COMMERCE NOW

Summary:

Today's podcast is an oldie but goodie.  A podcast we first released in May 2019 was so popular we decided to share it again! In this episode, we take you on a journey of how self-service has woven its way into so many of our daily activities from paying for gas to checking in for a flight and really what are the consumer expectations for these types of offerings. 

Resources:

Chart your Path for Retail Growth -
Connect with our Retail Experts here

Blog: Retail Self-Service: Today, it's WAY more than self-checkout 

Transcription:

Amy Lombardo:                Hello again, this is Amy Lombardo, your host for this episode of Commerce Now. In today's episode we're joined by Matt Redwood who is the head of self service checkout for Diebold Nixdorf's retail division. And today we'll discuss how self- service has woven its way into so many of our daily activities from paying for gas to checking into a flight and really what are the consumer expectations for these types of offerings. So hi, Matt and welcome to COMMERCE NOW.

Matt Redwood:                Thank you for having me.

Amy Lombardo:                Always a pleasure to talk to our friends in the retail division. So Matt, let's talk a little bit about your background first. Can you tell the listeners a little bit about yourself?

Matt Redwood:                Absolutely. So as you said, my title is head of self service for Diebold Nixdorf. Been in the company about 15 months now. It was brand new position within the company and DN saw the need to put more focus on the self-service checkout. So look after the self-service checkout business for Europe, Middle East and Africa. I've been in and around self-service my whole career. I've been in retail for a nearly 10 years.  So, I've worked with multiple different retailers all across the globe on their self-service strategy. But also that self-service implementations to make sure they're deploying the right solution into the right place.

Amy Lombardo:                Very good. So Matt, what I wanted to do was start at a very high level and talk about some macro trends that are shaping the retail industry because you can't get away with reading any headline of any major industry publication these days without seeing something about self-service in there. So can you talk a little bit about some of those macro trends that are shaping the retail industry today?

Matt Redwood:                Sure. So self-service in the form that we see at most grocery stores has been around for 15 years, which you know in the retail landscape is a long time. But it's taken a long time I think for retailers really to understand self-service checkout to get to a position that deploying it in the right way and of course for the consumers to adopt it in the right way. I think we're really at a tipping point now where from a consumer perspective is, there's self-service in every part of our life. Whether you go to the gas station, whether you go to the train station on the app or you go to the grocery, there is a self-service option and what we see in our data is that consumers really now see it as point of convenience for them. They see the benefits of self-service checkout and they've moved past the point of not only wanting it but they actually now dictate it to retain it.

Matt Redwood:                So we have a lot of retail customers that come and want to work with us purely because that's [00:02:30] amazing that stores are actually demanding it. I think when self-service initially came on the scene and a lot of retailers saw it as a great way to strip costs out of that store. And so a lot of retailers, particularly in grocery, really went for very very high density self-service checkout deployment. They stripped a lot of stuff out of their stores but what they came to realize that actually they saw a bit of a drop in the consumer experience within their stores and I think the assumption was that they put self-service checkout and they remove staff, customers will use it and everything will be fine. But actually what happened is that had a detrimental effect on the consumer experience in the store because there weren't staff to help where consumers really valued the experience within the store.

Matt Redwood:                So what other retailers now do is actually, it's not about a reduction in staff, it's about a redistribution in staff.

Amy Lombardo:                Right.

Matt Redwood:                If you take tasks that were normally done by the system and you give it to the customer to do, that frees up that member of staff to then be in other areas of the store to make sure that customers can find products, or the shelves are well stocked, they're well priced. So actually getting the experience right or getting the efficiency right at the self-service checkout as a knock on effect on the customer experience all the way right back through the store.

Amy Lombardo:                Right. So Matt, can you explain how consumer's knowledge and their comfort level is shifting in terms of how consumers are engaging with the self-service technology today versus maybe what they did when retailers first started introducing it many years ago?

Matt Redwood:                Sure. So I think there's really a perception shift with self-service checkout that's happened over recent years. I think when self-service was first introduced to stores, there was a bit of negativity and a bit of push back from consumers because they saw it as a replacement of the members of staff within the store, especially very loyal consumers that went to the same store every single week to do their shopping. They built a reputation with the member of staff. The thought of that member of staff being taken away and replaced by a machine was hit with a lot of negativity from consumers. The shift that's really happened over the last couple of years is consumers value the choice, the choice to check out or to interact with a brand, a retailer in the way that they want.

Matt Redwood:                So now what we see a lot of retailers doing is focusing on giving consumers as many channels to shop within their stores or checkout within their stores as possible. So the role of the assistant has changed completely from just a member of staff and the checkout to really kind of a customer experience manager within the store. So the tasks that would normally be done by an assistant at a point of sale system will now be done by the consumer either on a mobile device or self-service checkout or a kiosk.

Matt Redwood:                And that frees up that member of staff to actually deliver the right level of customer experience within that store. So I think the perceptional shift has been away from that machine is taking a member of staff's job to actually that machine is an option for me to check out of the store and it's freed up the member of staff to deliver a better customer experience somewhere else in the store where I wouldn't normally get it.

Amy Lombardo:                So Matt, I wanted to comment on what you just said because I think about how when I go to my local grocery store and I use self-checkout all the time, maybe because I'm a control freak and I like to see what I'm actually scanning and paying for. I let my kids do it sometimes, but then I hear time and time again, you'll see certain generations that come up and they say, I don't want to use this, this takes longer. And there's always a problem with it. And I'm just wondering is that a perception issue? Is it a training issue? You know, can you comment on that a little bit in terms of maybe just generational preferences and using self-service?

Matt Redwood:                Sure. I always say to retailers, deploying self-service checkout is not as simple as deploying a point of sale solution because innately it's a change in so many processes in your store. So we really refer to self-service checkout as a business change solution because it enables retailers A. To make their stores more efficient and but also B. Delivering a much, much better customer experience to their consumers. But the byproduct of that is because of the interaction is so different between the brand and the consumer, that retailer has to change so many processes in their stores for self-service to really be efficient and work well.

Matt Redwood:                So things like cash management, how they staff their stores, how the staff interact with the customers, how their customers interact with them as a brand, all changes. So there's a huge amount of operational shift that has to happen. So I'd say a big part of getting self-service right is how you operationalize it. Ultimately it puts a lot more onus on the staff to deliver a better customer experience because you're taking away so much human interaction within the store. But when [00:07:30] staff do interact with consumers, it's that much more important that they deliver a much, much better service. So I think it's probably a combination of not just the technology but how you staff the stores, how you operationalize your stores. It all comes together to really deliver the right customer experience.

Amy Lombardo:                Got It. And so in self-checkout or really varying ways to shop, it goes beyond just self-checkout. So there's smart phones, there's handheld scanning devices in the stores, [00:08:00] all of these different types of self service options. How have these changed the way consumers engage with brands?

Matt Redwood:                Well, I think it's giving consumers a lot more choice in terms of how they do interact with the brand. If you think about a customer journey of a grocery shopper five years ago, they'd make the decision that they want to go shopping and that may be influenced by family or what they're going to eat tonight, what they have in the fridge. [00:08:30] They'd make the choice to go to the store. They'd shop that store, they'd pick their products, they'd go to the checkout, they'd check out and they'd leave.

Matt Redwood:                Now what we're seeing is the customer journey is actually a lot more cyclical and yeah, retailers really have to focus on the digital journey. So how do I influence that consumer when they're away from my store, when they're away from my brand? So yeah, while they're watching type TV, how do I influence them to actually shop at my store, rather go to a competitor store and then how do I drive that consumer into that store [00:09:00] and enrich that customer journey when they get there?

Matt Redwood:                So give them the choice to shop your brand in the way that they want. Once they get to your store, enable them to shop the store in the way that they want, but put the right technology in there to enrich that consumer experience. Apply the right level of staffing to the store as well to supplement that technology journey. Allow them to check out in the way that they want. I think now more than ever we're seeing retailers really put the most amount of choice in that technology [00:09:30] that consumers can use to interact with a brand than ever before.

Matt Redwood:                But then it doesn't stop when they leave the store. Once they left the store, how do I influence that consumer to come back my store and actually driving the consumer into the store and actually making sure they come back is as a bigger part of the customer journey as the in store piece. So just giving the consumer a good in store experience isn't enough anymore. You've really got to enrich the consumer experience all the way around the circle.

Amy Lombardo:                [00:10:00] Do we see custom retail apps tied into self service options? So I think of Target for example, and I have their cartwheel app and I always get special discounts given to me just through the app. And then a lot of times then it's for the ease of self service. So do we see that customized apps maybe have any type of leverage on how self-service is used?

Matt Redwood:                Yeah, absolutely. So [00:10:30] when you think about a mobile app, and more than ever, every single consumer has a mobile, a piece of technology that allows them to effectively never go to a store again. But what retailers can do with that app is they can actually influence that consumer come to that particular brand or that particular store. And as you said that may be through personalized adverts, it could be through promotions or through a loyalty system. But ultimately that's an amazing tool for retailers to, I wouldn't say target [00:11:00] specific consumers, but definitely engage with consumers when they're away from that store or make sure they come into their store. And then really the use case flips because if you take the online second screening type of example of, I want to buy a TV. I might go into a store and look at TVs, but there I'll be using my mobile phone to second screen. And actually I'm researching prices all the time.

Matt Redwood:                So I'm now a professional shopper because I'm price matching as I'm going through the consumer journey. So it's really important that [00:11:30] retailers don't shy away from mobile. They actually embrace it because consumers don't like to be forced down a particular path. They want choice and they want clarity as well. Clarity of what they're buying. Clarity of pricing. So really retailers have to accept that every consumer has that mobile device and really put a lot of focus on using that to enrich the in store experience.

Matt Redwood:                Of course., as well, consumers could apply the application to allow them to actually shop the store. So scanning products and [00:12:00] actually use it as the checkout. So yeah, self-service checkout then becomes a supplement to a mobile application because it allows them to finalize the journey within the store, potentially pay cash or pay card or get help from an assistant or coupons or loyalty. So really the self-service checkout on the mobile device shouldn't be seen as competing technologies. They really supplement each other.

Amy Lombardo:                That's an interesting way of looking at it. So when a retailer is ready to make the shift to self-service or they need to modify their existing plan, something's not working right, maybe they are ready to add on some new functionality. What's your advice on how that retailer begins? And I ask you this because I go back to one of your initial comments here was the over simplification of self-service solution. So you can't just set it and forget it. So you know, talk to us a little bit about some of those advice pieces.

Matt Redwood:                [00:13:00] Absolutely. So really important, as I said previously, not to consider self-service checkout as another point of sale solution. And as you said, which I'm going to use actually set and forget. We don't want any sets and forgets because it's not a guarantee that our consumer is going to use that device. So if anyone wants any help with that process, we have some great advisory services where we work with retailers specifically on identifying the right solution to put into their stores A. For what they're trying to achieve as a [00:13:30] business but B. For their consumers. So staff from a data point of view work out what the trading profiles of your store are. Work out what you're trying to achieve by putting self-service checkout at the store. Is it efficiency, is it customer experience or is it just because everyone else is doing it or your biggest competitor is doing it?

Matt Redwood:                That's quite an important [inaudible 00:13:51] to start from. And then I think really focused on the customer journey. So why do your shoppers shop at your store and what kind of customer experience are they [00:14:00] expecting? If you can nail those three points, then you can really identify what type of self-service checkout to put into your store. But then more importantly, how you operationalize it within your store.

Matt Redwood:                So the landscape that we see now with retailers, particularly with retailers that are quite far advanced down the self-service checkout journey, they're not just putting one type of self-service checkout in to a store, they're putting three, four, five different types of self-service into a store and really focusing that particular solution [00:14:30] at a particular customer demographic. A. It delivers them the best operational efficiencies but it also delivers the best customer experience for their consumer, because it gives them the choice. So I would say focus on the operations and focus on getting the right solution for your stores and for your customers and then operationalize it in the right way.

Amy Lombardo:                That was a good way of listing it out here for our listeners. So you talked about some of these new industries or just [00:15:00] the fact that retailers want to get on board if they're not there with self-service. Can you talk a little bit about maybe some of the unexpected types of industries that you're seeing? Because we all know of the grocery model or the C-store that it's pretty easy to grab something quickly, pay and go. But what are some of those like unexpected industries?

Matt Redwood:                Sure. Self-service has been around for almost 15 years in the grocery industry, but for the first time I think retailers outside of grocery are starting [00:15:30] to sit up and notice self-service checkout as a way of enabling them to deliver the right in-store experience. So we're talking to fashion retailers, the petrol retailers, the GM retailers, the DIY retailers. Ultimately there should be no bounds to self-service checkout. The same person that shops in a grocery store is going to be the same person that goes to the DIY store on a Saturday because they're renovating the house or goes to the petrol convenience store because they want to buy petrol for their car [00:16:00] or takes their family shopping and goes through a fashion retailer. It's the same consumer. So I think we as a supplier to the industry really need to realize that actually every consumer is the same whatever shopping type their shopping in. And so if a consumer is demanding self-service in a grocery environment, why wouldn't they expect it in any other shopping environment?

Amy Lombardo:                I think it makes our lives much easier and it gives you that piece of empowerment and control your shopping experience a little bit. If you're making the list [00:16:30] and you're checking your coupons, why shouldn't you just be able to finish the transaction as well? But maybe that's just me.

Matt Redwood:                I completely agree.

Amy Lombardo:                So Matt, I think this is a good place to wrap up our discussion today and I thank you for joining us here and sharing your insights. And to our listeners out there, if you're interested in more information on self service and retail, go to dieboltnixdorf.com/retailgrowth or click on the link in the podcast show notes. Until next time, please keep checking back on iTunes or however [00:17:00] you listen to podcasts for new topics on COMMERCE NOW.

Summary:

Devon Watson, Chief Marketing Officer for Diebold Nixdorf recently traveled to Dubai UAE and sat down with the Dubai Future Foundation - a government initiative driving accelerator programs - as well as a special block chain consultant, to discuss how the region is approaching growth and innovation.

Resources:

Dubai Future Foundation Website

Dubai Future Foundation LI page

Mark Balovnev, LI Profile

Educhain Website

Accelliance Website

Diebold Nixdorf Website

Transcription:

Devon Watson:                 00:14                     Hello again and welcome to this week's episode of COMMERCE NOW my name is Devon Watson, Chief Marketing Officer for Diebold Nixdorf. Today I find myself in Dubai, UAE. We're at the Dubai Future Foundation, a government initiative driving accelerator programs in the region. I'm joined today with Ghaith Abdulrahman and Karin Gabriel, both of whom are project leads at the Dubai Future Foundation and a special guest Mark Balovnev. He's the founder of Educhain and a partner at Accelliance, a blockchain consultancy based here in Dubai.

                                                                                So maybe to start off, Ghaith, if you could tell us a bit about Dubai Future Foundation and some of the programs you guys are running here.

Ghaith Abdulrahman:                  00:54                     Sure, absolutely. Dubai Future Foundation was born out of the belief in the need to drive future in Dubai. As you know, Dubai is one of the global cities and a major, major regional player and it's been doing really well in a lot of sectors, primarily specific sectors that drove it out of turbulent times in the past and it created a successful business community and society. We've had brands come here and stay and we've had homegrown brands that have gone global. So the need to start planning for the future comes out of the belief that we need to continuously be number one, and it started in the World Governance Summit where we had an exhibition around the Museum of The Future, where we wanted to demonstrate what the future could look like. And instead of demonstrating relics of the past, it was more about what could future sectors look like, what could human interaction technology look like and how could society look like in the future? Everything from government to private sector and the society itself.

                                                                                From that very, very humble beginning. The foundation has over 200 employees, a vast portfolio of projects that range from everything from building capacity for society, government and multinationals around explaining what the future could look like when when emerging technology comes into their sectors to building disruptive programs around with multinationals government about how could we lead on certain sectors? How can we transform government from a nascent and inactive player to a proactive player? Which has been the case for Dubai government for a long time, where they've been pushing and driving the innovation in any economy or any sectors or in the economy, since their inception, and the private sector has been kind of following rather than leading. So that's really to build and capitalize on that effort quite a lot.

                                                                                Some of the programs that we host range from connecting government to very bright startups to entrepreneurs to building capacity on a leadership level to help them understand how is technology changing their sector? How it could change your organizations to working with private sector as well around a similar scope to building capacity with university students and high school students around breaking down myths, breaking down misconceptions around things like AI, blockchain, other parts of technology and how could they be part of that new wave of entrepreneurship, but also how can they use that technology moving forward. So the scope's quite vast. We get into a lot of programs, what we primarily focus on building programs that link regulators or government with a private sector and startups and how do we build the value chain around these three.

Devon Watson:                 03:38                     Got it. And one of the things that you mentioned that I thought was pretty interesting, so as I look around Dubai, the desire to be number one is pretty obvious, the world's tallest buildings and very impressive engineering feats. But there's also this kind of clear trend towards the societal aspect, the satisfaction or happiness. I've noticed that those measurements are kind of stitched in every place I go in the user experience. Can you talk a little bit about how the user experience, as it pertains to really a societal benefit here right, the government is what's actually driving this and how does that marry up to this desire to be number one because many other governments or institutions would view it as one or the other?

Ghaith Abdulrahman:                  04:23                     Absolutely. You're spot on. I mean the general vision is to be number one and that, to different stakeholders and government, that could mean different things, right? From a government centric perspective, one of the things that means is that, beyond creating government entities that are stellar, that are continuously innovating and taking the lead in their sector, there's a huge services mandate towards the people, towards a society that needs to be fulfilled. And that's been a primary concern and primary focus of the government entities here. How can we provide world-class services to the citizens, to the users, whether they're commercial, residential, and everybody who even passes by or transits Dubai, right? How can we give them an experience around service that's not comparable, right?

                                                                                And there's been a lot of focus. Everything from gearing the Government entities internally, whether they're from an organizational perspective or from a services perspective, operational perspective, but also how can we team them up with the best technology that can facilitate providing the best services. So that's been really the focus. And ultimately the common denominator across all that is that we want everybody who hand or deals with Dubai government to be happy with the outcome and the transaction and the experience.

Devon Watson:                 05:36                     Got it. And one of the things that I've always thought a lot about when I go to a different city and I see how they're trying to stimulate innovation is, how you bring the right mix of participants together, right? And you need students, right, that are graduating and becoming risk-takers and new ventures. You need often some sort of government support. You need large corporations that can be acquisition vehicles for these different startups and things like that. And you need capital, right? And one of the things that I noticed that I thought was really interesting is that you've brought a Techstars program here, so maybe you could tell us a little bit about that.

Ghaith Abdulrahman:                  06:12                     Sure. So Techstars program was launched the beginning of last year and it was the first accelerator program we hosted in our flagship project Area 2071. So Area 2071 is an experimentation space between government multinationals and startups focused on identifying a disruptive business models and technology. And out of that we hosted a Techstars for the first time in the region. It was the first endeavor in the region there were sponsored by one of the big family businesses in in the UAE. And we really liked the outcome of the program because the way it was organized and the way that it was structured was in a way that ensured that the companies would not just succeed, but find a home in Dubai. So we found that quite attractive to our mandate and our positioning. So we hosted them for two cohorts over two years. And a lot of these companies are going to get special visas around that enables them to stay for a long period of time, sponsor their teams, and sponsor their families to be based here out of Dubai.

                                                                                So that's the support that we've usually provides any accelerator program or any startup. But that Techstars experience has been quite stellar because it also pushed us to launch a project recently, it was one of the reasons that focuses around how can we incubate ideas on a university level where it's safe to fail, it's safe to experiment with new ideas for businesses and how can we play a role along with the private sector and the government funds around seeding these ventures and graduating a lot more of these ideas. And that's the problem that you find in the Middle East in general, is that there's a lot of talent, there's a lot of bright ideas, but there's very few mechanisms that enable it to go from idea stage to execution stage or a POC stage. And that's kind of where this project, which is called Genie Zones or Alchemy Project has come out from.

Devon Watson:                 08:01                     The way I often phrase that problem when I'm thinking about it. It's something that recurs in different regions as well as solving the get to market problems, not the go to market problem, right? And it's a different mindset, right. And you need, in particular, permission to fail, right? And that's not always culturally viewed as an okay thing.

Ghaith Abdulrahman:                  08:21                     And that's why universities are the best place to do it, especially when you embed that program within the credit system that the university student goes through. It becomes more of an incentive and it puts the parents at ease as well because they say what, he or she are focusing on the degree and at the same time that this program that they're doing is contributing towards that degree. So that program really fits in quite well with everybody's needs

Devon Watson:                 08:45                     And then that changes the perception, right. And opportunity to learn rather than a blatant risk, right?

Ghaith Abdulrahman:                  08:52                     Absolutely.

Devon Watson:                 08:52                     That's excellent. So thank you Ghaith. That was super helpful. I really liked the kind of the mission around what you guys are trying to create here with the ecosystem. So Karin, maybe we could move over to you and tell us a little bit about, as this ecosystem is coming together, you're trying some new things, what are the technologies, what startups maybe are starting to capture your attention that you're bullish for that will have a great future.

