Is videoconferencing the answer to RDR?
The reason Barclays has said that they have withdrawn from advice is that with the cost of training for RDR it has become financially unviable to offer the service. What they have said is not the reason, but surely must have been an influence, is the high amount of the fines that the FSA has been handing out for misselling of complex products.
There is no doubt that RDR is going to increase the cost of training sales advisers and once trained it is then a question of making those advisers productive. Having them sitting in branches waiting for customers to come in is not necessarily the most productive use of their time and that is where videoconferencing comes in. With the use of videoconferencing it should be possible to have a smaller team of advisers who are busy more of the time and therefore generating more profit per adviser. Add on top of that an efficient appointment booking system that customers can access via the banks portal, social media presence, call centres as well as in the branches and you have further productivity gains. It is also true that a customer who makes an appointment is more likely to buy than one that simply walks in off the street.
However we’ve been here before. Over the last ten years or so there have been many attempts to put videoconferencing into branches and none have been particularly successful, so why could it succeed this time?
Firstly the quality of videoconferencing has significantly improved since it was last tried. Cisco’s Telepresence (which Bank of America is rolling out to its branches), is a very lifelike experience where the customer sits at one side of an oval table and the adviser appears to sit on the other side, life-size and in high definition. There is none of the awkwardness of having to look away at the camera you simply talk to the person who appears to be opposite to you.
Secondly the cost of Telepresence has dropped significantly so it can become far more viable for smaller branches and doesn’t only justify itself in the busiest urban branches. Indeed it is getting towards the point where it is beginning to be targetted at the consumer market and not just business.
Thirdly with the increasing use of smartphones, iPad2 and Skype-type personal videoconferencing, social media and Youtube, we’re all beginning to get a little more used to videoconferencing and seeing ourselves in videos, so the willingness to videoconference is much higher than it was ten years ago.
So as long as the placing of videoconferencing in bank branches is done sensitively (in the meeting rooms that the advisers would otherwise have been in), then yes it might be a way of in the post-RDR world customers getting investment advice.
But this will most likely only be for the medium term, for as videoconferencing prices drop in the longer term not only will the customers be able to do it from their own home, but the advisers will most likely be doing it from theirs as well!