions from the branches, which – coupled with more efficient use of the time of remote tellers – will provide the bank with significant cost advantages in the long run.

The bank has reduced its physical footprint from over 1,000 branches three years ago to around 800 branches today. Through the digital kiosks, Shinhan Bank was able to retain its customers in places of high competition, even after it closed its branches.

Moving forward, the bank plans to expand its digital kiosk capability. This will allow the bank to reassess the branch network, distribution strategy, and staff allocation to reflect the optimum utilisation of advanced technology while meeting customer needs.

Global practices
Shinhan Bank’s digital kiosk is considered a first of its kind in Korea. While other banks like Industrial Bank of Korea are experimenting with biometrics authentication using the iris (eyes), the bank plans to integrate palm vein and eyes biometrics authentication system to its kiosks.

However, there are other notable digital innovations that have been visible in bank kiosks globally, which include the following:

Getin: Poland’s Getin Bank has implemented unmanned remote branches using Virtual Teller Machines (VTM) that use finger vein biometric authentication. These machines are equipped to perform branch operations such as payment of bills, setting up deposit accounts, transferring accounts, and instant issuance of payment cards with bank consultant support through videoconferencing. The VTM is also equipped with a document scanner that allow remote bank staff to validate customer ID, and a secure hand-writing tablet for handwritten signatures.

Standard Chartered Bank, Hong Kong: The bank introduced its digital kiosks in 2014 that enable multi-currency cash based transactions and other services through real-time visual interaction with a remote teller. The machine allows document imaging through a camera. It also has a signature capture device, cash and cheque deposit and dispenser, printer, card reader, video camera, and a microphone. These digital tellers are capable of handling about 70% of transaction types, including cash and cheque transactions.

BMO Harris Bank: US-based BMO Harris Bank has a smart branch that combines a number of digital tools. These include video tellers to provide customers with live on-demand interactions with bankers, smart automated teller machines (ATMs) that allow mobile cash withdrawals without a debit card. Customers are assisted by specialised bank professionals via video streaming on a number of financial services such mortgages and retirement planning.

POSB (DBS): POSB, which is part of DBS group, also introduced its own VTM in Singapore recently. These machines provide round-the-clock branch banking services to customers with a live-video streaming option with remote tellers. Services include balance enquiries, change of particulars and statement requests, and release of internet banking security tokens and debit cards. These machines will also include biometric finger vein scanning for verification if required.

CTBC: Catches also experimented with finger vein biometrics and facial recognition capability for its ATMs.

Conclusion
Digital kiosks offer a win-win situation to Shinhan Bank and its customers. Such technology offers unique services, wider and easier bank access, faster transactions, and lower costs. As competition from incumbents and new players such as ‘Internet only banks’ in Korea increases, the digitisation of self service capability will only expand bringing ubiquitous banking to customers. Smart banking features with automated self service capabilities are emerging as core growth driver for banks in the region. Biometric-technology has gained rapid attention and acceptances it offers enhanced security. Becoming an early adopter of these unique service capabilities should render certain distinct competitive advantages to Shinhan Bank.