Karin Gabriel:                                    09:18                     Absolutely. And I think, I just want to start off giving a bit of context of the kind of programs we run here. So my colleague mentioned earlier Techstars, which is one of the programs that are invited to set up an Area 2071. And Area 2071, as mentioned earlier, is an ecosystem that comprises of three main stakeholders, private sector organizations, government organizations and talent in the form of startups primarily. And they're all situated here in Area 2071 in Emirates Towers. And our goal is to make sure that we harnessed experience and expertise of our members in this ecosystem. And we work on specific programs that are all driven by a specific challenge. So challenge is a need, a problem statement that we identify together with our partners. Then our goal is to find the right stakeholders, bring them on one table, and then we create a program that allows the different stakeholders to work together and co-create a solution for the challenge statement. And these challenge statements usually revolved around technologies and we have seen all kinds of technologies from AI to a block chain artificial intelligence. Sorry, let me move [inaudible 00:10:29].

                                                                                Yeah. So we have seen all kinds of technologies being represented in our programs from artificial intelligence to blockchain, virtual and augmented reality and so on. And I think what's interesting about our programs is that they are driven by a specific need. So in Dubai future accelerator, if we work with their road and transport authority that looks into autonomous driving, for example. The electricity and water authority looks into new forms on energy savement, energy generation, but it was a water generation. The knowledge authority of course really wants to revolutionize the education system to make sure that it's ready and prepared for the 21st century. I think what we have seen interestingly is, in the beginning a bit of question on the government side on why should we work with startups? Because for them this was a new field. As you can imagine, even for us in Dubai Future Foundation, we are very young organization. We are less than six years old.

                                                                                But if you want to buy let's say new furniture and new equipment, we have to go through an RFP process which is very strict, which doesn't allow us to work with startups, which means all of the solutions that startups provide around innovation. I think that we can access on a legal basis. That's why Dubai future accelerators was set up as a test bed to allow startups to work with government entities and explore during the nine weeks program how they can collaborate. And we have really seen a shift in the mindset of the government from being in the beginning very careful when it comes to working with startups. They wanted to know which were the partners that the startups have worked with before and they wanted to do have references. To really switch integrate, you have never tested it before. I want to be the first one you test it with.

                                                                                I want you and us to sit down and further develop your technology. Now I can give you an example here, we had a company from the UK called Desolenator and they brought to Dubai a solar powered water desolination technology sit in MVP stage. They signed an agreement with the electricity and water authority from Dubai and over course of one and a half years, defer to develop the technology and have now building a community size plant in Dubai using this technology.

Devon Watson:                 12:46                     It's a great success story.

Karin Gabriel:                                    12:48                     Absolutely. It's brilliant and I think it shows the risk appetite the government has and the confidence in the startups and really understanding that emerging technologies can help them offer better services to their customers.

Devon Watson:                 13:02                     So the self-awareness and government's part to understand that there probably was a lot of red tape and things like that. I did a similar interview with another accelerator in a different part of the world and they were telling me that at first when they got started, they were bringing these brand new startups in and the government form had to make the startup list of the number of fire extinguishers they had. No startup has any clue why you would even, right? They don't even think that way. Right? So it's interesting that the government here was kind of self aware that there was impediments and red table, whatever you might want to call it, to that progress and then and then fixed it. What was that conversation like through the education process though? Was there an aha moment or was it just kind of a continual collaboration to help refine how the government looks at it?

Karin Gabriel:                                    13:52                     Yeah, that's a good question. And I think it's an ongoing process. So they have been a lot of aha moments and I'm pretty sure they will be a lot of aha moments moving forward. So for example, one of our partners really looked into changing or adapting their procurement system, right? Because our procurement based system sometimes takes months. And months are not an issue for large corporations, but months are an issue for a startup because they have limited resources. And I really think it's by having the government partners and private sector organizations as well, work with the startups over a period of nine weeks, every single day side by side to really see the potential that they have in transforming the services or the way we offer the services to our customers. And not only our customers, but we had one example where a smart Dubai office who is kind of like the tech department of the Dubai government so to say, and they are also in charge of the software used in their houses, the inventory, management and planning system, which until recently was very much focused on paper and it was very manual.

                                                                                It was sometimes very frustrating for the employees, right? Because you know you have to print a lot of items. There's just a lot of time that is gets wasted from employees time on this admin tasks. They teamed up with a company from the US called Ensosoft. Now they changed the name to Nybl. And over the period of nine weeks they went to one of the warehouses. They looked at the processes and they recommend to the director training of smart Dubai office and how they can change it and they agreed. Then they signed a contract and they're now using IOT and AI to digitize the system, which means the employees have now more time because they can focus really on the important tasks. So again, looking into happiness.

Devon Watson:                 15:40                     Excellent, interesting. In all of these different entities that you're working with. Can you give us a couple of examples of other interesting technologies that you know you guys are maybe doubling down on or really focused on?

Karin Gabriel:                                    15:52                     Yeah, I mean, one very interesting one is around virtual reality for example, and augmented reality. This year we run a very interesting competition with Burj Khalifa and HTC. And Burj Khalifa was looking into providing a new touristic experience at the top of Burj Khalifa. They already have one, but they wanted to edit a new one. And instead of just creating it internally, they wanted to harness the creativity of the VR ecosystem globally. We ran a competition, 115 companies applied. The top six came to Dubai. They presented the demo and then we had two winners and they walked away with... the winner walked away for prize money and the second run app their experience will now be placed in the Dubai mall, which is attached to Burj Khalifa and the winners on top as well as the global port of HTC.

                                                                                What do you have seen as well with Emirates for example, they focused in our core this year on transit pass passengers. There are a lot of passengers we have coming to the Dubai airport, it's the busiest airport in the world, so we are very lucky. A lot of transit passengers, a lot of flights that are being missed or people don't find their gates. So they developed a very interesting solution and the country [inaudible 00:17:03] too much. How they can really personalize the support, the customer service support, after transit passengers and they worked with a startup during this program.

Devon Watson:                 17:15                     So virtual and augmented reality is something that I think the banking sector has taken interest in a few times. Nobody's really figured out quite how to use it. And so there's some things with the signage that helps direct traffic flows and stuff like that. And it's an augmented reality if you will. But it's very interesting to think of the different use cases you could have at the top of Burj Khalifa. And I can't imagine trying to catch Pokemon, running around on the top floor. That would be a dizzying experience.

Karin Gabriel:                                    17:44                     Yeah. But I mean it's interesting because we talked about banks and of course, I mean as mentioned earlier, blockchain is massive, right? And the hype around blockchain has slowed down a bit now. We really talk about proper applications in blockchain. But there's still a bit of a question mark around that. And in partnership with the World Economic Forum and the Center for the Fourth Industrial Revolution, we hosted a blockchain governance accelerator. So again, we brought together private sector organization, public and startups who have either looked into implementing doctrinaire already done. So at a certain extent and using the World Economic Forums toolkit. So it's a guide book that they have created. We analyze the Skybook through case studies and the outcomes were fed back to the toolkit to now be presented next year to World Economic Forum. But this really goes back to our goal. We believe that innovation is driven through collaboration. I think that's the way forward and Dubai is doing its best to position itself as the global test but for emerging technologies.

Devon Watson:                 18:50                     Fantastic. Great, thank you. Mark, I'd like to switch over to you and you've been the founder of a company called Educhain. You're a partner at Accelliance, which is a blockchain consultancy. Maybe just to get your macro perspective on blockchain first, how do you see things as they've evolved over the past couple of years, right? From the hype cycle and what do you see moving forward as we kind of get to the industrial phase with blockchain?

Mark Balovnev:                19:19                     Yeah, sure. So I am a bit of a unique experience and I guess I came in as a hobbyist. So before they were cryptocurrencies, they were virtual currencies. And back in 2009 2000 time we were trading those currencies and we were the market makers for various types of virtual currencies. And of course when Bitcoin came around we were one of the first to adopt it and start trading. And so before there were really big exchanges, I hear about these days where you can go and buy and sell different types of cryptocurrencies. We were actually doing that manually with a team of agents across several countries connecting different markets from China to the US and beyond. So we've seen everything in the space from the emergence of big point as a new way to facilitate payments all the way to blockchain in 2015 and early 2016 when financial institutions started taking notice.

                                                                                So we've seen a dramatic shift in the way that blockchain has been approached from the early days when there was a lot of hype and a lot of over promising and under delivering to a new sort of environment where people have gone and they've invested a lot of money, they've seen what works and what doesn't. And they started the drill down on the fundamentals. So there was a time in 2017 2018 where people thought blockchain could be applied to everything. And of course there was that corresponding investment and time. And we've definitely seen that die down a bit. But what that means is that now that the people who are in the space, they understand what to do and what not to do, and they've really to focus on the applications and technologies that work. And so for me personally, it's a time of great excitement and rates anticipation because this is really where the production applications are coming out and the technology is really started to impact the end users.

Devon Watson:                 21:04                     Got it. And I think you're exactly right. And in 2018 I was personally convinced that if my coffee wasn't enabled by blockchain, I wasn't cool. I would those 100% convinced to that. But now as the tech is industrializing, there are more developers trained up. Right. Because that's been something that's kind of starved that ecosystem is that, you know, if you don't have a really good grasp of not just comp side but mathematics, it's very hard to get into the core development of it. That shortage is slightly alleviated. What are the areas where you're seeing kind of the most promising traction?

Mark Balovnev:                21:42                     Well, I would even add to that in the sense that people and the governments and banks and others didn't know how to work with the technology. So not only were they missing those technical capabilities, but they didn't know how to structure governance. They didn't know how to work with their competitors. They didn't know how to collaborate with startups and emerging technology. So that was one of the things that we as well saw a lot of development and a lot of maturity. And so with that said, I think there's this moment where we saw blockchain being applied to everything. Everyone was talking about blockchain for every single industry. But these days it's really come back to the fundamentals, which is the same industries that they emerged from financial industry. So financial services clearing and settlement, supply chain, trade finance, a lot of international use cases around financial services and the financial industry at large.

                                                                                So that's definitely one of the biggest ones as well as things like records and data notarization. So blockchain is a very good at a few things. It does some very well, but when you tried to make it do everything, it breaks down, right? So one of the things that we see a lot of traction in is digitizing processes, digitizing documents, and using blockchain as a way to find out where things are coming from, who's issued them or who's shared them and if they're legitimate or not. And that can be applied across a variety of industries from education to supply chain and beyond.

Devon Watson:                 23:01                     Got it. Final provocative question. Is Bitcoin a currency or an asset?

Mark Balovnev:                23:07                     Well that that is a tough question and I'd love to prefix this by saying that I'm not a financial advisor and this is not the official position of any of the companies organizations that I represent, but I think that it is a payment token or something like this. We've seen a definitive sorting of these types of tokens. For example, Finma Switzerland looks at utility payments and securities and I think securities represents a non-tokens of shares and companies, shares and debt shares and other assets are the real asset back tokens. Whereas, so you have to open some utility that provide access to a certain right or certain products in payment tokens. So we like to categorize on and look at them from that perspective.

Devon Watson:                 23:56                     Fantastic answer. Thank you, Mark. That was excellent. Well, thank you all for joining us on this episode of COMMERCE NOW, if you enjoyed listening to this, please follow us or subscribe to Commerce Now on iTunes or your favorite podcasting app. You can also find us on YouTube, Facebook, Twitter, LinkedIn at Diebold Nixdorf.

Summary: 

On this podcast we discuss how to transform from traditional sourcing to an “as a service” economy. Today’s consumers expect “anytime, anywhere” access to the self-service channel, leaving financial institutions with the challenge of optimizing availability without driving up costs. For many FIs, this challenge can quickly become overwhelming. 

Resources:

Blogs:

Banking Innovation: 4 Ways You Can Make a Big Impact Quickly

The Growing "XaaS" Service Economy Trend

Websites:

COMMERCE NOW

Diebold Nixdorf

Transcription:

Amy Lombardo:                00:13                     Hi, this is Amy Lombardo, and I'm your host for this episode of COMMERCE NOW. We're coming to you live from DN Intersect 2019 in Las Vegas. I'm joined today by Homi Karkaria, who is head of our Solutions Group, and he's presenting to our bankers today a topic that's entitled Evolving the Operational Model, which I think is a little intriguing, due to your role in the software market. So let's talk on the topic of software as a service model and why a banker should think about this as an operating model. So my first question for you, Homi, is where do you think the global software as a service market is headed right now?

Homi Karkaria:                   00:52                     Sure, thank you so much. Well, there has been significant increase in the global software as a service market as we look at things. For example, if you look at everything as a service, or what people would coin XaaS, that market has grown by 38%, or is expected to grow by that by 2020. When you look at the software side, which is the software as a service, that is also growing at healthy double digits greater than 20%, with a cumulative growth rate expected to reach a huge 185 billion by 2024.

Amy Lombardo:                01:27                     Does that sound about right for the role that you're in? Would you expect to see that? Is it something that bankers are accepting and gravitating now?

Homi Karkaria:                   01:36                     I think bankers are really understanding this and accepting it. They have started realizing the advantages of why this is happening, what's in it for them, and how they could benefit, whether they look at initiatives like branch transformation, more automation, connectivity of physical and digital channels. I mean, all of this has to happen with limited cost, with limited infrastructure, with limited resources that the bankers have, and this is where software as a service can really help them.

Amy Lombardo:                02:06                     Okay. So dive a little bit deeper into that. You mentioned a few of those benefits there, but can you explain them in a little more depth here for our listeners?

Homi Karkaria:                   02:15                     Absolutely. When you look at customers, customers have different needs. So there are different needs for tier one customers versus tier two entry. A tier one customer might be able to have a large capital expenditure as a part of their budget. A smaller customer might not. So how do I have a solution which translates or which goes from a CapEx mode to an OpEx mode? So that's one benefit for the tier two segments.

Homi Karkaria:                   02:40                     The second thing is, banks want to retain, in certain cases, their own cloud environments, their own private cloud. However, there are certain applications which are not business critical and they want to connect to a public cloud. So how do I build a hybrid solution which connects the best of [inaudible 00:02:57] from what Diebold Nixdorf brings with what the have in-house?

Homi Karkaria:                   03:01                     When you look at the challenges that the banks face today, a lot of it is to do with upgrades. So I have done, you know, how much time does it take to do an upgrade and that could be reduced significantly in software as a service model.

Homi Karkaria:                   03:15                     The other big challenge is, when I have an update, how do I ensure that my install base is not affected because of somebody else? How do I have a faster go-to-market? How do I have a seamless migration to have a positive consumer journey? So those are all the benefits that the standardized solutions which comes as a part of the SaaS models brings to the banks.

Amy Lombardo:                03:38                     So where does security come into this model? Is it almost you're more protected by going through as a service model, or maybe what are the considerations that a bank needs to think about pertaining to security?

Homi Karkaria:                   03:52                     Security becomes absolutely critical when we go to this model because the benefit is the flexibility across the different channels that brings with it the challenges associated with security. Now, when you look at security you're not just looking at security from a client end-point perspective, which might be the ATM, you also need to look at security from a backend server perspective based on the solution that's hosted in the cloud, and how are these two connected? How do I ensure that my end consumer is indeed the right one and is using the channel effective. Security becomes an extremely critical part of this equation.

Amy Lombardo:                04:29                     Okay, so Homi, let's move a little bit into the implementation side. What does a banker need to think about as they want to move to the SAS model or are there particular models based on their own environment?

Homi Karkaria:                   04:43                     Yeah, so I give simple example to illustrate what kind of models the bankers can think about. If you are an end consumer, you have multiple options. You could own your own car. That is equal to, in my books, putting a software on-prem at the customer side. But I could decide to lease a car. I don't want to own the car. I do not want to have the headache of it's a maintenance and upgrades, et cetera. And I want to change it after a couple of... so I could lease a car. And leasing a car is then synonymous to software as a service. I could also have a situation where, I don't even want to lease a car, I don't want to drive it. I want to take a taxi. I want to go from point A to point B today. I want to go from point P to Q tomorrow and I want to take a taxi.

Homi Karkaria:                   05:28                     And that would be a synonymous to a managed service model where a customer is requesting, I have not only to deploy the solution but operated on the RBF. And finally when we look at something that we call biz sourcing, it's like taking a train. A train leaves a station, irrespective of the number of consumers that enter it. A train does not deviate. It goes from station A to B to C at a specific predetermined time period. And that's akin to what we call biz sourcing, where solutions ATM as a service come in. So bank needs to think of where are they today? Where do they want to go, how much do they want to invest? What's the level of maturity inside the bank? How do they focus on their core competencies of financial services versus focusing on technology and let us handle it for them.

Amy Lombardo:                06:16                     Got it. Well that was a perfect example there and made very logical sense to me. You mentioned on premise and off premise servicing. Can you explain the differences there and and really is there any difference for the consumer?

Homi Karkaria:                   06:34                     So from a consumer perspective there wouldn't be a difference. From a bank's perspective, there are a couple of differences. When you look at a solution that is hosted as a service, you have all those benefits, like a standard solution with faster go to market with the quick upgrades and seamless migration, et cetera. However, when you look at an on-prem solution, you have other types of advantages. Namely a customer might want to have a highly customized solution. They might want to have control over the implementation timelines. They might have specific integrations which are very proprietary to the banks ecosystem, so they might have cash on the balance sheet, which they want to invest upfront and they want to pay for the licenses right away rather than distributed over a couple of years. So it's a very different model when you look at on-prem versus SAS and that are advantages and differences between the two.

Amy Lombardo:                07:32                     So it sounds like there's benefits either way, it's just based on how your organization's makeup is built and where you want to go with the offering. Right,

Homi Karkaria:                   07:42                     Absolutely. I think especially for tier two banks, who do not have significant investments to be made on the technology side and have on faster go to market, I think a SAS solution would be better off than an on-prem solution. But otherwise, work models are very much work in the market marketplace.

Amy Lombardo:                07:58                     Got it. Okay. So I think this is a good point in our discussion to end here. Homi, I'm grateful and thankful that you sat down with me today and to our listeners out there, keep following us along on COMMERCE NOW and for more information on our Vynamic Software Offerings go to dieboldnixdorf.com. Thanks for listening.

Summary:
In a follow-up conversation with Karen Webster from Pymnts.com, Carl von Sydow from Diebold Nixdorf recounted that self-checkout store data is not complicated or complex — it’s pretty simple information, including time stamps, the number of items in a basket and whether certain items are age-restricted, but paying close attention to the data will ensure an optimal customer journey throughout the check-out process.

Resources:

Pymnts.com related articles:

https://www.pymnts.com/checkout-conversion/2019/for-self-checkout-location-location-location-and-data-boost-conversions/

https://www.pymnts.com/news/retail/2019/using-data-to-increase-checkout-conversions-in-store/

Blogs:

Relevant Retail - the New Norm

Retail Self-Service: Today, it's WAY More than Self-Checkout

Website:

Diebold Nixdorf

Previous Carl Von Sydow Podcast:

Using Data to Increase Data Conversions In-Store

Transcription: 

Karen Webster:                00:00                     Hey, Carl, thanks for joining me today. I'm looking forward to having a follow up conversation that will build on the last chat we had about using data to increase checkout conversions in the store. We talk a lot about checkout conversion online, and in the store, using the right data, can certainly help to increase that process.

                                                                                We set the stage last time we chatted, now we're going to dig into the details of exactly how to do it. So, thanks, as always, for making the time.

Carl:                                       00:43                     Well, thank you. Happy to be here again.

Karen Webster:                00:46                     Okay. So, let's get practical about what to do with the data that has been collected, and observed. Now, action is ready to be taken. How would one go about actually putting a checkout conversion plan together when looking at their data, for figuring out how to do that?

Carl:                                       01:10                     Well, first of all, I just want to come back a little bit to what we said last time, perhaps. [Core 00:01:18] data we are talking about, first of all, is not complicated or complex, it's pretty simple information. I don't anyone to believe that we are doing some highly sophisticated, rocket science analysis here. It's more or less about the timestamps, amount, number of items in the basket. Is there age-restricted items or not, et cetera? It's pretty simple information, it's just how you interpret that information.

                                                                                But, coming back to your question, first of all, you have to, when you collect the data, you have to think a little bit about from what period you picked the data. You can have data from a slow week, or a busy week, or some kind of average week, but the important thing is that you know from what type of period you pick your data. Or, you can choose to have a data from a longer period of time, like work with averages. That's one thing that's important.

                                                                                When it comes to conversion rate, you have to look through the data, and put together what might have an impact on your conversion rate. Conversion rate, of course, is being the ratio of customers coming into the store, buying respectively, as not buying anything. You want to have as high conversion rate as possible. You want all customers that comes through your doors to buy something.

                                                                                Typically, the customers that leave the store are customers with few items. They come in, they are in a hurry, they want to buy just a few items and get out of there. The good thing is, like, self-service is ideal for customers like that, with the few items. If you look at your store data, and you can identify a group of customers with small baskets, less than five items or something like that, then you have a good potential to increase your conversion rate if you, then, add more self-service, or add new self-service to that store location.

Karen Webster:                03:12                     So, when you think about the impacts of conversion, and looking at data on the efficiency of the experience throughout the store ... we're talking grocery stores, I guess, and other stores where people are going in and out, and buying things. Convenience stores, I guess, would be another category. There's the consumer angle to this, which is obviously very important, that drives sales.

                                                                                There are also other behaviors that, looking at data, and trying to make decisions about checkout efficiency, is also very important. Can you talk a little bit about the staff impacts, the management impacts, some of the investments in technology that need to be considered in looking at this bigger picture?

Carl:                                       03:55                     We have one example. We have a customer I'm working with right now, they didn't have self checkout. They installed card-only self checkout in their exit area, four lines. We studied the data before and after. All of the after, only a few weeks, we could see that we had an adoption rate of 25%.

Karen Webster:                04:17                     Wow.

Carl:                                       04:17                     Which was really good.

Karen Webster:                04:17                     Mm-hmm (affirmative).

Carl:                                       04:18                     It was four lanes out of a high number of lanes in that store. They were careful with the investment, self checkouts is expensive. They didn't know how their customers would react to this new concept. This is actually this summer, so we retailers just adding self checkout.

Karen Webster:                04:38                     Mm-hmm (affirmative), Mm-hmm (affirmative).

Carl:                                       04:38                     So, what we could see, when we looked at the data, we could see some signs that, perhaps, they have some possibilities for, first of all, add more self checkout. We could easily see that we had a lot of customers going through the normal lanes, still with very small baskets, paying with credit cards, that would be ideal to try to push them to the self checkout. So, the potential was clearly there.

                                                                                We could also see, since we can go in and look in 15 minute brackets when lanes are open, I could see that, for some reason, they didn't open the self checkout lanes until after two, three hours later in the day. They could have several [manned 00:05:18] lanes open before they open the self checkout.

                                                                                So, we had a discussion with that retailer about that. It was all about it being really careful with customer satisfaction, and customer experience, and also staff training. They felt that they didn't have trained enough staff to be able to man the self checkout area.

Karen Webster:                05:41                     Mm-hmm (affirmative).

Carl:                                       05:42                     Then, we went there and made some observations. It's always good to see everything -

Karen Webster:                05:46                     Sure.

Carl:                                       05:46                     - live, as well. Numbers are one thing, but you have to see it for yourself. We could see that as soon as they opened the self checkout, the line of customers waiting for the other manned lanes immediately gravitated towards the self checkout. Because, customers today, they know that self checkout is a very quick way to leave the store, and that's what they want.

Karen Webster:                06:12                     Mm-hmm (affirmative), Mm-hmm (affirmative). Yeah, I mean, it's interesting because ... I'd be curious to get your thoughts when you observe this. People just don't like waiting in line, right? If they have a small number of items, and they have an option to use self checkout, and they can do that without standing in line, it seems like an obvious choice. So, you get -

Carl:                                       06:33                     Yeah.

Karen Webster:                06:33                     It's not as if consumers are going to put their basket down and walk out. They've already made the investment to go there, park the car, and select their items. You know, they may not come back the next time if the experience is difficult for them, or the association with the store is, I'm always going to have to stand in line when I've got five items that I want to just buy to get in and out. It plays on basic human behavior.

Carl:                                       06:57                     Yeah, it is. As I said, it's common sense, it's like an after thought. Everything is so easy when you look at it afterwards.

Karen Webster:                07:05                     Sure.

Carl:                                       07:06                     And you have the good example in front of you. It is actually very simple.

                                                                                Interestingly, in you take just the transaction process itself, a cashier is always faster than us normal customers, when we go and go through self checkout.

Karen Webster:                07:23                     Yeah.

Carl:                                       07:23                     We have the same number of items, a cashier would scan them faster and all that than we can do ourselves, but the perception that we have as a customer is that the process is faster, because we are in control.

Karen Webster:                07:38                     Yeah.

Carl:                                       07:39                     We do everything ourselves. So, there is a lot of objective things that make the customers gravitate towards self-service nowadays.

Karen Webster:                07:47                     Mm-hmm (affirmative).

Carl:                                       07:48                     They are getting more and more simple to use.

                                                                                Another trend, a little bit, is that some retailers, they add more staff in the self checkout area. Perhaps, deactivate or disengage the wait security during peak hours.

Karen Webster:                07:48                     Mm-hmm (affirmative).

Carl:                                       08:05                     To increase the throughput and make it easier to scan and just go. That's a sensitive topic, of course. More and more retailers, I think, they're looking at the throughput rather than the hard fact, security, and you have security features and all that. Add more customer service, more staff monitoring and helping the customers, and you will have a higher throughput, and everybody will be more happy, really.

Karen Webster:                08:29                     Yeah.

Carl:                                       08:29                     Throughput is more important than every, I think. The speed that you get customers through the self checkout.

Karen Webster:                08:35                     Yeah, no, for sure. I think you're right. You fumble around to get the bar code, sometimes, and then you have to -

Carl:                                       08:43                     Exactly.

Karen Webster:                08:43                     - push your stuff down the chute, and then you have to bag it. All that takes time. You do feel better, because it's you that's doing it. You don't have to wait behind someone that has 50 items in their basket, and that takes forever.

                                                                                As we all do, we scan the lines to make some mental decisions about what line will probably move the fastest. I always pick the wrong lines.

Carl:                                       09:10                     Yeah.

Karen Webster:                09:10                     I think that's what consumers do.

                                                                                What about the convenience store environment, which is not the same large format as grocery stores? What are you seeing there, in terms of best practices with self-service, self checkout?

Carl:                                       09:27                     With convenience stores, it's an interesting store format right now, for self-service. They have a different challenge, in a lot of cases, compared to bigger supermarkets and [hyper 00:09:38] markets, in the way that they have not so many staff in the store. They could have one lane open, or two lanes open, typically. Then, perhaps a maximum capacity of four or five lanes. Conversion rate, they are very sensitive for that, because especially in a convenience store, customers tend to go out immediately if the lines are too long at the checkout.

                                                                                Nowadays, when we have smaller, more efficient from a footprint perspective, self-service solutions, the door has opened a little bit for convenience stores to start to use self-service. On top of that, there are some clever hybrid self checkouts on the market, as well, where you can have a lane in self checkout mode, and then you can easily just switch that self checkout, without turning anything around or anything, just you switch the software application so it turns into a manned lane.

Karen Webster:                10:39                     Mm-hmm (affirmative).

Carl:                                       10:41                     For example, we have another project with a C-store customer in the Midwest. They have four lanes in that store. Typically, they had one, two lanes open. Then, peak hours, they went up to four quite often. Difficult to plan staff, because it went up and down, up and down, over the day.

                                                                                We discussed with them, looked at the data. We took out two of the four lanes, and put in three self checkouts instead.

Karen Webster:                11:08                     Hm.

Carl:                                       11:09                     Which means that, in any given point during the day, with one person, they will have four lanes open.

Karen Webster:                11:17                     Yeah.

Carl:                                       11:17                     That person will operate the manned lane, but she will also have three self checkouts available. So, the maximum capacity, at any given time, increased dramatically.

Karen Webster:                11:28                     Yeah, sure.

Carl:                                       11:28                     If you do that, then it will take much longer for lines to build.

Karen Webster:                11:32                     Yeah.

Carl:                                       11:32                     When a customer comes in.

Karen Webster:                11:34                     Yeah.

Carl:                                       11:34                     So you have, immediately, a positive impact on the conversion rate.

Karen Webster:                11:39                     Yeah.

Carl:                                       11:39                     When you need the maximum capacity, you can switch the self checkouts to manned lanes, and the capacity you need is available.

Karen Webster:                11:47                     Yeah, I think in those stores, the opportunity for abandonment is very high, because the abandonment happens because consumers will walk in, they'll see these long lines and say, "Forget it." When you're going to the grocery store, you're committed because it's bigger format, and you don't always have that same visibility because lines are dynamic.

Carl:                                       12:09                     Yeah. Typically, convenience stores, an argument you'll always hear, or very often, at least is that, "Oh, well, most of our customers pay with cash. Self checkouts with cash is very expensive."

Karen Webster:                12:22                     Mm-hmm (affirmative).

Carl:                                       12:24                     They are difficult to use, a lot of maintenance, and all that. Which is true, to some extent. Then again, if you take the time and really analyze the data, you will see that, all right, you might have 55, 60, or even more, 65 percent cash, but you still have quite a lot of card customers.

Karen Webster:                12:24                     Right.

Carl:                                       12:42                     Why don't install self checkouts to address those customers? They will be happy, too, if they can come in and pay with their card and get out of there, instead of just leaving without buying anything.

Karen Webster:                12:52                     Mm-hmm (affirmative).

Carl:                                       12:55                     I always try to open the door, to think a little bit. Be brave, look at self-service. It doesn't have to be with cash, even though cash is king, cash is forever here to stay.

Karen Webster:                13:11                     Yeah.

Carl:                                       13:11                     Just be flexible, open-minded.

Karen Webster:                13:14                     A lot of retailers are looking at these smaller format stores. I mean, certainly, grocery, but when you think about the expanse of stores that are looking to locate in urban areas, where they don't have the ability to have the same size store, but want to be able to serve customers. I'm curious to get your thoughts on where to put some of these self-service lanes? You've got this consumer that is, perhaps, going to opt in to self-service because they're in a hurry, but the store operator wants people to, perhaps, see other things while they're there, making their little journey, making their little shopping journey, and pick up things that they hadn't planned to buy when they walked through the door. I can see the pros and cons, but I'm curious to get what's considered best practice there?

Carl:                                       14:10                     Yeah, we always try to push for having self checkout, or any kind of self-service solution, whatever you have, as visible as possible when the customer enters the store.

Karen Webster:                14:10                     Mm-hmm (affirmative).

Carl:                                       14:20                     When the customer enters the store, she or he will know that is a possibility for them when they go and checkout. I don't really understand, when they put self checkouts in a wall in a corner, or somewhere it perhaps fits from a floor plan perspective, and is not in the way for anything, but in contradicts the whole idea with the self checkout, right? It's more customer service orientated than ever, and you have to pay that price with floor plans, perhaps. I would definitely not put it somewhere where it's not easily visible. Yeah, that's my recommendation anyway.

Karen Webster:                14:58                     Seems logical to me. It also seems logical, as you said at the beginning, Carl, that you're not talking about data that requires a rocket scientist to go dig up, it's pretty simple data that stores have available. Why is it that these data aren't used more effectively, or more regularly, to make some of these decisions?

Carl:                                       15:22                     Well, I think a lot of retailers really do look at their store data. Absolutely they do, especially a lot of the retailers that have been using self checkouts for a lot of years. They know a little bit about what and how to look for information.

                                                                                But, quite often, after a while, they tend to trust their gut-feeling more than anything else. We have developed this very simple, easy to use, data tool, which makes this super easy to do on a regular basis. A lot of retailers I've talked to, they typically use Excel, and that's it. They do the number crunching in front of the computer screen. That is perfectly okay, but it takes time, and is a little bit more cumbersome. If you have a good tool, that helps you, it's fast.

                                                                                We have another customer, actually. They were so happy. When they saw our scorecards, the application that we have, they wanted to use that as their management tool to improve their self checkout performance, as a management tool, which is perfect. Again, it's nothing really super seriously advanced we're talking about, but it's just a simple way to look at data.

                                                                                Absolutely, a lot of retailers do look at their data, but perhaps not close enough, or they're not drilling close enough. It's a mix, I would say. It's not like it's new for everybody.

Karen Webster:                16:47                     Right. Is the motivation, though, different today, perhaps, than it once was? I can imagine that, one of the original drivers of self-service was to reduce staff. It sounds like the emphasis is shifting to not just that, but improving checkout conversion in the store?

Carl:                                       17:09                     Yeah, that's a very good comment, and I couldn't agree more. If you look at the self checkout, self-service drivers, 10 to 15 years ago, it was very much ROI-based, headcount reduction, efficiency, and all that. Now, it's much more customer service driven. Retailers add self-service because customers expect it, they demand it more or less. So, the driver is very different.

                                                                                That's why it's more important to really understand, or identify, what's your target group when you install these self checkouts. That's also why, I think, the standard self checkout with cash, and weight security scales, and bagging platforms, that was the only version that existed for so long. No one really looked at it. Now, we have a wide range of different alternatives, different solutions. More big ones, et cetera. That's a big change, I think, in the driver, why we are looking at some many retailers looking for self checkouts nowadays.

Karen Webster:                18:15                     Are they thinking about it from the perspective of, yes, customer satisfaction, but, perhaps, redeploying staff in other parts of the store, to help address customer service issues, or better merchandising of products? I'm thinking of things that help drive basket size, at the same time self checkout is trying to drive conversion by making it less time consuming to actually take the times you want to buy and check out.

Carl:                                       18:49                     Yeah. I mean, just the other day, I think it was yesterday, I read an article on LinkedIn about ... This was from Europe, by the way. It was an article from the Trade Union paper, concluding that, looking at the numbers, the staff count working at the checkouts had reduced. That was just a fact, compared to five, six years ago. Then, on the other hand, the number of floor associates, working inside the store, had increased. That's exactly the purpose.

Karen Webster:                19:21                     Right.

Carl:                                       19:21                     You want to move your resources, the valuable resources you have, from the checkout into the store. That will only increase customer satisfaction, improve customer service. I was so thrilled, but it was a Union representative that had written that article. They have been so negative over the years about self checkout.

Karen Webster:                19:43                     Sure.

Carl:                                       19:44                     Of course. But, here they were, saying, "Wow, this is not a bad thing, actually, because we are moving the staff into the store." The staff, of course, sitting in the checkout, it's a pretty repetitive work, actually. All the cashiers working out there, they're doing a pretty tough job.

Karen Webster:                20:01                     Yeah.

Carl:                                       20:02                     Repetitive, scanning items, tough environment. To, instead, be walking around in the store, helping customers, of course, that's much more rewarding, also, for the staff. I think it's a great ... I was really happy when I read that article.

Karen Webster:                20:18                     So, Carl, if the motivation to initially install self checkout was staff reduction, and now it's different, how are retailers measuring? What are the KPIs that they're using to evaluate success? It seems like there's just a lot more input now, right? Inputs into coming up with those KPIs.

Carl:                                       20:44                     Yeah, that's a tricky question. I don't have a good answer to that.

                                                                                I mean, the KPIs the retailers are using are, of course, basic ones. Number of transactions, how many customers come in, what's the average transaction value, average basket size, traditional traffic KPIs. They have been there, and they are still there. I think as retailers add self-service solutions, different self-service solutions, it could be click and collect, or home delivery -

Karen Webster:                21:13                     Yeah.

Carl:                                       21:13                     - or self checkout, hand scanning, whatever, I think a lot of retailers in Europe, they are actually really proudly presenting their adoption rate, the numbers.

Karen Webster:                21:23                     Hm.

Carl:                                       21:23                     How many customers are using our self service solution. So, perhaps that is one way to look at a KPI that's getting more and more important, and a competitive advantage, sort of, since customers, as we said before, are driving this a little bit right now.

Karen Webster:                21:39                     Mm-hmm (affirmative).

                                                                                Well, I mean, consumers, as we've looked at on so many levels, and our research shows this on so many different touch points, whether it's in the retail or banking sector, or payment sector, consumers are driven by convenience. That's what they gravitate to. How do you make it easy?

Carl:                                       21:57                     Yeah.

Karen Webster:                21:58                     How do you eliminate the friction? How do you make it more convenient? You know, this certainly is the big step to doing that in the store, especially at the end, right? I mean, that is where, still, a lot of the friction remains. Checking out, whether that's payment methods, or standing in line, or not having to stand in line. I mean, there's just a lot of friction to remove from the checkout experience.

Carl:                                       22:21                     Yeah. No one really likes to stand and checkout, right?

Karen Webster:                22:24                     No.

Carl:                                       22:24                     Because you're shopping journey is over at that time.

Karen Webster:                22:27                     Yeah.

Carl:                                       22:27                     You're not really going to sell anything more, you're not going to buy anything more. The only thing you want to do is to scan your items, and pay, and leave, and do that as fast and convenient as possible. Anything that improves that, makes it faster and more convenient, is a good thing.

Karen Webster:                22:45                     Yeah. Yeah, also ... Then, I'll let you go. This has been a fun conversation. You know, the longer people stand in line, the more they consider what they've put in their basket. I don't know about you, but I've been behind people who, you know, if they stood in line a long time, maybe they won't buy the magazine, maybe they'll put it back.

Carl:                                       23:03                     Right.

Karen Webster:                23:03                     Or, maybe they won't buy this, maybe they'll put it back. So, you know, there are a lot of little things that go into the standing in line part that can work for the retailer, in the case of making it more efficient. Or, against, in the case of making it less efficient.

Carl:                                       23:18                     Absolutely.

Karen Webster:                23:19                     There's that, too.

Carl:                                       23:20                     Yeah, I agree.

Karen Webster:                23:21                     All right, Carl. Well, listen, this has been a fun conference. Thank you so much for making the time. It certainly seems as though this is a great way to satisfy what retailers are looking to do to make their operations more efficient, and to serve customers better, and clearly what consumers want, as well, who are always in search of convenience. Thanks again for making the time.

Carl:                                       23:41                     Thank you very much for having me. It was fun.

Summary: In this podcast we will share an interactive panel session we recorded live from Intersect 2019, our marquee partners shared how their solutions and strategies align with financial industry trends and Diebold Nixdorf’s roadmap, such as; more integrated, with devices that enable better service delivery; more available, with optimized service capabilities that enhance the customer experience; and more efficient, with tools that enable you to achieve your customer-experience objectives.

Guests:
Vanessa Foden, Strategic Planner Retail Banking
Hospitality & Education, Intel
Ken Pedersen, Business Development Director, KICTeam
Bill Stutzman, Director of Strategic Initiatives, Ventus
Steve Gilde, Director of Global Product Marketing, Paragon Application Systems
Shai Stern, Co-Chairman & CEO, CheckAlt

Moderator: 
Scott Anderson, Brand Evangelism, Diebold Nixdorf

Content:
More Integrated Video:
https://www.youtube.com/watch?v=hsIXFjt0IzA

More Efficient Video:
https://www.youtube.com/watch?v=w3yPIPmEuak

More Available Video:
https://www.youtube.com/watch?v=r6PktPP309g

Transcription:

Speaker 1:                           00:00                     In this Commerce Now podcast, we will share an interactive panel session we recorded live from Intersect 2019. Our marquee partners shared how their solutions and strategies align with financial industry trends and Diebold Nixdorf's roadmap. Such as: more integrated, with devices that enable better service delivery. More available, with optimized service capabilities that enhance the customer experience and more efficient, with tools that enable you to achieve your customer experience objectives.

Devon:                                 00:31                     Next up we have our diamond partner panel, so I'd like to welcome to the stage our Diebold Nixdorf evangelist, Scott Anderson. We're going to have our partner friends, Shai Stern from CheckAlt, Vanessa Foden from Intel, from KICTeam we have Ken Peterson and we have Steve Gilde from Paragon and Bill Stutzman from Ventis. Welcome to the stage everybody, thank you for joining us.

Devon                                   01:09                     Awesome.

Scott Anderson:               01:14                     Thanks everybody. We are between you and alcohol. I do apologize. And we all convinced in the back and we said "You know what? The modern tool that we would like right now is alcohol to help us with this next task", but we'll get you there soon. It's my distinct pleasure to welcome this panel. A group of panelists up on stage today to share with you a little bit about their organizations and talk about how Built To Connect and Built For More actually means more than just an ATM and solutions. Really, to run a banking environment, it takes a community, just like raising a child takes a community. And we have a community of people up here who really have a passion for our business and who help really transform the banking industry along with Diebold Nixdorf's partners and we're really proud to have them up here. So, I want a quick round of applause to welcome these folks up here. Thank you very much.

Scott Anderson:               02:06                     And while Devin gave us a quick introduction of these individuals by name, I'd love them to take a couple of moments and introduce themselves more personally and share with you who they are and what they do. Let's start with you, Shai.

Shai Stern:                          02:15                     My name is Shai Stern and I'm the CEO of CheckAlt. I do not have a phone on my desk, I run my company on WhatsApp voice notes and I do have my emails printed out.

Vanessa Foden:                02:28                     I'm Vanessa Foden. I'm with Intel corporation as you noted, and I'm the director of strategic planning for our retail banking, hospitality and education group. I don't print my emails, but I did print some outdated notes for the show.

Ken Pedersen:                  02:46                     Ken Pedersen from KICTeam and for those who don't know what KICTeam does, we manufacture and design cleaning products for currency, print and payment technology, so ATMs, POS terminals, check scanners, TCRs and... Yeah, thank you.

Steve Gilde:                       03:02                     Steve Gilde from Paragon Application Systems. We're all about testing the payment systems. I will say that I could not have predicted that Ben ran 30 minutes over. Who knew that that future was going to happen, but happy to be here.

Devon                                   03:15                     Excellent.

Bill Stutzman:                     03:16                     Hi, I'm Bill Stutzman from Ventis. Ventis is a networking company. We work with making sure that you're ATMs are up and running, so that your customers are happy.

Scott Anderson:               03:25                     Fantastic. Thank you very much for introducing yourselves. I think what we wanted to do today is really focused on all of the cerebral thinking we've been hearing about today. [what rounds 00:00:03:34] the Built to Connect and Built For More, but hone in a little bit on what does that mean and how do the individuals at this panel contribute to that and really make a difference in our overall industry as we go forward. This is a great opportunity for us to have some open conversation. We actually agreed that we don't have to always sit in our chairs, we can get up and kick each other if we don't agree, whatever the case may be. But what I'd like to do is, maybe tee up some questions to the individuals to get things started and of course we'd love to open it up to the audience and get some feedback from you and some direct questions as well. So, let's start with personalization. More personalized. Vanessa, let's start with yourself. What's Intel's point of view on personalization in this industry?

Vanessa Foden:                04:14                     Yeah, so let me start with, as noted, we're a retail banking, hospitality and education. So, we have the pleasure to see a connection point with use cases across these different sectors. And for retail for example, what we have seen is... And heard and everyone in this room has probably heard is, "Oh, stores are closing into retail as we know it, et cetera, et cetera". And really, what we've found is, that there's opportunity there and yes, there are definitely retailers that are not growing. But then there's the some that are going to different size format and then there's a few that haven't innovated and we know who those are. And yes, some of them are no longer with us. So, when we think about this with branches, we know that there are some shrink happening at the branch that could be in the actual space of the branch or closures.

Vanessa Foden:                05:13                     So, [Octavio 00:05:14] was talking this morning about 9.000 closures branches in the last five years. Now again, there's opportunity there, because there's different size formats and different technologies and ways to bring in our customers, because it's not just about one solution. And so, what we're really seeing, is opportunity. There is over a billion branches worldwide. So there is still that personal connection with the technology. So, the physical with the digital and that's the way we really need to think about it. And in the sessions today, which I really enjoyed them all, someone asked for a vote, I thought the two I went to are both great and very different. So I couldn't say one was better the other. But, it was very consistent in the message of opportunity and what's available to us in these use cases. So, it's really about understanding from the customer's standpoint, when they walk into your branch, how do they feel?

Vanessa Foden:                06:14                     Are they employees trained? Do they know how to engage with these customers? And on the flip side, digital. How do we know what our customers want? So, we're always thinking about what are our customers want? When do they want it, and what location should it be? And on and on and on. Right? So we apply that logic within our team to how is that relevant? Whether it is an Interactive Teller Machine, an Automated Teller Machine, a Virtual Teller Machine, POS system, et cetera. So that's how we really look at those use cases and try to apply it to make it personal, whether physical or digital.

Scott Anderson:               06:53                     Interesting. Steve, I'm going to challenge you a little bit. So, Paragon Systems and Testing, how would that bridge into the personalized world?

Steve Gilde:                       07:01                     Sure. So, we heard this morning a lot about the customizable capabilities that the new DN Series will give to... That Diebold customers will have a chance to give to their consumers, right? You can do all sorts of interesting things, but the last thing you want to do is come up with an exciting new program, a new card, a new something for your high-net-worth customers and then have it fail when it gets in their hands. And being that we engage a lot on the testing side of the equation with customers, we hear a lot "Oh well, we couldn't test that with our host, because of this reason". Or "We forgot to test that because we ran out of time" and they wind up with a negative customer experience. And today, in the YouTube world, it becomes a very public brand damaging issue right away. So, with all the stuff that we talk about, all the changes and all the difficulty in projecting what consumers are going to want... We know they're going to want something, right? But it's all got to be tested and... Because you want that perfect customer experience every time.

Scott Anderson:               08:04                     Excellent, thanks. Any other comments from the panel?

Scott Anderson:               08:08                     If not, I'll tee up the next question. Shai, you got to have something to say.

Shai Stern:                          08:11                     Yeah, I'll go for it. We look at personalized services a little bit different, in the fact that we are the ones who service you, the financial institution, on the ATM side. And we know that your job is to go ahead and to get the best experience to the consumer, to your customer, to your member if you're a credit union. So us, as a vendor to the financial institution, we want to make sure that you're able to provide the best services, the most advanced services, and the most personalized way. So, I have my cell phone on the website of CheckAlt.com as I try to give personalized attention and we give direct dials and direct emails and we make sure that the folks at the financial institutions are experiencing the best service possible, in order to recognize that checks, even though we all would have envisioned years ago that checks would have gone away, they are still here and rather healthy. So, our job is to provide the best services to you, the financial institution.

Scott Anderson:               09:04                     Excellent. Let's keep it with you and think about... More integrated. So, what tools in your organization are you bringing to the marketplace to help with that integration piece?

Shai Stern:                          09:14                     You're staying with me?

Scott Anderson:               09:15                     I'm staying with you.

Shai Stern:                          09:16                     Oh wow. So, what we look to do is, we are a payment agnostic company. So, I always say that my mother is never going to stop writing a check and my daughter is never going to start writing a check. And amazingly, my little, almost two year old grandson won't even know what a check is. But the fascinating thing is that at CheckAlt, our job is to be what I call "payment agnostic" and "demographic agnostic". And when I think about integration and when I think about how the financial institutions are able to take the legacy needs in their payments and their futuristic needs and the discussion around the electronic payments and realtime payments, we are there to create APIs to tie it all together to give a great experience.

Scott Anderson:               10:00                     Excellent. Ken, I'm going to kick it over to you, no pun intended with KICTeam, but what interesting insight capabilities are you bringing to the market?

Ken Pedersen:                  10:07                     Yeah. For integrated, we are... The way we design our products and create them is very data-driven, right? So we want to understand where does dirt build up, how frequently does it build up and when does it need to be cleaned, because we want the right solution at the right time. So, today you heard from Chase talking about integration and data and using that data to become predictive. And so, we try to design our tools around that so that we can provide a better product in that... Ultimately, the devices that we support provide an ultimate experience. It's an optimal experience and that the end user enjoys using the device that we support.

Scott Anderson:               10:44                     Excellent. Vanessa, Intel Inside. I mean, what are we doing here from an integration perspective?

Vanessa Foden:                10:49                     Oh yes. But if you don't mind, I'm going to do a little bit of back to the future. Yes. So, in my previous role, I was an integration manager at a banking institution, and they had actually outgrown their software and hardware solution. And one of the things, and I'm sure it's like this today with a majority, if not everyone in the room, when you went to the internal webpage, the number one thing you saw every single morning is: "How many customers did I gain from yesterday?". It was so important to continually watch the customer base. And so what happened is, as they're worried about the customer base, we're in the background saying "Okay, we've outgrown our customers. And if we don't do something, we're going to let them down". At the same time again, what we've heard time and time again, is security is so important.

Vanessa Foden:                11:46                     Now, security has evolved into way more of a complex monster than it was back then. But it's really important at the end of the day why we're thinking about integration. We're thinking about "How do we protect the customers?". And that can be multiple ways. That is through security. That is through having remote management capability, so that if your system's down, meaning, down down, you have an opportunity to bring it back up or if you just need to do a patch or et cetera. So, we really think about it from all aspects and understand, at the end of the day, it's about growing the customer base and if you lose a customer you can... Well, you might be able to get them back. But it's really hard. Statistically, it's really hard. So we'll focus more on "How do we help with the overall security?". We help with the remote connectivity and we, as you know, we also help with our Intel Inside. We believe that our products are secure and do help provide the best solutions available in the market. So that's what we do.

Scott Anderson:               12:52                     Excellent. One of the other mores that we've heard about, and I think this is top of mind to a lot of the folks in the audience, is available. And my fellow bookend at the end here, let's... Bill, kick it over to you. Availability leads to enhanced customer experience. So how does this impact, how was this impacted by the network?

Bill Stutzman:                     13:09                     Yeah. Availability is one of the highest priorities that we look at from a networking perspective, because all the stuff that everyone else is talking about, unless it can get from one point to the other, it's something that just isn't going to make your customer experience positive. And so, uptime is an extremely important element for us. And so, we look at it from different perspectives. First, where is it that you're putting your ATM? Your locations, are they at the branch? Are they at a sports stadium where 60.000 people show up and use them? Are they in a mall, or are they in a more of a less traffic area? Even to the point where we're out in remote Louisiana, where there's nothing else out there and we've been able to find a type of connectivity. And so, we look at what's the most important type of connectivity to make those networks work. And so whether it's cellular, whether it's a broadband circuit, whether it's an MPLS circuit, we build that to work it through.

Bill Stutzman:                     14:02                     And that can also impact based on the type of machine that you have. And so, we look at how do you integrate those pieces together. If you're putting in an ITM, the amount of data that you're required for that ITM can impact the type of infrastructure we would put in, as to whether you need something that allows you to have a cost effective... The amount of information that goes back and forth to an ITM or that might be built into a full MPLS circuit versus a cellular circuit.

Bill Stutzman:                     14:28                     The other really important thing that we've seen recently is business continuity from availability. And so, we've been working with a lot of our bank and credit union partners on taking their branch ATMs, isolate them from the branch network so that if there are issues on the branch or on the ATM, either one or the other is up. And so, we've launched this program called Branch ATM Network Isolation and it's worked very well for us because one, it provides that business continuity for the branches so that the ATM stay up, it removes some of the PCI auditing that you're required as part of the branch experience because the ATM needs it, but the branch does not. And then it allows that customer experience, which is... Always, the biggest measure is how is that customer feeling when they come into the branch. So there's always something there for them, whether it's one or the other. And so, to us it's really always about availability.

Scott Anderson:               15:17                     Fantastic. Ken, Steve, I think this is a perfect topic for your lines of business as well. Ken, why don't you kick it off here and give us some thoughts?

Ken Pedersen:                  15:23                     Yeah, absolutely. So availabilities is key for our products, right? So our products enhance the performance, they enhance the customer experience, they prolong the product and they increase the availability, which I think for all of you out here that's very key and that's very important. So when we look at the products that we're creating, we want to make sure that they are enhanced, so that the experience's at a top level. We're trying to enrich the experience and we're building it in to the data. So we talked about data and we talked about predictive maintenance and prescriptive maintenance and Chase talked a little bit about that earlier. And so, when you can get into that model where you can clean this device or maintain this device before something goes wrong, you are increasing the experience ultimately.

Scott Anderson:               16:12                     Excellent.

Steve Gilde:                       16:13                     Yeah and it's the same for us. As Bill said, it's all about the end-to-end experience and all of those pieces have to work together, they all got to be tested together. You need to make sure that one transaction works and you need to make sure that you test transactions at scale and find out if there are any bottlenecks or any issues. And again, you just got to make sure that the customer has a good experience and make sure, end-to-end, it all gets tested, it all works.

Scott Anderson:               16:39                     Excellent. If we think about efficiency, obviously time is money to every one of us and all of our consumers as well as, as we look at the customer journeys that they're going on. Bill, from a Ventis perspective and being a leader in the ATM network, what are you guys doing in this regard?

Bill Stutzman:                     16:54                     Yes, so we look at providing the full experience with the managed network as a service. And so, our ultimate goal is to help our bank and credit union customers and partners develop a process that mostly takes it completely off their plate. And so, working with CheckAlt, we provide a direct relationship with them with Multi Endpoint Routing. We can go to your check imaging, we can do your security, we can do your alarm panels, we can do your DVR. And so, the network that we've built within the Ventis private core is a fully redundant, multiple circuits, multiple data centers, and that allows that integration. And so, our whole objective is to make sure that we integrate whatever you're doing within that ATM, so that we can provide you that service, so that it takes your IT teams off. Because every banking show, everything we go to, is all about the next thing.

Bill Stutzman:                     17:44                     And so, by us taking those basic networking issues off your plate, it allows you to then look at those future projects and kind of see where you're going in the long run. And so, by doing the engineering, by doing the 24/7 customer support, by doing the ability to troubleshoot remotely, because we've built the whole IP addressing schedule into our tech center, we're not just looking for routing, we're looking for how the whole thing works. We concentrate on that full customer experience with our managed network as a service.

Scott Anderson:               18:13                     Excellent. So you mentioned CheckAlt. So Shai, why don't you comment a little bit on that part of the equation from a check perspective?

Shai Stern:                          18:19                     I think that when we look at the way checks are coming in, we're constantly seeing about who are processing the checks, where they're coming from and how we need to make sure that the ATMs are always up and running. So we monitor the heartbeats. And I think that that is something that's very important about heartbeat monitoring. Having a dedicated team, seeing if the ATMs are, quite frankly, processing quickly enough. I think that working with Bill and his team is of utmost importance. I think the other thing that's super important is understanding security around these ATMs and that why is somebody motivated to put a check in an ATM versus a mobile phone? And that's so interesting, that you haven't seen a big falling off the cliff about the processing around the ATMs and ATMs are alive and kicking.

Shai Stern:                          19:08                     And it's really fascinating and I think that when we go ahead and we think around security, we have what we call extended deposit approval. We give certain fraud protection capabilities, we go ahead and we have duplicate detection capabilities. So, I think that when you look at the way checks are being processed, it's very important to think about security. The time of day that checks are being processed to make sure they're processed same day as many of the folks who are putting their checks into the ATMs, they are living a, let's call it... They need that money right away. So, to making sure that those deposits get in right away, you don't have to wait the next day, but rather their money is available to them immediately, are things that we're constantly measuring, constantly monitoring to make sure that we can give, again, the best experience to the customer.

Scott Anderson:               19:55                     Excellent. Let's shift it to more future-ready and we just heard from [Ben Hammers Leon 00:00:20:00] on the future point of view. Steve, if we think about being future-ready and some of the testing capabilities that are out there, what's Paragon's point of view on this?

Steve Gilde:                       20:09                     Yeah. I know Ben mentioned the term "pace of change", but that's really what we're all dealing with today, is how fast consumer behavior's changing, how fast our technology is changing, and so the thing that we would say is that you need to be prepared to deal with the change, because whatever the change is, something's going to change on you, legal and regulatory changes, et cetera. So, having an environment where you can easily integrate a change within your... Whatever it is, within your testing environment and make it happen quickly that you're not... Your projects aren't delayed because you can't digest a change or that you're not prepared to deal with it.

Steve Gilde:                       20:49                     We would say to a new prospect that the more you invest in your testing solution, the more valuable a resource it becomes. As you automate your aggression tasks, as you integrate with your other application life cycle management systems, as you make those investments, it becomes easier to say "I can deal with change, I can make my ability to digest change, a competitive advantage for my company by being able to just take whatever comes up"... Well, I don't know what it's going to be. I know something's common.

Scott Anderson:               21:23                     Right. Interesting. Given we just had a futuristic conversation a couple of minutes ago, any other panelists want to comment on sort of future-ready from your point of view?

Bill Stutzman:                     21:32                     Well, I think the one thing that we can look at is that everyone's working on Windows 10. And so when you talk about change in the future, we know that Windows 10 isn't the last update. And so, knowing how that's going to impact... And from us, from a network perspective, Windows is just such a different animal than what it was between the amount of updates that have to go through for security, to even just installing it and things of that nature. And so, working with our partners and customers to make sure that whatever impact that change has, that it's future-ready and going forward. But we know three years from now there's going to be whatever they call it, Windows 20, Windows 15 or something of that nature. And those systems are going to continue to change and change.

Bill Stutzman:                     22:10                     And so, I'm always fascinated when I've talked with the banks and credit unions on where they're at with their Windows 10 integration. And so, finding people that are completely done to folks that are like... We're just going to get finished in December. And so, planning for that change has been a... And we've known about it for what, two years, three years that it's coming and that the deadline is December. And so, watching that type of change happen, I think it's something that we constantly see within the industry.

Scott Anderson:               22:36                     Interesting.

Vanessa Foden:                22:37                     I think some of the things that are opportunity for change, and I saw some of that in your demonstrations outside. So, if anyone didn't stop by and check out the demos, they're really exciting. It's really exciting to see what you all have done. We really have been focusing around opportunities in artificial intelligence and computer vision. And I think that's a game changer for us. For us, everybody, whether you're in banking or other industries, we're going to continue to see that relevance around artificial intelligence, computer vision, and we need to be able to engage in that. Where do we need that compute power? Is it at the edge or is it in the cloud? And so, those are some things we need to continue as our businesses are evolving and we're evolving with you, what is it that's the priority? And how do you decide, depend on... And again, this goes back to security. Not everything needs to go to the cloud.

Vanessa Foden:                23:36                     So, we need to think about what really needs to be edge compute when we're processing. And we need to think back on security. Various ways of security, including understanding. Is the person coming up to the Teller Machine? Is it who they say they are? And how do you know that? Or if they're coming up, whether automated or coming up physically into your store, is that the person that you should be engaging with? And I think artificial intelligence and computer vision will help with that.

Scott Anderson:               24:04                     Interesting. And that's a great Segway to our... I'm sorry Steve, did you want to [crosstalk 00:24:08]

Steve Gilde:                       24:08                     Yeah, I was going to say one more thing is that... The thing that we see a lot with branch transformation... If you'd asked me two years ago sort of where ATMs were heading, we were kind of flat-lined, we weren't seeing growth and things like that. And then the whole change in branch is getting a little smaller. Branch is changing and the products that you guys are putting out now are now allowing branches to kind of reconfigure what they're doing. And so we talked to... We're always interested to see how they're integrating those devices into the universal. We're seeing a lot of universal bankers with cash recyclers with ATMs and where that's becoming more of a part of that integration into the branch versus just a sort of out-the-window or out-the-best of your remote location. And so we've seen a very positive uptick in that element of the automation being integrated into the different branch setups.

Scott Anderson:               24:54                     Excellent. Shai.

Shai Stern:                          24:55                     I just want to add on one thing. One of the things that we think about is that we speak about an iPhone... All of us who have iPhones, which I assume is most of us here, you see some times that if you plug in your iPhone at night, by the time you wake up in the morning, the update has been completed. One of the things that we have established at CheckAlt is that we have a universal installer that, where were there to be an update in our deposit automation technology or whether it be to roll out any updates, it's a press of a button and we can go out there and touch all the machines in one swoop.

Shai Stern:                          25:23                     We do that in a very thoughtful way, in a very futuristic way, but also recognizing that the environment that we live in, even though we all would love to be in the cloud tomorrow and have great computing tomorrow and all those great advantages but we, unfortunately, or fortunately, we do live in a rather regulated environment. And when the regulators come in and they challenge a cloud, a futuristic plan, or they challenge the way that you're thinking about security, it is incumbent upon each and every one of us not to get in the cross hairs of these regulators. So it's a rather delicate balance between planning and executing for the future, but yet maintaining the happiness of those regulators to make sure that we can continue doing what we're doing.

Vanessa Foden:                26:06                     Happy regulators and happy customers.

Scott Anderson:               26:10                     So we've tiptoed around security in a number of these comments here. And that's the last more we want to talk about, sort of the elephant in the room, and for most of us is this secure environment, this trust, this ensuring we're protecting our brand. So, let's open it up to the panel. I'd love your points of view on what we're doing in the security space in each of your organizations. Maybe... Well, let's start with you, Vanessa.

Vanessa Foden:                26:31                     Oh, I thought you were going right past me. Yeah. So, around security. So, really good question. Globally, right? So it really depends on what's happening globally. We see lot of... I'm going to go sideways just a little bit, I promise I'll come back. We see a lot of activity in China around what they're able to accomplish because they have different regulations to your point, and it is amazing what we've seen there. The way that they've been able to use the automated kiosk with any engagement, the things that can be done on a mobile phone, the biometrics and scanning to identify who they are and a lot of what they're doing never requires another person. And so it's edgy, but it also reminds us, puts us back into reality here in the United States and in EMEA. And if we didn't need that, GDPR has made sure... And PCI compliance, our other good friend, has made sure that that keeps us in our place, if you will.

Vanessa Foden:                27:36                     So when we think about that security, we try to embrace what we can push at the edge, but at the same time making sure that we are able to help our customers innovate because it is happening. And when we think about... A lot of people didn't want to do the PCI compliance on these different devices and now Square's killing it in the market, right? And we were all afraid of that because we were following the rules, this is the rules and they weren't PCI compliant and it's not going to work. Not true. They're doing extremely well in the market. So, it's just that fine balance on innovating while still making sure we follow within guidelines. And that's how we work with our partners. Because at the end of the day, again, I know I've said it a million times, I'll say it one more time. We understand it's all about the customers and keeping the customers and growing that customer base, and with that they need to be secure but also... We have different generations and security and what people are comfortable with is different depending on the generation that you're working with. So it needs to be that balance.

Scott Anderson:               28:37                     Great. Ken, anything to add on that?

Ken Pedersen:                  28:39                     Yeah, so you wouldn't think of cleaning and security going hand in hand, but when we look at our products, we think about exposure and risk and can we make products that are easy to use that limit exposure and risk? And can they be done quicker and faster? So, we do take a lot of thought designing our products. Can we maximize security and minimize risk?

Scott Anderson:               29:02                     Excellent. Steve.

Steve Gilde:                       29:04                     Yeah, a couple of things. We hear often from customers who are behind on Windows patches and things like that at their devices because they're busy or they just can't get to it type thing, which is difficult because there's no sympathy for any more in the marketplace, right? If you see some exposure because you didn't have your Windows patches updated, nobody is going to come in on your side on that one. And so, if you can automate your capabilities to test and get those things out there, it makes it easier to stay on target. Another aspect of security is internal security, which is unfortunately a real issue that we all have to deal with today. So, having a centralized infrastructure to manage users and roles and permissions and understand who's tested what and who hasn't tested what, who changed what on the system.

Steve Gilde:                       30:00                     Unfortunately we see that at times where folks say "I don't know how that data element got changed. I don't know who changed that. Somebody did, but I don't know who". So, having the capabilities to audit that and stay on top of it and management is just something that you have to deal with. Going back to when regulators come in and look at your books, you want to be able to say "I know exactly who did what, why they did it, when they did it", those types of things. And finally, for a lot of our customers, they have their downstreams, they test for their downstreams, they test for their own customers, and being able to have reports that can be managed and maintained longterm to prove that you did test what you said you were going to test for your customers, and survive an audit with that aspect of your business as well. It's security, it's risk, but it's all part of making sure that you protect your business.

Scott Anderson:               30:50                     Fantastic. Bill?

Bill Stutzman:                     30:51                     Yeah. So, transferring that information from one place to the other is a very secure area. And so, we have always looked at PCI compliance as our number one. We always try and be out in front that if it's changing two or three years then we do at a year or two early and try and keep that going. Same with internal security, always trying to make sure that however all the data centers and everything is put together is always fully secure. And then what we're introducing here at the show this week is that we've partnered with a company called Eclipse and there's some folks here from there as far as the technology agent, to provide a full end-to-end key encryption system from the ATM to the cloud. And so, to stop jackpotting or mend the middle pieces, it's eliminated that piece that was never encrypted from the machine before.

Bill Stutzman:                     31:41                     And so, we're looking at introducing how you can integrate that into your Diebold product and we're talking working with Diebold and how to run that through their managed services program. And so, we're very excited that if you want to stop by and talk to us about that, the ability to fully encrypt from the machine to the the data center and then move that on to the processors to the Cheque Imaging and everything else we think will be sort of groundbreaking. And so we're really happy to kind of introduce that at Intersect this week.

Scott Anderson:               32:08                     Fantastic, thanks for sharing that. Shai.

Shai Stern:                          32:10                     Yeah. Vanessa mentioned Square. So, one of the things that I wanted to mention is that all financial institutions, when you read the Wall Street Journal, then the news, you constantly see our Fintechs taking away business from banks, is that the fear of the banks and the Fintechs, and how they're going to battle one another. And one of the things that we try to do as... Some people call us an old company because we do process checks, but as well we are a Fintech company and we actually look to invest into new startups in the Fintech space and be able to offer them to our clients. So [two 00:32:42] for example, we're an investor and bank [inaudible 00:32:44] . It's a mobile banking company and also another one called [inaudible 00:32:47] that is a cutting edge technology and cybersecurity and helping financial institutions protect their card data in the dark web.

Shai Stern:                          32:55                     So these are things that we're constantly thinking about. And I think a financial institution, it's incumbent upon all financial institutions. And when you have the previous speaker speak about diversity and thought processes, it's about "Yes, we have regulators and yes, we run a payment businesses and yes, they need to be secure". But how can we go ahead and take what we can learn and what is available today from the newest technology and be able to go ahead and have them live together? And I think that's something that it really... Everyone should be thinking about.

Scott Anderson:               33:22                     Fantastic. I'd like to express my warm thanks to the individuals up here on the panel and the contributions they've made for the success of this gathering and this conference. So if you wouldn't mind, please give them a warm thank you. I appreciate your time.

Speaker 1:                           33:36                     Keep checking back on iTunes for new topics from COMMERCE NOW.

Summary:  Guest Ben Hammersley speaks on his take on how you need to be present today, so you can be future ready for tomorrow.

Resources:

Hammersley Futures Website

Ben Hammersley LinkedIn Profile

Diebold Nixdorf Website

Transcription:

Amy Lombardo:                00:14                     Hello and welcome to COMMERCE NOW, your source for  FinTech conversations and emerging trends. Today, I have the unique pleasure of talking with Ben Hammersley. He's a globe Trotter and an author an adventure seeker, and he has the most wicked handlebar mustache you've ever seen. And today he's going to give us his take on how you need to be present now so you can be future ready. Sounds easy. Right? Well wrong. Let's get Ben's thoughts. So, Hey, welcome...

Ben Hammersley:            00:56                     Thank you. Such a pleasure to be on COMMERCE NOW.

Amy Lombardo:                                                Oh good. Thank you for that plug. All right, so I'm not gonna be able to do you justice. So why don't you tell us a little bit about yourself?

Ben Hammersley:                                            So I'm one of those annoying people that disappointed my parents over the past 20 years by not having a job, they can describe, I'm currently a futurist or is a strategic foresight person. So I run a company called Hammersley futures, and we work with corporations and with governments and some high net worth individuals to sort of help them understand the future and specifically to help them understand innovation and the methodologies behind innovation. And that has come from 10 years of doing that. But, before that I was a technology journalist and I edited wired magazine in the UK and I was a war correspondent in Afghanistan and I've done many, many things. I run a digital studio making digital things for couture houses and luxury brands. And so I have this very strange background, which has come together into this one thing which is helping people understand the nature of innovation.

Amy Lombardo:                01:57                     Okay. And, and what inspires you about your work? How, did this whole being of Ben Hammersley come together?

Ben Hammersley:            02:06                     I think what inspires me is sort of two fold. There's this, there's the selfish reason, which is that it enables me to be increasingly eclectic and, and taking lessons and taking influences from, from lots of different things, which is very selfish because I'm, you know, I'm fundamentally sort of unemployable and the regular day job or you know, I'm, how would you put it neuro atypical. And so, so being, having a career where I can travel a lot and taking a lot of input and then synthesize it into something else is a great privileged but also the slightly wider thing. I think the thing that really inspires me over the past couple of years is that I think we've come to a set of methodologies and an approach to our work, which is genuinely helpful for people are at as sort of a holistic level. It's helpful for them in a business point of view, but it's also, I think it's genuinely helpful for them sort of personally and that sort of pastoral care aspect to it. If that's slightly weird way of putting it. Yeah,

Amy Lombardo:                03:13                     no, that's a unique identifier. Yeah.

Ben Hammersley:            03:16                     Is actually is very satisfying because, because I get a lot of people coming to me immediately after I get off stage routes out of a meeting or comes to me six months later and say that thing, that approach really changed the way that that I think and it's made my life or my business or you know, whatever it is that they're particularly interested in has made it better. And that's, that's incredibly satisfying. So that's, so I get to, I get to go away and be weird, which is, which is helpful and I, and I get to help people, which is great.

Amy Lombardo:                03:47                     All right, so we're at a banking conference here. Intersect 2020. So can you give me some examples of areas you think banks are missing the boat? You know, opportunities that they can be capitalizing on.

Ben Hammersley:            04:08                     So I, I think actually that question really highlights the difference between my approach and, and other futurists or other technologists approaches to these things, which is that I don't think there is a boat as it were or a collection of, of large boats that people are missing or not missing. It's very easy and I am very typical of the sorts of conferences and not just banking conferences but any, any industry conference to say, ah, you know, if you are not paying attention to, you know, subject X or if you're not paying attention to new technology Y then you are than you are falling behind and you're missing the boat as you say. And that's almost universally bullshit to be honest. In the vast majority of those conferences. And the vast majority of those subjects very specifically are things which are overblown and misunderstood and probably aren't at least right now relevant to the, to the individuals in the audience.

Ben Hammersley:            05:12                     So instead of thinking about the world as in terms of innovation boats that you can get on or not, and if you don't get on them, then you're going to be left behind to continue the imagery. Instead, what I try and teach people is to, is to look at the boat and see if it's something that is suitable for their business in the context of their business. Okay. So another way of looking at this is that the vast majority of futurism that I do, where I, in terms of when people ask me directly, you know, what are the new technologies that we should be paying attention to? Almost all of those technologies aren't things that don't exist yet. They're technologies which do exist and are being used a lot, but they're being used in another place. Okay. And so in a lot of industries you can be very, very innovative literally just by being up to date.

Ben Hammersley:            06:02                     Right? Banking in the U S is a good example of that. In that, in that if you compare banking in the U S too, as specifically consumer banking, if you, if you compare consumer banking in the U S to consumer banking elsewhere on the planet, you could very easily innovate massively radically for the U S just by being about five years behind Europe or you know, or 10 years behind China, right? Like if you really wanted it to be up to date, just big, just go and do what the Chinese are doing 10 years ago. Those sorts of things. So there is, there is a saying that William Gibson, the science fiction writer said that that the future is already here. It's just not evenly distributed. And that I think is very true. But, but all of these or this sort of talking around this highlights the thing that I like to talk about, which is that innovation is not a step change to a new future that everybody agrees on.

Ben Hammersley:            06:54                     Instead, it's a methodology of continuous improvement based on your own personal context and the context of your business. And that takes, that looks at those new technologies. It looks at those big boats as you say and says this, the suitable for us is does this, you know, yes, this is getting the front covers of the economist and everybody's very excited about it or whatever. But it isn't necessarily the thing that our customers are most likely to benefit from the most or our business will benefit from the most. And so what do we teach you is a much more holistic and continuous practice of continual mindful attention giving innovation on a daily basis rather than going, everybody needs to be on the blockchain or we're all dead.

Amy Lombardo:                07:41                     Right? You know, you have this unique thinking on this concept of being present or recognizing what is right around you and you have to be able to capitalize on that before you can look ahead and you maybe unpack that a little bit for me and just give a little more examples.

Ben Hammersley:            07:58                     Sure. Maybe like some concrete examples of what you see in your business. Sure. So, so let's start actually from the beginning of the talk I just gave, which is that because of the exponential rate of change that we have at this time on the 21st century and rate of change in everything. And you know, as I as I said on stage that that technology and society and culture and business are all interlinked in a fundamental way. When one changes then all the others change in the olden days. So 20 years ago, 30 years ago, technology was, was this specifically technology was the sort of layer on top of business. So you have business and then you have the technology that comes in and makes it a little bit more efficient. Right? Like this fancy bolt-on. Yeah, exactly. And you know, fancy precisely that. And, and the, the CIO of the business or the CIO.

Ben Hammersley:            08:48                     So the business was probably not even on the board. It's probably one level down at the same level as say the, you know, the facilities manager, something like that. Whereas today, specifically in, in data-driven businesses and financial services and banking are perfect example of that. Your business is what you do with your data and what you do with the data is fundamentally technologically driven and so everything is tied back to the technology, but that technology is so intertwined with the rest of the world that everything changes. Everything else, everything is as a codependent uprising and everything changed. When one thing changes, everything else changes because technology itself changes at an exponential rate because of phenomenon like Moore's law, which is this phenomenon that for roughly the same price every year, you can fit twice as many components onto an integrated circuit, which means that again, speaking roughly every year, computers get twice as powerful for the same price or the same power computer harms in price roughly every year.

Ben Hammersley:            09:47                     Because of that exponential growth and because exponential growth is itself incredibly difficult for human beings to comprehend because technology grows like that, the rest of the world changes at the same rate and therefore for a futurist like myself, making strategic forecasts, saying what the world's going to be like in 10 years time, I am completely lying, right? I'm just making shit up at that point because it's impossible to do so. And I think we only have to look back over the past three or four years or certainly the past decade and see how society has changed in the past decade or the last 11 years since the launch of the iPhone to today in every aspect of of human endeavor, whether you're talking about business or culture or society or politics or everything, all of that is now utterly unrecognizable compared to where it was 10 years ago. So if I come up to you and say, Hey, this is what the future of banking is going to be like in 10 years time, I'm [inaudible], I'm just making things up and I might be right.

Ben Hammersley:            10:39                     In which case in 10 years time you'll think I'm a genius, but I'm not going to be right. Right. And nobody's going to be right. And so if we, if you start from the basis, the fundamental basis that, that, that five year plans or 10 year plans are just wrong, then there has to be another way of living your life. There must be another way of actually doing your job if you're a member of the leadership team of a, of a bank. If your job, what to be on the board is to guide this organization into the future. And yet it is structurally impossible for you to predict what the future is going to be like, then you're going to need another way of doing it, right? And so what we came down to in terms of our work is that that other way of doing things is doing it as a continuous process one day at a time.

Ben Hammersley:            11:24                     And this isn't necessarily new. In fact it's, it's something that was in manufacturing. For example, Toyota invented the Toyota system in the 50s and, and that's what made Toyota. And in a cultural and religious context, you have a lots of people's spiritual practices, which are about continuous improvement. And you have lots of physical practices like yoga for example, where you can't win yoga, right? There's no end game of yoga, but it's a practice that you do every day and you get better at it, but you're always going to get back. You know, it's something you just do unless you're doing very yoga or wine yoga. Well indeed, but that, that, that does actually that's Dan, it [inaudible] other than that magnificent sounding activity, there's, you have to be in the States. This is what we do. It's exactly that. Goat yoga [inaudible] get tired after awhile. This is the thing.

Ben Hammersley:            12:19                     But the thing of the thing about all these prints is that they're continuous practices. And so we try and look at what would it, what does it mean if innovation is a continuous practice rather than a continuous [inaudible] gentle practice rather than a kind of violence every five years we take on the, the, the new technology and an upgrade to it or half upgrade to it because everyone's confused by it, which is the standard Silicon Valley model of innovation, which is every five years they invent a new thing and everyone goes around and stands on stage and says, if you want us embracing this new thing, then you're all going to die. And so whether it's blockchain or the cloud or big data or AI or whatever it is, and of course those things aren't, that's AIDS, it's just not true. But it's also just not a sustainable method of innovation.

Ben Hammersley:            13:09                     Right? Yeah. So, so I try and help people do that gradually. And so then the question is how do you do it gradually? And to do it gradually, you have to do it by really asking quite fundamental questions about what it is you do on a daily basis ordinarily and why you're doing them and who you're doing them for and who you're doing them with and how best can you serve those people or how best can you structure your teams or structure your internal processes so that you can put yourself in a position where you can better serve those people. And that involves things like employing more cognitively diverse teams. So you guys as many ideas and as much as much sort of empathy within your organization as you can. It means talking to your customers a lot more. It means paying attention to all of the processes you do and asking yourself on a, on a daily basis, why aren't we doing this in this way?

Ben Hammersley:            14:08                     Because a lot of the things that many companies do, I've done that way because somebody decided and then that person left and nobody can remember why, but that's way the way they've always done it. And so now that that approach is actually much more uncomfortable than doing the same thing for five years. And then having somebody turn up and say, Hey, now you need to do the blockchain thing. Or Hey, no, he needs to do the AI thing. It's much less comfortable in that everybody fit many people. And I think most people actually through human nature kind of prefer to just sit around doing the same thing and then just to be told what's due next. It's much more complex and much more uncomfortable to be continuously, continuously asking, am I doing the right thing and what am I, what am I? Yes, and what am I assumptions.

Ben Hammersley:            14:56                     Yeah, exactly. But it's also, it's a daily practice of what am I, what assumptions we make. Eating is what we thought we were doing is the concepts that we had 12 months ago. Are they still true? And asking yourself these fundamental questions. But if you do that, if you do that practice, then very rapidly you bring yourself as an individual and your team and your organization right up to the cutting edge of today. And once you're there and it's become a habit to be there, then the future takes care of itself. And in the vast majority of industries, just being up to date pots, you in the top three and in many industries that puts you into the top one. Because most companies, you know, when it's 2019 you know, in the world it's like 2002 inside the organization. Yeah. Yes. And if you just bring your organization right up to 2019 and you know precisely what it is that you're doing and who you're doing it for and what they want and what you, what you can provide and all of those sorts of things.

Ben Hammersley:            15:57                     And you get there by asking these quite difficult questions and making these sort of mindfulness practices as it were. If you can get yourself up to that level, then you're profoundly well positioned in a way that all of your robots won't be. So one last question for you. Sure. And you're probably not gonna like me for this question because you just can't predict the future. But I have to ask this question because I want to get a different perspective. Sure. Because you are not a banker. So what do you think the future of cash looks like? So my personal assistant is Chinese and she was on holiday for the past two weeks and she just came back and she went back to her family in China and going Joe. And she was, she was telling me about this a couple of days, you know, a couple of days ago at time about the whole day, you know how it went.

Ben Hammersley:            16:47                     And she was saying that not only did she never see any cash like physical cash throughout the whole trip, but also she never saw any credit cards either. And this came to the head when she tried to pay for it. She went out for lunch with her brother and she got her wallet out and she'd got her physical credit card out and her brother started laughing at her and she, and she was like, why are you laughing? You may and he lifted up the tablecloth on the table and other than this tablecloth under the glass tabletop was a QR code and he'd already paid the bill by scanning the QR code on the tabletop with the, with WeChat, which is the dominant app in China. And so in China it's, it's incredibly rare to leave the house with any form of wallet or credit card and certainly with any cash now this changes many things.

Ben Hammersley:            17:38                     It changes fashion, right? Because you only need one pocket, which is the pocket for your phone. You don't really need a handbag apart from other things. Right. But you don't need a purse, you don't need things for carrying money cause it's all on your phone and everybody from market store holders to beggars in the street to the Chanel boutique, take the same payment platform, which is through your phone. That's one possible future. Okay. Yeah. And in some places I can see that becoming, you know, 100% in China and some bits of the U S I can see that being 95% of your day at this if not we chat. But something like Apple pay and contact lists, you know from my, I bought loads of things this morning and bought it with my watch, you know, of through Venmo. Exactly. All of those go out. You just pay each other that way.

Ben Hammersley:            18:25                     Precisely. And you and you know, and certainly in the UK where I'm originally from contact lists, Apple pay, whatever you want to call it, is pretty much universal everywhere. However, you know, I live in Brooklyn and or on planes or in hotels or in corporate headquarters. And for me to live my life cashless solely through, you know, Apple pay and or my sort of platinum Amex or something is totally doable and perfectly, perfectly understandable future. But whilst my assistant was on holiday, I was moving house from Los Angeles to Brooklyn and I drove across the U S and I drove through the Southern States of the U S and certainly that pigeon forge Tennessee goes cashless will be a good 10 years after Brooklyn, New York or Venice beach, California where I'm sure, and so when you have a conference like, like this for example, which where the audiences are bankers but they're, but they like regional and local bankers as well as like your, the mental image you have, when I say the word bankers, right?

Ben Hammersley:            19:30                     Those guys, their version of innovation around something like cash or payments or something is going to be different and will be just as innovative, but it won't be the grand myth of a capitalist society that say the cashless society vendors are putting forward. Yeah, right. Yeah. But it will be a bit, it'll be the dominant thing in their region that they correctly work for that work for that thing. Micro society. That's right. Yeah. And then Mike, Chris is, it might be 10 million people. It might be 100 million pieces. Okay, that's fine. And so we'll see. And this is, this has been the same everywhere. You know, if you look at M-Pesa, for example in Kenya, that's been a mobile cash solution that's been there for 1520 years and has been as a major part of their economy. And then you have things like local cash systems where we, a friend of mine again lives in Kenya and is currently doing it, setting up her own currency for a local, for a region.

Ben Hammersley:            20:26                     Oh wow. And there's quite a few of these around the world where it's physical cash, you know, it's real, the real bank notes, you know, and they're only accepted within that community. And so it keeps economic flow going around the community. And so they're not dollar rich or shillings rich or whatever, you know the Kenyan currency is, but the rich and the local, you know the economic movement hat. Yup. Yup. And again, that's now that's also a solution to the question about what, what does society, what does cash look like? Because that invites you to ask the question of what is cash in the first place and why do we have cash and what is it for and what is the definition of a, of a healthy economy in T? Is it the number on a spreadsheet or is it the movement of money? Is it the fluidity of money rather than this rather than a, a stock somewhere living in a bank account or not moving.

Ben Hammersley:            21:19                     And any economist who's gotten past the first year will tell you that that is the flow of money. That's the important thing, not the stock of money. And so cash is a pretty good thing to flow around. And so again, the reason I'm being like giving you five different answers, the question is because there are a million different answers to that question or around that every different context and the why is organizations will look at their context of their marketplaces and if they're small organizations will go well here in this place with this group. And when I've spoken to my customers, they've expressed what they want to do and I'm providing them the solution to the thing they want to do. And it turns out the best solution, the thing we want to do is QR codes or the best solution is our own local currency or the best solution is more ITMs.

Ben Hammersley:            22:06                     And again, this taps into is not a technological thing. It's always a social thing. So having moved from the UK to the U S five years ago, the instant thing that I noticed is the 3% on a bad day, 1% on a good day, you know, surcharge to all ATM withdrawals, right? That's illegal in Europe. Literally illegal. Right? And so one of the features of cash will be, it won't cost anything for me to get cash, for example, because that's because that's a 3% tax on being poor. And in terms of social inequality, that's unacceptable actually. You know what I mean? Spot-on. So, so will you, do you only get to that realization when you start to question actually what is this for? Right. The same thing for, for contact lists, I have the, the Apple cart from Apple and from a product design point of view, the whole process of applying for receiving, activating, using the Apple card, both a digital thing on my watch and on my phone and as a physical artifact when they shipped me the actual metal card, the product design of that, the service designer that is in is astounding. It's, it's a good 10 years ahead of everybody else, right? In the U S beautiful. There's a process, and I've used it a lot today to buy coffee and things, but that's not the future of payments because the future of payments cannot depend on somebody owning a thousand dollar device in their pocket. Right. The future of payments has to include like my five-year-old you turned five two days ago and is now getting an allowance. She gets 50 cents a week because my wife is stingy.

Ben Hammersley:            23:52                     Earn that 50 well yes, and she has chores to do it. Exactly, but she's not going to have a cashless. If I went to her and said like, yes, I'm going to, I'm going to credit your contact list. You know I'm credit. You're in contact with that physicality, right? Yeah. And she can't park. There are no gumball machines that we'll take. We'll take like Apple pay and gumball machines. That's right. And gumball machines is her big thing right now. And so she's obsessed. And so like for her the best payment solutions is coins, whereas for the nation, the penny makes no sense. Right. For example. Right. And for the user, the U S bank notes are a disaster. They're all the same size and color. Somebody used to redesign those, but now, and I think we're good there [inaudible] it's like it's an impossible question, right.

Ben Hammersley:            24:50                     Which is why I sort of blooded a path it for what photo booth but to come to this solution. But to answer that question, you have to answer it as an individual and the [inaudible] for an individual and for the companies that services individuals, you can come through, you can come to an answer. It won't be the same as the guy down the street or the person in the one state along. And certainly it won't be one person's four States along any other direction. But for your 100 million people it will be perfect. I think this is a good place.

Ben Hammersley:            25:18                     Do we have any other impossible solutions? Disposable problems? No. Unless you've got something else up your sleeve, you think fun there. No, I mean, well other than I think this can be an interest. One of the interesting questions as well, once you start these new technologies come along, they do invite people to rethink the fundamental nature of the transaction. Yeah. And once you start to rethink the fundamental nature of the transaction, you then start thinking, well, why am I doing this transaction with this company? And so there are organizations out there and I think the Apple card is the obvious first one of these where if I was a bank I will be terrified that organization deciding to offer those services and this is what we saw in China with WeChat and the other equivalents, but not necessarily with cash accounts like you know consumer banking.

Ben Hammersley:            26:10                     But something like insurance. Amazon knows everything I have in my house because I basically bought most of it from Amazon. So why I don't have my rental insurance around Amazon is literally a thing that puzzles me on a weekly basis because they could offer it to me immediately. They know, you know, they know where I live, they know about your other thing, right. They know the value of my stuff. They know the end and they also know from that they know all the demographic information they have. I have a 1516 year purchase history with them internationally. I have all of my banking details like they know the risk and everything from all the demographics or there's this thing they could underwrite that trivially will be easy for them. Amazon doing household insurance. I know Facebook has a banking license in Europe. I think the next big thing coming along down the line will be people just going, well I gave all my money to Apple anyway or to to T mode or bottle.

Ben Hammersley:            27:06                     I don't have that much savings. You know I only have a few hundred dollars in like in the cotton account, you know my checking account anyway, I never write checks. I'll just hold a positive balance with T mobile and I'll just close down my bank of America account, something like that. And it's from an individual person point of view for the vast majority of people will make no difference whatsoever. That's really, I think any of my true regulatory approval because of that. It might not happen here, but it will certainly happen in other places as it has as it does in China.

Amy Lombardo:                27:36                     Cool. Well thank you for sitting down with me today. This was fun. I feel like I could talk to you for hours. You want to do one more plug for me for COMMERCE NOW. Oh beautiful. Alright, follow him at, @Ben Hammersley and stay tuned for more episodes on COMMERCE NOW.

With $48b in assets, Banco Popular is the largest financial institution in assets and deposits in Puerto Rico. In this podcast, you will hear from Moisés Pena Reyes, VP, Digital Banking for the bank. Moisés is responsible for driving and managing the ongoing evolution, innovation, and strategic direction of Banco Popular’s digital banking platforms by meticulously managing their customers’ journeys via mobile, online and ATM. Hear how his unique “digital-first” approach to their transformation journey has allowed the bank to have more active devices in use to engage with the bank, than actual customers.  

Resources:

Banco Popular Website

Moises Pena Reyes LinkedIn Profile

Diebold Nixdorf Website

Transcription: 

Amy Lombardo:                00:15                     Hello again, this is Amy Lombardo and I'm your host for this episode of COMMERCE NOW. We're coming hot off of the stage from our last keynote presentation at DN Intersect, where Moisés Pena Reyes, from Banco Popular, hope I said that right and did you justice, Moisés . He presented the bank's digital transformation strategy. And so I'm lucky enough to be able to pull him aside for a few minutes here, and be able to share with our podcast universe, your story. It was fantastic for the group that was here, but I couldn't let you get away without getting in my hot seat here to talk to me.

Moisés Peña:                     00:54                     Let's do this.

Amy Lombardo:                00:55                     Moisés is responsible for driving and managing the ongoing evolution, innovation, and strategic direction of Banco Popular's digital banking platforms. So that's enough from me and let's hear it directly from him. So, welcome Moisés .

Moisés Peña:                     01:10                     Thank you, thank you. I'm excited to be here sharing one of my passions with you.

Amy Lombardo:                01:15                   So what I learned is you have 17 years at the bank, and 2008 was really when you started on this digital journey. So talk to me a little bit about how you came to this realization and what were the factors that led you to realize that digital is really the place to be for the bank.

Moisés Peña:                     01:36                     Yes, I think that ... 2008 was the year that I arrived at the Internet strategy team, and our customers loved to online banking, and we measured that. And seeing how the volume of transactions were literally making a dent in their behavior and monitoring the tendencies and the new stuff that was coming out, for me was truly engaging to embark on that journey. In the beginning we were just a small group, that admires an alternate channel but we persisted and continue to challenge the way things were done. And day by day, we started to launch new services, transform experiences to the place that we are today, with over a hundred people actually looking out for the top strategy in the bank.

Amy Lombardo:                02:37                     And you said something that was interesting because you said channels, but really you don't want to think in channels, that word isn't even in your vocabulary. Right?

Moisés Peña:                     02:47                     Imagine that. Alternate channels, no, it's our experiences, our customers and their expectations are the ones that are going to choose where and when they want to do banking.

Amy Lombardo:                03:02                     Right, right. Because customers say, "I need a bank."

Moisés Peña:                     03:05                     Yeah.

Amy Lombardo:                03:05                     They don't care. They're not going to say, "I need to go digitally pay my bill." It's just the experience.

Moisés Peña:                     03:12                     Experience and context, it is all about the context of the journey that our customer is going to embark.

Amy Lombardo:                03:18                     Right.

Moisés Peña:                     03:18                     Yeah.

Amy Lombardo:                03:19                     Right. All right. Moisés , so you talked a little bit about the journey itself, but can you share some of the innovations that the bank actually deployed?

Moisés Peña:                     03:27                     Yes. We run on a custom core and everything that we want to build, we literally have to build it. So that's a great opportunity for us. We have been at the forefront of iterating our new services. For example, we were between the top five banks in the U.S. to launch Apple watch support. So is really through the different skill sets that we have and do an innovation with them. And in a couple of weeks, we had our mobile app tailor for the Apple watch. Balances, transfers, transactions, payments, and we were in the first five banks in do that.

Our cardless cash service, it has been truly revolutionary because of the way that we offer the service to the non-customer. So we did it also ourselves also with the help of our technology partner. And the beauty of it, is that our customers can send money to anyone, even if that person doesn't have a bank account. But we did it the way of making them interact with our app. So they will enroll in our app and get access to their cash but I can truly offer them new experiences via that app because they allow me to send them promotions and cross sell opportunities are beautiful.

Amy Lombardo:                04:48                     Right.

Moisés Peña:                     04:48                     Yeah.

Amy Lombardo:                04:49                     So you mentioned something interesting in terms of, okay, "We were one of the first banks to do this," but sometimes that can have the reverse effect because consumers aren't ready or they're not trained, they can't adopt the technology. So how receptive was your customer base to the different phases of this digital transformation?

Moisés Peña:                     05:10                     Yep. I live by the principle that our customers don't wake up in the morning saying, "I want to do banking today."

Amy Lombardo:                05:20                     Right.

Moisés Peña:                     05:20                     Right.

Amy Lombardo:                05:21                     Unless of course you win the lottery.

Moisés Peña:                     05:23                     Yeah. But we are competing not with other banks. We are competing with what their expectations are with the ecosystem of applications that they interact with day in, day out right? So in our case, digital adoption is robust. Over 90% of our customer base is enroll in digital banking. So our customers are great in that they are fast adopters, right? So we will try stuff, for example, the Apple watch example, it has a low usage and we learn from that. We did experiment, we [inaudible 00:06:00] the teams collaborated and we monitor their performance and the usage. And we saw that, "Hey, people will still wants to use their phone to do it not the Apple watch."

Amy Lombardo:                06:12                     I'm going to throw you a little bit of a curve ball here, is there anything that scares you about the pace of change?

Moisés Peña:                     06:21                     Oh yeah, totally. And because of that ... because we are not competing with other banks anymore and we are a big bank on ... honestly, I want to move faster. But obviously Google, Amazon, Apple had a lot of more resources than we [inaudible 00:06:42] and a huge customer base. So what scares me is that we don't move fast enough to be part of that journey for our customers and lose business because a bigger player did it fast than us. So yeah, we keep pounding the rock and iterating and listen to our customers. That important thing.

Amy Lombardo:                07:06                     So maybe the goal we'll have here is, you know, we hear all about the Amazon effect or you know, you say you Google something, Google became a verb and maybe we'll have the Banco Popular factor right? And people will think about it that way.

Moisés Peña:                     07:21                     Exactly.

Amy Lombardo:                07:21                     Yes. Okay. You mentioned Google and in your keynote presentation you said that you are embedding Google analytics into your ATM. I almost fell out of my chair because I have not heard a single banker ever say that. So how'd you come to that?

Moisés Peña:                     07:41                     We love to experiment. We do a lot of proof of concepts. We have our own ATM lab in our building and being a group that they're ... our lives has ... have been helping the bank transition that digital transformation. When we started to HTML the hell out of those ATM screens, my senior web developer and on the team is like, "Hmm. HTML, CSS let's embed that we [inaudible 00:08:11] go there and start tracking the journey, the different touch points and," ... and that's the beauty of making your teams collaborate and expanding their skill sets, right? Because the idea came out of the team that didn't have anything to do with the ATM.

Amy Lombardo:                08:30                     Right.

Moisés Peña:                     08:31                     And that's how it came to be and we implemented it, we tested it. We even have the dashboard seeing it now in ... in a couple of machines and for us that we believe in design and interaction design that help us to understand their conversion funnel at the ATM because it is a transaction and ... and understand the pain points, why a customer it's spending this amount of time in this screen versus the other one and how can I enhance that pain point.

Amy Lombardo:                09:04                     Yep. So Moisés , you're ... sounds like you're bringing things faster to your team than they can possibly handle your wacky ideas. So how do you keep those folks motivated?

Moisés Peña:                     09:16                     They are part of what we are doing. I approach this in a very open way. I have conversations with them day in, day out. But the important thing is that you have to empower them to actually ... once you share the vision, I don't want to be the one that made that ... that vision a reality because it is impossible for one person to do that. So once I have those crazy ideas, I run the ideas by them and I empower them to make decisions and let them experiment and make suggestions. And that's how it ... it's truly a better conversation. And for example, for this keynote, I run the presentation with them two times.

Amy Lombardo:                10:01                     Oh, that's great.

Moisés Peña:                     10:02                     And I let them critique me and give me pointers and made changes to the slides. So it is not Moisés' presentation is my team's presentation, right? Because it is not only my vision, we are in this together. That's the model that we use every day, day in, day out. We are in this together.

Amy Lombardo:                10:21                     If we talk a lot about the intersection of physical and digital, I mean we're here at our newest flagship event, it's called 'Intersect'. But I think I had this aha moment when you were talking because I was thinking, it's really not the intersection of physical and digital, but it's also this third leg of the stool. It's that human element, right?

Moisés Peña:                     10:47                     Yep. It's ... I truly believe that this is not a technology problem. It is a human one. And once you break the silos and you empower your teams and help them get new skills, right. And encouraged them to, "I want you to collaborate with my interaction design," and run by him the idea that you have for that service, and that's when it truly became a richer product in the end is your teams the ones that make or break the customer experience.

Amy Lombardo:                11:25                     Yep.

Moisés Peña:                     11:26                     Yep.

Amy Lombardo:                11:27                     Okay. So last question. Can you give us any hints at ... at what's next?

Moisés Peña:                     11:32                     Hmm?

Amy Lombardo:                11:33                     For the bank?

Moisés Peña:                     11:34                     Well we are ... I think that for me a huge realization was that for the first time all these teams are in the same building. Digital retail, cyber fraud and technology operations, we are on there going our transformation of ... on how we collaborate. So for me, next things is that it's super exciting to see how the ATM structure now is going to reflect the reality that when we merge all these wonderful people and visions, the ... the point of view of what we do explodes service wise. I am super excited on what we are doing with taking our mobile experience and adapting it to the ATM. So my customer would see the same payment flow that he sees in the mobile app. He will see the same flow adapted to a tablet in the ATM. So that truly motivates me and we are doing some interesting stuff with the analytics. Also, we are doing predictive models for cash replenishment also in house with machine learning.

Amy Lombardo:                12:51                     Okay, okay.

Moisés Peña:                     12:52                     I always says that machine learning, artificial intelligence and cash recyclers, you have the opportunity to have a self sustaining cash replenishment operation. And we're doing interesting stuff with personalization and new services for our commercial customers. Yeah, I love what I do.

Amy Lombardo:                13:09                     You do.

Moisés Peña:                     13:09                     Interesting times.

Amy Lombardo:                13:10                     That passion is recognized. And I thank you for sharing-

Moisés Peña:                     13:15                     Thank you.

Amy Lombardo:                13:15                     This story with our listeners. So for those of you out there, keep checking back for more episodes from COMMERCE NOW and of course you can always subscribe on iTunes or your favorite podcast listening channel.  

Summary:

Retailers and grocers want to streamline the in-store checkout experience and increase conversions. Diebold Nixdorf’s Carl von Sydow tells Karen Webster from Pymnts.com transaction data can help firms find the optimal checkout footprint that fits, on a case by case basis. 

Resources:

Blogs:

Relevant Retail - the New Norm

Retail Self-Service: Today, it's WAY More than Self-Checkout

Website:

Diebold Nixdorf

Previous Carl Von Sydow Podcast:

Empower Your Retail Customers

Transcription: 

Karen Webster:                00:12                     Hey Carl, thanks for joining me today. I'm looking forward to having a conversation about data, in-store point of sale, and the insights that retailers can glean from that data. So thanks for making the time.

Carl von Sydow:                00:29                     You're welcome, no problem. I'm happy to be here.

Karen Webster:                00:31                     So, there's been so much written and discussed about improving the checkout experience in the physical store, and of course we're all familiar with the efforts that a number of players, obviously Amazon at the top of that list, have pioneered to really improve that experience. I'm curious to get your take on, first of all, the the landscape around, then the appetite for, using the point of sale experience, reinventing it and making it a more streamlined experience for the customer.

Carl von Sydow:                01:10                     Yeah. Well first of all, retail and grocery retail and all the other verticals, are going through big changes now in in the checkout process. As you just mentioned, Amazon is one example and we have click and collect, we have all different kinds of self-service solutions or other solutions. Customers has options when they go shopping. But we have a great number of stores and retailers that are still working with traditional retail, and the Amazon idea is good for some locations, but there are a lot of retailers they're still expecting, or looking, for solutions that are, perhaps, not reinventing everything but using what they already have and improving the shopping experience for the customer, with not investing in a lot of technology like the Amazon solution.

Karen Webster:                02:03                     Yeah, yeah. That is clearly, as you said, for a different kind of a store; smaller format, limited selection and so forth. But your point is a good one, which is stores want to make the experience better. No one wants to see long lines and there are lots of efficiencies that can be delivered within the existing store format today. What are some of the innovations that are helping drive that forward?

Carl von Sydow:                02:31                     Well, first of all, when we usually try to help a retailer improve their shopping experience in the checkout area and the efficiency and throughput and all that, we start with looking at the store data, what they already have within retail. One store location can be very different from another one. The customer demographies is different from one side of the town to the other. So by looking at the actual store data for a particular store, you can learn quite a lot about how and where you can improve the shopping experience in that particular store. And the T-log data, the transaction data, that will help us to analyze the customer work, or customer shopping journey, the customer journey.

                                                                                And through the store data that we can extract information, like for instance, the average basket sizes, the different payments options that they are using, cash or card payments, coupons, et cetera. How many transactions are used with age restricted items? That will have an impact on the different solutions for self-service that you can implement, of course. But looking at the data, the actual store data, you can get a long way of analyzing and simulating how you can improve that store without spending too much money.

Karen Webster:                03:52                     So what are some of the the insights? I was listening to you talk, I was reminded of an experience a couple of weeks back in a grocery store on a Saturday, and they didn't have that many items so I decided to do self-checkout. And the lines were actually, in the self-checkout lanes, deeper than I had seen them. So a lot of people are opting in. I happened to get into the line where a woman had a pile of coupons. That was painful because scanning those coupons and putting them in the little holder, I was like, is she ever going to finish? But you mentioned that as an example of a behavior that helps stores make decisions about throughput. What kind of insights, and therefore actions, does that one example provide a retailer in how to think about throughput and efficiencies at checkout?

Carl von Sydow:                04:42                     By analyzing their own transaction log data, their own facts in a good way. The retailer can optimize the different checkout options for that particular location, for that particular customer demography that they have. Or, like options ... You mentioned coupons, if we look 10, 15 years back in time, we have seen more or less only one type of self-checkout, which is the traditional basket-to-bag self-checkout, as we call it. With a large bagging area, with or without cash, pretty big units. And they accept cash, they accept coupons, et cetera, et cetera. If you look at the T-log data, just as you mentioned, customers with small baskets, typically self-service is very attractive for small baskets, obviously. But today what you can see in stores is that the self-checkouts are for all customers. You can go there and have a customer with 50 items and they are building mountains on the bagging area. And do you just want to go through with three items.

                                                                                So our idea is to look at the T-log data, analyze the different groups of customers that they have in that particular store, and then identify what different self-service solutions, or options, can you add to this checkout area to meet the different customer demands? So the customers with small baskets that just want to go through fast, they pay with credit card, they don't want to wait for someone paying with cash, et cetera. So you should have like a mix of different self-service solutions to meet your customer demands, and that's what the store data can help you to analyze and simulate.

Karen Webster:                06:25                     Is that, Carl, something that retailers are starting to wrap their heads around? I mean, this particular store, I won't name the brand, but it's pretty pretty big chain and it was interesting that all of the checkout lanes, self-checkout lanes, were identical. You could use cash in addition to cards, as you described. Any number of items could be moved down the conveyor belt, and of course those coupon things, which I found very annoying because she had a lot of them. So are retailers starting to adopt these new ways of thinking about narrowing the options for self-service in some lanes?

Carl von Sydow:                07:09                     Yeah, I would say more and more retailers are doing that. For quite a while the retailers have been working through the thinking about averages, and one-size-fits-all kind of mentality, and that's what we see on the markets today. And now they're slowly realizing that that is not necessarily what the customers want. There is no one-size-fits-all in self-service anymore. And the customers, they are learning and they are developing and they're doing ... They're fast. They are expecting retailers to offer continuous improvements also in in the checkout area. We have seen quite ... Hasn't been so many different developments for the traditional basket-to-bag self-checkout. It looks more or less the same today like 15 years ago.

                                                                                And the customers, they're trying to ... They are expecting something different now and the retailers are realizing that, but they don't really know how and to which extent they would add like fast lanes or express lanes. And then especially in the United States to go card only. It's a pretty bold decision and a lot of retailers are afraid of that. But if you look at the store data, you can easily see that there is a market, if you like, internally, for that store to actually have card only self-service solutions to meet those customer's demands.

Karen Webster:                08:33                     What are some of the more innovative options that retailers are embracing who are looking at this data, recognizing that averages don't cut it, and they really do need to be more thoughtful about about checkout options?

Carl von Sydow:                08:54                     What different self-service alternatives there is, or what do you mean?

Karen Webster:                08:56                     So, when you think about self-service alternatives, and just looking at checkout holistically, what are some of the more innovative retailers doing to try to make that experience better?

Carl von Sydow:                09:07                     Yeah, well, what they are doing, they're mixing different checkout solutions in the same store. Some stores, already, still today, only have normal lanes. Then, a lot of stores, they have a mix of normal lanes and traditional basket-to-bag self-checkout. And now we have seen, like Giant Eagle, Kroger, Walmart did some tests, and now Sam's Club is doing, to also add personal self-scanning. Where you have this handheld device that you go shopping with through the store. We have retailers adding smaller kiosk-like fast lanes without cash, and very few items. So some of the more aggressive retailers, they are mixing different self-checkout, or self-service solutions, within the same store. And that is coming more and more, but it goes a little bit slow but I think we will see a big change coming, you know, two years. A lot of the interests that we see right now from retailers on almost any market in the world is particularly towards the smaller self-checkouts, the fast lane type of checkout.

Karen Webster:                10:21                     Yep. Yeah. You know, it is also just a wholesale shift right? From from checkout being something that is in the lane, as you call it basket-to-bag, being handled by store personnel to, for the sake of efficiency and convenience, the consumer is willing to take that responsibility on themselves. I mean, and including order ahead and pick up curbside where everything now is being driven by convenience and efficiency. So I can see mixing the format. But you know, most people when they're in the store, they want to get in and they want to get out. And they look for the lines that have the fewest people in it. Sometimes regardless of whether that's self-checkout or not.

Carl von Sydow:                11:08                     Yeah, I mean we, when we talk about conversion rates for instance, which means the customers that are buying stuff versus customers leaving the store empty handed due to long waiting lines. So the conversion rates, the retailer wants a high conversion rate, which means that all customers that go into the store should buy something. But if the lines are long, then they will leave the store without buying anything. And to add the opportunity of different checkout options, you will have a higher throughput per hour, or per time. And you will increase your conversion rate. Definitely. I think we have some interesting examples from projects that we have done. One, for instance, we had a project where we implemented a self-checkout, these fast lanes self-checkout, and we had a terrible estimation of 30% adoption rate in the project. After just a couple of weeks we were up to 37%, and now a couple of months in, we are up at 44%.

Karen Webster:                12:21                     Wow.

Carl von Sydow:                12:22                     So the adoption rate is high. What we have seen at the same time, in that store, is that the conversion rate has gone up, of course, but the average basket size went down. And that, for a retailer, is like a red alarm bell because they want the average basket size, of course, to increase, not decrease. But when we looked at the store data, we saw that, well since the conversion rates increased, but we saw that the customers with few items had increased dramatically because of the faster throughput through the checkout area. So since this store then had more customers with fewer items, the average basket size went down. So actually it was a good sign, but it was an alarm bell that no one really expected.

Karen Webster:                13:08                     Well, I would imagine that, you know, one of the explanations, who's to know for sure, is that people are shopping more frequently. So going to the store a couple of times a week rather than once a week with smaller basket sizes to get in and out. So I mean that could be one explanation. But I mean, I'm curious about, in that example, adoption rates going up; what does that say about the inefficiencies of the store overall? I mean, if I'm that particular retailer, I'm thinking, wow, more people are using self-service, that must mean that the traditional checkout it's pretty friction laden for consumers.

Carl von Sydow:                13:47                     Yeah, but I think, again, if you look at the customers in any store, they have different customer journeys. A customer with a large basket, with coupons, paying with checks, paying with cash, they look for [inaudible 00:14:01]. Interaction with people, they like to go through the normal lane. But then you have the efficient customer that just wants to go in and out as fast as possible, pay with credit card, no coupons, and they do like the social interaction with people, but the speed through the store is more important for them. And when they go, when they come to the checkout, that's also important to remember, when the customer comes to the checkout, basically the customer journey is over.

                                                                                The only thing they want to do is to pay us as fast as possible and get out of there and go home or wherever they are going. So the whole shopping experience ends at the checkout area. And by offering different options for that, you will make more customers happy. And if you have coupons, if you have checks, if you have cash, then you can go to the manned lanes and go through that part of the checkout area. But if you don't, you want to be able to find a way to leave the store without waiting for people with tons of coupons in their bag.

Karen Webster:                15:07                     Carl, I'm curious to get your thoughts on how self-checkout and the opportunity to further, I guess, curate that experience ties to loyalty programs that stores may have. I mean, one of the things that's interesting about the Amazon Go stores is that you have to be a member of Amazon Prime in order to do that. I mean, that's just sort of the Amazon model. But but grocery stores have loyalty programs that most people participate in, and I'm curious to know whether that's been ever considered, or even appropriate, to think about. Certain lanes are available for loyalty club members, or certain experiences are, et cetera.

Carl von Sydow:                15:54                     That's a very good question. One of the reasons why we have been stuck with the traditional basket-to-bag self-checkout is that it has built-in security. You have the weighing scale bagging area where the self-checkout will always verify the weight of the item with the weight database that you have. And you can trick everything, of course, but there is a security feature in this traditional self-checkout. However, it makes the whole checkout experience a little bit annoying, especially if you have these unintentional blocks, the weight it doesn't always fit, and you have waiting times for this and that. So the throughput is definitely affected by that.

                                                                                If you leave the security features outside, then typically a lot of the retailers, they want to have some means to identify the customer, and the loyalty program is an ideal way of doing that. So a lot of the retailers that take away security features from the self-checkout, like these fast lane self-checkouts without weight security, they want to add the loyalty program to that so they at least can identify the customer. And the customer will feel, well, the retailer knows who I am, I have scanned my card and then I can use this VIP lane for self-service. Especially handheld, the personal self scanning solutions, are very much focused around loyalty programs for security.

Karen Webster:                17:24                     Yep. Yep. Interesting. Well there's certainly a lot of opportunity to innovate. It is something that consumers, in particular the grocery shopping experience, is something people do in the physical store and making that more efficient in any possible way is a welcome experience., Particularly since people do it on Saturdays and they don't really want to be doing it ... spending their Saturday mornings going to the grocery store. So it's a, and maybe I'm speaking from personal experience, Carl, I don't know. It's not my favorite thing to do on Saturday morning.

Carl von Sydow:                17:58                     Yeah we will, I think we will see a big increase in self-service solutions in retail, and not only in grocery, we will see it in DIY stores, convenience stores, pharmacists because it is a very convenient and fast way to go through the checkout area. And the customers have said before, the customers are learning, they are expecting self-service nowadays. The adoption rates are really high from the get-go nowadays. 10 15 years ago, it took much longer to reach a good level of adoption with self-checkout. Now it goes, as I said before, really, really fast because customers are used to self-service in so many instances right now. But you have to, it's not one-size-fits-all. That's the main thing.

                                                                                And to do the best implementation of self-service, you should look at the store data, to look at what different types of customer groups, what's the demography in this store? And then simulate different scenarios and build a paper pilot with actual store data. How would it look like if I do this? If I implement this solution in this store? And that's typically what the project looks like today for us. A lot of analysis of data and different alternatives, and then we have a discussion with the retailer. How bold do you want to be with self-checkout, or self-service? How many different alternatives you want to offer your customers? And we are going definitely in that direction. That's my impression.

Karen Webster:                19:30                     Well Carl, thanks so much for your time and for the insights about the future of self-service and retail. Obviously grocery being just one, obvious an important use case, but certainly others as you pointed out as well. Thanks again for your time.

Carl von Sydow:                19:45                     You're welcome, happy to join.

Amy Lombardo:                19:46                     Thanks to our listeners for tuning into this episode of COMMERCE NOW. To find out more about the future of retail, go to dieboldnixdorf.com or click on the link in the podcast show notes. Until next time, keep checking back on iTunes for new topics from COMMERCE NOW.

Summary:

On this episode of COMMERCE NOW, we discuss how cloud-based banking is really booming and what FIs can do to be on the front side of this upswing.

Related Content:

COMMERCE NOW Site

Diebold Nixdorf Site

Transcription:

Scott Anderson:               Hello again. This is Scott Anderson, your host for this episode of COMMERCE NOW. As some of you have heard, cloud-based IT is booming, even with the core applications of the banks.

Scott Anderson:               Although migration from conventional IT infrastructures to the cloud can be complex, once it's done, it offers interesting opportunities, not to mention enormous savings potential.

Scott Anderson:               Today, I'm joined by Michael Engel, Managing Director and Vice President for banking software at Diebold Nixdorf. And on this episode of COMMERCE NOW, we will [00:00:30] discuss how cloud-based banking is really booming and what FIs can do to be on the front side of this upswing.

Scott Anderson:               Welcome, Michael. Thanks for joining me today.

Michael Engel:                   Hey, it's a pleasure, Scott. Thanks for having me.

Scott Anderson:               Before we dive in, Michael, I know you quite well, but why don't you begin by telling our audience a little bit about yourself and your background?

Michael Engel:                   Thank you, Scott. I'm in the industry for 20 plus years now and always worked in software and financial industry, [00:01:00] so I have seen a lot of iterations of technology. So all the way from the good solid host-based environments that a lot of FIs are still running, to now all these latest technologies driving banks and FI's around the globe.

Michael Engel:                   So therefore, I would say I have a good view of the historic aspect, [00:01:30] but also as part of my job, talking to customers around the world, and also to technology providers around the globe, have a fairly good understanding of the dynamics in different geographies and markets, towards what is still under discussion and what is basically real and what is in production today.

Scott Anderson:               Excellent. [00:02:00] And really appreciate that you're joining us with that global point of view. And if we target our focus then to today's topic, can you kick us off and briefly discuss cloud-based software and why you think that's been growing in popularity lately?

Michael Engel:                   Well when we talk about cloud-based software, it is more than just putting a piece of functionality into a central located data center [00:02:30] that is accessible through standard protocols and is hosted by a central organization that gives basically, a cost advantage based on a dynamic usage model.

Michael Engel:                   That is what most people immediately have in their mind, but it's much more than that. It is all around technology around that, so the whole idea of containerization, the whole idea of APIs [00:03:00] to be used and consumed and the whole tools in order to create software, to test software, to deploy software to run and operate. And all of these pieces are now coming from the mobile phone.

Michael Engel:                   This is really, really cool and a bunch of nerds across the globe are looking into that. Into it has become [00:03:30] now, into a state of maturity where, now conservative organizations such as banks are seriously looking into that and the front runners are actually exploring that mission critical application, post development and operation and so showing extremely good results. And then that is what brought us to the point [00:04:00] that from being a buzzword and being the cool thing around the block, it has matured into, it is actually real enough and mature enough for a mission critical environment such as special services industry.

Scott Anderson:               Interesting. So I know that there are several trailblazers out there globally and you've touched on a couple of their examples and aside from costs, what other [00:04:30] benefits, you know, if we have some financial institutions listening in today, how can you assure them that there are benefits beyond cost with cloud based software?

Michael Engel:                   Well, again, let's, let's fundamentally look at what is happening elsewhere in the industry. And then if you look at, for instance, companies such as Amazon, if you look into Amazon, not as a cloud service provider but as a retail organization, then by [00:05:00] and large the entire Amazon platform. So the shop that you see where you go and look for stuff to buy, but also the whole logistic engine, even engine behind that, everything is a very dynamic infrastructure. Why? Because Amazon has realized that they're living in a very fast changing environment and if they're not able to [00:05:30] adapt changes from the market, changes from customer behavior, integration of new products and services into their offering, then they're falling behind and they no longer stay relevant for their consumers. So as a result, they have worked intensively with other technology providers on a end to end, so called continuous improvement, continuous deployment, delivery chain, [00:06:00] tool chain.

Michael Engel:                   And as a result of that, they are basically creating an ongoing living organism of software that will evolve itself every give and take 12 months. So basically no code in there is legacy code. Everything gets constantly updated, enhanced, improved, and by that, change. Now that is exactly [00:06:30] how a lot of these smaller fintechs are today operating. They are not better or smarter, they are simply faster. And they are faster by utilizing latest technology in order to adapt to customer demands. And in order to automate servicing their customers, you do this by using software which is obvious. But only if your software infrastructure is able [00:07:00] to adapt the rate of change, then you have a real chance to stay ahead of the game. And that is what if you now think about the traditional bank, one of the biggest headaches that the CIO of the bank has, because by and large, the core functionality of the bank and there are parts of bank sells basically virtual parts, mortgages, [00:07:30] not tangible, consumer loans, not a tangible product.

Michael Engel:                   It is basically a digital product. Now if your core infrastructure that creates those products, that manages those products that sell these kinds of products, is sitting on a whole space infrastructure that's 30 years old, and it's very hard to change and very hard to maintain and basically your IT guys are telling you, "Well once or twice a year we can do a minor update [00:08:00] to that system but won't touch anything because it might break." Then this is not really exactly the agile environment that you are looking for in order to compete in a faster and faster moving market.

Michael Engel:                   So and that realization triggered for a lot of front running banks, the question of how do I get to a end to end tool chain that allows me in the same [00:08:30] way like Amazon does it or other tech company do it, how can we utilize really an end to end agile process of deployment? Because today a lot of these agile processes stop right in front of production. So you have people in an agile setup developing new functionality but then the host team says, "Well guys, very nice but two [00:09:00] releases a year. Thank you very much."

Michael Engel:                   Now how to get there. And then this is exactly where we have worked with major FIs to have a look, the tool chains and the technology from how you define functionality and how you develop functionality and how you test and how you deploy functionality.

Michael Engel:                   How to bring that into the context of your requirements of a FI with regards to stability, [00:09:30] reliability and also adding the context of prebuilt microservices functionality for a financial services organization. And that is basically the underlying driving force here. It is not so much predominantly to get the cost advantages of cloud deployment. It is getting into a much more agile way of creating new services for the bank's customers, [00:10:00] and then on top of that be able to deploy the new much more cost effective environment than before.

Scott Anderson:               Hmm. So if I think about the conservatism of most financial institutions, at least historically speaking, certainly the CIOs are looking at this with an open mind. But if we, if we think about the paradigm of legacy processes like a C-Systems, you know, this demand to go agile yet [00:10:30] still have happening to be waterfall at the end delivery point. You know, how does cloud based software, how would we articulate this to the people who actually have to do the heavy lifting in the financial institutions? Is this, are we automating steps and making their life easier that have been manual in the past? How would you describe that to them?

Michael Engel:                   Well yeah, for a certain time you're actually doing things in parallel. So what you usually do is a step by step approach. You take a certain set of functionality [00:11:00] and you would move that off your existing, cost heavy infrastructure and put that into a much more lightweight or a cost effective production environment. And by the savings you are getting out of that you have so to speak freed up budget for new innovation investments.

Michael Engel:                   So, and when I say that it is, it is a process that takes some time and yes, you are at risk in a risk [00:11:30] environment where you need to keep running the bank within the existing infrastructure that you have inherited, while you're building up a new infrastructure that allows you to create in the CICD, the paradigm code and the creation of the code, the deployment of the code, the containerization of the code and then the hardware permission and software orchestration [00:12:00] is at the end of the day fully automated.

Michael Engel:                   So a lot of the tasks that have been very manual and therefore costly and therefore a lot of dependencies including all the test and integration work is not really end to end automated. So whenever today developers in our organization create some new code, every night that runs through automated processes, will automatically be packaged into containers, will automatically be provisioned [00:12:30] to the, to the respective part. We're using for instance tangible scripts for the software orchestration. We use open source technologies such as the need is, and then we deploy that really in an open source environment. And then a lot of this functionality that does work for you, in the past was highly proprietary, highly costly. And then in the meantime it is in its majority based on open source and that open source [00:13:00] because it's now used by millions and millions of people has reached a robustness level, a maturity level and gives you cost performance ratio that is really unseen before.

Michael Engel:                   And that makes it so exciting. So it has moved from, again, out of that nerdy corner into really mainstream availability and robustness. And this automation [00:13:30] then allows us to step by step, move more chunks on the existing whole space infrastructure over to this type of environment. And you get with every step that you take more and more cost advantages and gain more and more speed. And that is what FI's are now looking into. So what are some of the less mission critical things that I can get some early wins on? Can test the waters, I can get some experience with this [00:14:00] technology. And as it shows improvement in cost advantages, I can basically migrate more and more steps, chunks from my dynamic key infrastructure over to that cloud base environment. Again, the cloud at the end of the day is just the representation of the operational infrastructure. Behind there is much more of the, the adoption of open source technology, [00:14:30] the adoption of that CICD thought process and the adoption of tools and technologies.

Michael Engel:                   Just to give you an example, what I mean with that. So if we are addressing topics such as the infrastructure for managing payments within the bank where more of the core parts of the bank to  the retail bank today. Then we usually do that in a very high available, high available fault tolerant [00:15:00] environment. And in order to do that, you usually have effective deployments of those solutions. And as of today, if you want to run really even active/active mode, you need to synchronize data to keep those two sides that run active/active in synchronization. Now there is proprietary, very good software available to do that. But it's also very costly. And as of today we [00:15:30] are able to do this really at a fraction of the cost with open source tools and technology. So we're using, for instance, for the data replication between sides an open source technology called Kafka, which is performing extremely well.

Michael Engel:                   Even in the largest installations with the largest data loads that we are working on, even those top tier FI's. So just a little example of in the past, [00:16:00] very specialized proprietary software, very costly, today can be easily replaced by open source technology. However you still need to have the knowledge on how to utilize that technology in order to ensure data integrity and then synchronize data across sites. But again, just a little example of step-by-step replacing traditional very high costly software infrastructure by open source [00:16:30] technology in the cloud. We have done this now with a bunch of FI's globally, successfully and the results are amazing.

Scott Anderson:               So if I have my chief operating hat on or chief information officer hat on, you're convincing me of the benefits, but I'm a little reluctant to buy into how easy this conversion would be. Can you talk about what typical conversion processes look like to go from my traditional heavy data center operation to a cloud based operation?

Michael Engel:                   [00:17:00] Don't get me wrong. I'm not saying it's easy, I'm saying it's doable. But it takes knowledge, it takes investment and it takes some time in order to do that and the majority of the focus should be really in understanding, managing and operating that true change.  And then that is much stronger as it is doable, but you need to have a set of good people that can help you [00:17:30] with that. And you need to have also a strategy on how to do it in the step by step migration because again, at the end of the day you still need to run a bank. However, the results and the benefits you are getting out of that are so immense, that tt is really worthwhile your. But the caution that I'm taking here is, it's not like snapping a finger and you're there. It is new technology, [00:18:00] it's mature technology, but it is also still a complex thing. If you have some help and you do have some guidance it is really manageable, and again the results are extremely beneficial.

Scott Anderson:               So when you keyed on how this can be considered somewhat newer technology and I guess the risk adversity of, of some financial institutions, they have more of a wait and see mentality or I'll, I'll follow the leader, see how they do [00:18:30] you know, what is your view on how cloud based products have become better or more reliable over time?

Michael Engel:                   Well again the, the reliability comes through the mass usage because every system is only as good as it is fault tolerant, and how many hours went into usage and finding of bugs and eliminating bugs. And that is to a large extent [00:19:00] the advantage here of the open source technology community and also the cloud based technology. Because of the wide usage, all the cloud technology in production today and also the open source technology and tools around that, due to the fact that over the years now millions and millions have used it, it has reached the maturity level that before only [00:19:30] very expensive, proprietary technology could give you.

Michael Engel:                   So you get so to speak, the maturity level and the robustness by the multiplication of usage across the globe and you inherit those benefits out of all the endless hours that went in there. But the same goes for topics such as security because we see that in a lot of cyber-attacks today, that guy sits in the inside, so our systems are hacked with inside know-how and there is only so much security that you can prevent from the inside and in a regular bank, you usually have a team that handles this. This [00:20:30] is a number of 10 people, 20 people, and maybe 100 people. If you look at what organizations such as Amazon are doing, they have 10 times the amount of specialists, engineers and technology in place because of sensitivity in order to protect this type of cyber- attacks.

Michael Engel:                   And again in that sense there are sitting men on the outside side versus we usually [00:21:00] have half what we saw over the last years mainly happening. People who are inside the axis attacking problems with those kinds of systems.

Scott Anderson:               So just touching on, you did hit the elephant in the room. Security certainly is of major interest I think to most FIs and looking at you know, all the publicity around data breaches and what have you. Just a little bit deeper on that Michael. So [00:21:30] if a bank is looking at this, what are the considerations for public cloud versus private cloud versus maybe a hybrid approach? Are there differences they should be thinking about?

Michael Engel:                   At the end of the day, it will always be an individual decision. And it has also to do with regional legislation and certification processes, things like that. So, you have certain countries where it is very clear about the legislator that certain data needs to stay in the country [00:22:00] for various reasons. So there are constraints that will decide whether you go public or private cloud and there are pros and cons on both of that. So I'm not saying that one or the other is the better choice. But again the decision to go public or private cloud again is only looking at the end state of deployment.

Michael Engel:                   If we consider what I said before, the cloud [00:22:30] is just a final representation of a fundamental shift on how you develop software, how you use tools, how you use an end to end agile approach to create software that will lead your organization into an agile state of mind that lets you stay ahead with your competition. Then the final decision, [00:23:00] whether you want that on your own data center or that sits on to somewhere else. It's actually a minor, is a minor decision and again, the needs we look at on an individual basis, what the cost advantages versus the certification slash legislation complications are on a case by case basis. [00:23:30] We have brilliant examples for those, we have very large FIs that who operate today, operate only in the public cloud.

Michael Engel:                   We have other customers that run on private cloud or in regional cloud type of environment. Either way is fine. The main benefits comes more from the adoption of a fundamental paradigm change, paradigm shift.

Scott Anderson:               So with that I [00:24:00] think let's, let's come back to cost reduction. I know we've talked a lot about the other benefits around this, but if we look at the cost of this, what kind of cost reduction volume are we talking about here roughly? Is there an ROI that can be realized in a relatively quick manner? Thinking about this for a, I'll call it a large regional or a national bank, what does that look like?

Michael Engel:                   Well, what can you see it, and again, every case has, we looked at individually, but you can take certain data in terms of [00:24:30] how much transaction volume do you have, how much processing capacity do you need? And you can look at your, your legacy environment and there are formulas on how to project that into a cloud environment. But, a rule of thumb, we have seen across the globe a cost reduction for the operational environment, so the platform in terms of MIPS and database [00:25:00] and just space and everything else around always North of 90% cost reduction towards a traditional mainframe based operational environment.

Scott Anderson:               So quite doable. Something that absolutely needs to be on the radar for people to look at this.

Michael Engel:                   Oh yeah. We had an FI that went recently, even from a host space environment to a already lightweight [00:25:30] cost effective Linux server environment for their production. However, and this is a very large FI running tens of thousands of branches and ATMs and whatsoever. They're current lightweight operational infrastructure right now runs on annual $10 million bill. If we would have put that into a public cloud infrastructure, and we haven't even [00:26:00] calculated the sort of speed that having adoption of utilization into that, but that would go down from roughly 10 million to below 400K just to do ...

Scott Anderson:               Per year?

Michael Engel:                   Per year.

Scott Anderson:               Wow.

Michael Engel:                   Just in order of magnitude. From the operational end.

Scott Anderson:               So you've touched on seeing examples globally. I'm curious where are you seeing the biggest and fastest move to cloud based banking? Is it a phenomena in certain countries? What's driving that and what can others expect [00:26:30] and when's it going to hit them?

Michael Engel:                   What you see is this is a global phenomenon, and you have the technology savvy banks or the first movers already deep inside that process of adoption. They have been so to speak playing around with this since years already. So they have got their feet wet on the whole agile development, the all open source technology [00:27:00] topic, the whole open banking API idea. And now the deployment into the cloud is, so to speak with the final step of putting everything on a new, much more agile, creation of design creation, deployment and operating infrastructure. And yeah, we are talking to banks about that in Australia and Asia, and Europe [00:27:30] and the Americas so it is basically everywhere. And you have much more of the traditional early adopters, fast followers, slow movers type of scenarios in each country. But there is not a particular and geo that is faster than the other.

Michael Engel:                   You do see, however, in some countries extreme fast moves because they're coming so to speak from behind. They're catching up and they're [00:28:00] just jumping over a couple of iteration steps in, in technology and go directly to such a quote and quote cloud based type of strategy.

Scott Anderson:               Interesting.

Michael Engel:                   And by the way, when we say cloud, I always mean a, what some people refer to a cloud native strategy, so it's much more than take your existing application and just apply it somewhere at the central data [00:28:30] center, it is really that end to end idea of how to create, in an agile manner, code that is really designed to be and take advantage of the capabilities of an agile, also agile environment, of a cloud operation infrastructure.

Scott Anderson:               Oh that's a good point. I think so it's not just virtualization of a piece of software, it's the whole end to end process around it.

Michael Engel:                   Right. I mean in a lot of cases [00:29:00] the just virtualization of an existing application is a good step to get familiar with the subject matter and get some experience but it doesn't change the dynamics and again, the key change that we see here in the dynamics is how do I transform my organization to be much more nimble and agile in responding to market changes [00:29:30] and customer demands. And again, if my production environment that is in its core as it says, 30 years old and I still need to send a program out to a programmer to accept my demands, I am in a tough spot.

Michael Engel:                   And that is the dilemma that a lot of banks are in, because they also know that just changing the core banking system [00:30:00] is a very difficult task and cost most of the CIOs their career. How do we get there, how do we get there? And that is where we see to really create a step by step approach that we build up in parallel to the existing infrastructure and by reallocating existing processing capabilities and capacities to cloud, daily cost advantages that allows you to finance and [00:30:30] process over time.

Scott Anderson:               Michael, I really appreciate the inputs here. I think it's provided some clarity and hopefully given some food for thought to folks who have heard about this, but not really thought much around how it would impact them and how they could implement. I think at this point, this is a great place to wrap up the conversation. We could talk for hours on this, but thank you again Michael for joining us and thank you to all of our listeners for joining us today. To learn more about topics like these, [00:31:00] log on to Diebold Nixdorf.com or click on the link in the podcast show notes below. Until next time, keep checking back on iTunes or however you listen to our podcasts for new topics on COMMERCE NOW.

Summary:

On today's podcast, we welcome Joe Skorupa, editorial director and feature blogger for RIS News and Ensemble IQ Media Portfolio. Recently RIS News released a targeted research study and article on streamlining the store to simplify shopping. Today, we  discuss this research and some of the main challenges retailers are dealing with in their shopping journey's.

Resources:

Infographic

RIS News Targeted Research: Streamlining the Store to Simplify Shopping

Blog: Retail Self-Service: Today, its WAY More than Self-Checkout

Relevant Retail: The new Norm

Scan, Bag and Go - Self-Scanning Technology Empowers Consumers to Shop with Ease

COMMERCE NOW Site

Transcription:

Jerry Langfitt:                    Hello, I'm Jerry Langfitt and I'm your host for this episode of COMMERCE NOW. On today's podcast, we'll welcome Joe Skorupa, editorial director and featured blogger for RIS News and Ensemble IQ Media Portfolio. Joe is frequently named as one of the top influencers in retail and technology and is also frequent speaker at conferences such as NRF, Big Show, amongst others. Welcome to COMMERCE NOW, Joe.

Joe  Skorupa:                     Hey there, Jerry. Glad to be here and I'm looking forward to our discussion.

Jerry Langfitt:                    I am too. Joe, you recently did a [00:00:30] study and article on streamlining the store to simplify shopping. We're excited to listen about this research, but let's start at a higher level and talk about the trends affecting the industry right now. What are the main challenges retailers are dealing with?

Joe  Skorupa:                     Yeah, Jerry, the study touched upon the fact that shopping is really a journey for consumers and honestly any friction they feel, anything that doesn't smooth things along and speed things up and make things more convenient for them [00:01:00] is not going to provide high customer satisfaction levels, and we know that retailers are searching for that. So from a macro level, this study, I believe, resonated with two big challenges that retailers are facing today. And the first is fast moving consumers and rapid fire changes in shopping behavior. And by that what I mean is that shoppers move onto the next viral trend or the next influencer or tech innovation before retailers can catch up. And essentially the pace of change is accelerating. [00:01:30] And this has significant consequences, especially for slow moving retailers who are dealing with falling foot traffic in stores, empty malls, and of course they're dealing with Amazon and Walmart growing ever larger.

Joe  Skorupa:                     I mean these are giants to begin with and they're not catching up to the giants. In fact, the giants are growing bigger. And I have nothing against Amazon or Walmart. I think they are outstanding retailers and exemplaries of what to do and how to change. But it is effecting [00:02:00] all the rest of the retail industry.

Joe  Skorupa:                     Now the second big challenge for retailers, I believe, is that they must recognize that they have to continually make investments in their businesses to keep up with consumers. Just because you have a brand and it's working, and it worked for a long time. The challenge is that you have to continually reinvest in your business. And if a retailer can't implement new innovations and new technologies and do them profitably [00:02:30] ... See that's the key. It's not investing, it's investing efficiently and profitably. And if retailers can't do it efficiently and profitably, then they're just increasing their debt, increasing their risk and squandering precious resources.

Joe  Skorupa:                     So to sum up, my two main points are, it's a fast moving, accelerating consumer marketplace. And secondly, the challenge is finding the right way to do investment to reimagine your business.

Jerry Langfitt:                    It's interesting that you that, because this kind of [00:03:00] leads right into one of the first questions I had where one of your first figures, key findings in the study is that retailers are split on the topic of self-service technologies. The ratings of the question gave everybody a five out of 10 then it would almost make you think that self-service technologies is not very important, but underneath the data, that kind of, it kind of told a different story, didn't it?

Joe  Skorupa:                     Yeah, it did. And Jerry, I do data analysis all of the time. And I also [00:03:30] believe that the RIS news readership represents the entire retail industry. So when I pull data points together, I look at it as a retail industry. And you're right, the average score came out kind of a middle of the road score on the level of importance. But then I looked into it and there are patterns that you can find when you dive into the data and filter it. And when I filtered this data point by [00:04:00] revenue size, I've found that there were two large camps, two blocks of retailers. And retailers with less than a billion dollars in revenue were more likely to rate self-service in stores lower than tier one retailers, the bigger retailers. And so the question then becomes why. And because every net new technology requires net new investment, well that represents a challenge in itself, especially to slower moving and conservative retailers who [00:04:30] are established in their ways.

Joe  Skorupa:                     Now, larger retailers have to support the vast size of their enterprise in a different way. They need constant reinvestment and innovation and and just moving forward. Because if they lose their momentum and lose their relevancy with a large part of the population, which is their shopper base, they're going to fade in the shopper's mind and the shoppers will move elsewhere. So large retailers have to stay relevant on a broad national [00:05:00] level. So they're constantly testing, developing and researching new technologies.

Joe  Skorupa:                     And during this process they have learned about the value that self service technology offers to shoppers and to their stores financial performance. Now are those same things at the large retailers learned also true for smaller retailers? Yes, there are, there is value to self service technology and it does provide shoppers with a streamlined experience and it does help the store's financial performance. But the smaller retailers are not doing [00:05:30] all the due diligence that the larger retailers are doing.

Jerry Langfitt:                    That's really interesting. It would almost seem to think that the larger retailers would also drag the industry in a certain direction and-

Joe  Skorupa:                     Absolutely true.

Jerry Langfitt:                    Almost force, or at least make it hard not to change, to go in that same direction. I mean we see that right now with with McDonald's, installing kiosks across their entire footprint. It's kind of a watershed moment where then other retailers, QSRs mainly would have to say, okay, if I want [00:06:00] to compete I have to do, not just a me too, but I have to do something. I can no longer sit on the fence or it's gonna affect my revenue stream.

Joe  Skorupa:                     Absolutely. Yes. So talk about having it your way and maybe that's the theme of a different QSR, but nevertheless it fits our discussion here. Having the ability to do self service is the ultimate have it your way experience.

Jerry Langfitt:                    Now, so look forward. Let's split this into two groups then. The two groups you pretty much indicated. What are the benefits [00:06:30] they are getting from more self service?

Joe  Skorupa:                     Well our study found that the primary benefits delivered to shoppers. And we asked about benefits to shoppers and benefits to retailers and they are different questions and they got different answers. So the primary benefits, I'll start with shoppers. There are three primary benefits and they are checkout, payment and price checking.

Joe  Skorupa:                     Now each of these things makes a shopper experience quicker and easier and [00:07:00] also it has to be said that shoppers feel like they are in control of the experience and all of these things are very positive for the shopper in any sort of consumer experience in a store.

Joe  Skorupa:                     Now the benefits are different for a retailer but possibly even more important. For a retailer, there is an improved level of customer service. Let's face it, this is something that a customer might need, might want, [00:07:30] and there it is. They're able to use it. That is customer service and also when that happens, customer satisfaction metrics are going to be increased for this store. All of these certainly stimulate return visits and that is a key to success for retailers.

Joe  Skorupa:                     And speaking of metrics, by the way, I mentioned customer satisfaction metrics. Another big benefit that retailers get is the ability to gather in store customer data through these touch points. Now self service devices are interactive [00:08:00] touch points. The consumer is actually giving the retailer information by the behaviors that are occurring on the self service device. Now this behavior can be examined and tell a retailer about something about how the store operates, about how the shopper's responding to promotions. It tells retailers, you know, what the impact of technologies are in the stores and potentially all of this information can be delivered to headquarters [00:08:30] in a real time or near real time.

Joe  Skorupa:                     And you know that's just the beginning. Many other data points can be gathered and just leave it to your imagination. You can add them to the self service process or not. But the choice is up to you. Really, it's an infinite horizon for retailers.

Jerry Langfitt:                    Now, I kind of see it as a couple different ways of why they're getting a benefit too and moving in this direction. One, technology advancement. To name the McDonald's story, again, everyone has iPads. Even my mother has an iPad, so it's a [00:09:00] much more approachable device at this point. And then cost points have come down that I can take it across 14,000 locations and it's no longer cost prohibitive.

Jerry Langfitt:                    And then the second is people are more used to this kind of technology as well. So cost of technology is coming down and everyone is a bit more adaptive to it. And a lot of people talk about the Amazon effect, and I don't want to talk about Amazon Go, but it's more about going on Amazon or going online and being able to [00:09:30] do what I want and do what I need when I want it. And it seems like self-service and ... a colleague of mine said the psychology of self service is, it just empowers you.

Jerry Langfitt:                    And if I'm standing in line and I can just do it myself, it's better than standing in a line. So that again I think ties back to the customer satisfaction as well. It's like if you're giving me a path to take care of myself, I'm going to be more apt to come because I want control of my life more than I normally have [00:10:00] it. Are those two points something you could agree with and think the data kind of points in that direction?

Joe  Skorupa:                     You know, empowering the consumer is definitely a sure way to increasing their return visits. And that is clearly what is happening with this technology. And the other point you made is that the general population is tech savvy at this point. And I think that's absolutely true. I mean, I think we probably won't even have this discussion much anymore. [00:10:30] And honestly, if a retailer even brings up that point in a board meeting or in any interdepartmental meeting and saying, well, you know, my customers, they won't, they don't even know how to use technology. Well, I think pretty soon that retailer is going to get laughed out of the room because we've just crossed that line. We are tech savvy. Tech is embedded into everything part of our lives, homes, and work. So I don't think that's going to be a much of an issue.

Jerry Langfitt:                    Well, [00:11:00] and I always use my mother as a great example because when she can text me a cat video or send me an Amazon gift card electronically, I'm like, oh, we're definitely in a new age.

Joe  Skorupa:                     Absolutely. My mother's playing games all day long on the computer. So it's just amazing. Of course she's retired so she can do that.

Jerry Langfitt:                    All of our goals. So we talked about those moving ahead. Let's talk about those dragging their feet or just aren't ready for it yet. What do you think some of the challenges they're looking at to move forward with technology that can help?

Joe  Skorupa:                     [00:11:30] Well yeah, you know the study shows that there are foot draggers out there or feet draggers, as the word may be. Almost 50% of the retailers in our study show that they have change management issues.

Joe  Skorupa:                     And what does change management resistance mean? Well I think that in many cases it starts at the top. I think that there are C level executives that are not [00:12:00] green lighting some of these capital investments projects. But I don't think it's just that. I think that the other points in the study data show that some of the resistance is found in the stores.

Joe  Skorupa:                     And two of the points that store operators bring up where we find this resistance are due to operational requirements such as re-engineering store formats to accommodate the self-service technology and re-engineering associate processes as well. But I don't ... Even [00:12:30] though this is a large group of retailers, you know, a little less than than half in our study, I just think this is an old story in retail.

Joe  Skorupa:                     In other words, this resistance to something that is, you know, net new and how they've always had their stores. And this resistance shows up so frequently that that's the reason that many of us in the industry, many who are looking ahead at where retail is heading, we follow the trends and the leaders. They're usually a couple of years ahead [00:13:00] of the rest of the industry and the rest of the industry follows.

Joe  Skorupa:                     And as you pointed out, there are leaders in retail right now that are deploying self-service technologies. That is increasing. And the numbers that we show here, where the resistance is strong, is certainly going to be that resistance is going to be a broken and the barrier will come down. And this will happen in the next year or two and we'll see a different number then.

Jerry Langfitt:                    I wonder what they need to convince leaders. I wonder if their back [00:13:30] office systems can support it. Are we dealing with antiquated technologies and system processes? You know the old way of retailing. Because we're seeing at Diebold Nixdorf, we're seeing self-service going into areas that we never would have dreamed of five, 10 years ago. I think people still have an idea of self service, self checkout is the grocery store and that's it. And we're seeing it in fashion. We're seeing it in convenience stores and we're seeing, even in groceries, many different ways self-Service [00:14:00] comes out. Curbside pickup, order online, order on my phone, delivery, scan and go. Walk through the store and scan myself. It feels like the industry is still now much more flexible in saying, okay, I'm going to separate my consumer base out and take care of each journey and find out what technology can serve them better rather than one self checkout is a one size fits all.

Joe  Skorupa:                     You know I have a, a story that I can quickly go over. I've been covering technology [00:14:30] a long time. And one of the areas that I was covering for awhile, a while ago, you mentioned quick service restaurants, and there was a time when, it's hard to believe, but zero quick service restaurants ... I'm talking about the McDonald's and Burger kings and Taco bells of the world could take credit cards. I mean it's hard to believe, but this is only like 17, 18 years ago. None of them [00:15:00] anything but cash. And to be honest with you, there was tremendous resistance for being able to take credit cards for two big reasons. One, it required technology in the store, not that much, but nevertheless. And then the other thing was that it costs them money. It wasn't cash. There's a cost to it, to accepting credit cards.

Joe  Skorupa:                     And that industry went from zero to 100% in just a few years. So that's what happens with resistance. You know, Jerry, [00:15:30] it's there, it's there, it's there. And then suddenly it's gone. And I think that's what we'll probably see.

Jerry Langfitt:                    Oh, fantastic. So one of the questions I've had and that I get from a lot of people is, well self-service is taking jobs away and all this is is one large labor play, for large industries. Now I will say there is a labor savings with self-service. I can now do more, but that's the difference. I can now do more with the same people. It's not something that I'm going to suddenly slash everything in half and I'm [00:16:00] going to go to the cashier-less, attendant-less store. Because I think as we march towards more self service, more personal service becomes even more critical. That you don't want to just go into a store and not have a chance to talk to anyone or feel that you're all alone. At least a theory of mine is always self service allows retailers to redistribute their employees and I've always felt that more employee customer interaction [00:16:30] creates better customer satisfaction. Is that something over the years you've seen that if we can increase the human interaction with self service that we'll get better footfall and more repeat visits?

Joe  Skorupa:                     Yeah, absolutely. Honestly, I've always saw the ability for retailers to deliver better service through self-service work. In a practical way. When I often go to a Home Depot, not to single that out, it could be Lowe's or anyone else, and there is a person, [00:17:00] a employee that's at the point where there are the self service technologies. And that person becomes a service person, particularly with home improvement goods.

Joe  Skorupa:                     I mean there is a lot of little things and a lot of SKUs that aren't easy and tricky for people to manage through the self service. So that's one level of service. But the other level of service is, the person is just there. I can't tell you how many times I've done it or I've seen other people do it. Just simply go up to the [00:17:30] person and ask them a question because they're there and they get ... Solving a customer's problems is usually not something retailers think a lot about. And I wish they would, but I don't hear people talking about it. Just think about that when a shopper needs a problem solved in the moment that they're there to shop and buy something, that is a critical piece of information they're seeking. And if you can't provide it and solve their problem, then you're certainly going [00:18:00] to be missing sales. So I think that they can be problem solvers and provide better service.

Joe  Skorupa:                     Now let me get toss in something else on this topic. It's a tight labor market right now. I think where the national level, you know well below 3% unemployment and I think it's closer to two and a half percent. And retailers simply can't hire the way they used to and there's a lot of turnover and they don't want to deliver a shopping experience [00:18:30] that has less customer service and is less efficient. And they're looking to do that. And they can do that with self-service technology.

Joe  Skorupa:                     And the final point I want to make is the loss of business. And you know, a retail day as you go through it, has peaks and valleys. And during the valleys, everything works smoothly, there's enough staff, there's enough service. But during the peaks you just have no idea what you're losing. I mean you [00:19:00] might say to yourself, you know, I hit my target that day, but during the peak you might have had 10, 15, 20% people walk out without buying because they couldn't get through. They could, they couldn't meet their timeframe. Their quick timeframe for how they have to buy.

Joe  Skorupa:                     So this gives you the ability, self-service technologies, gives you the ability to accommodate those peak timeframes and get business that you're actually losing. And you have no idea how much that is until you put it in.

Jerry Langfitt:                    That's an interesting point. I mean, you [00:19:30] unpack a lot here with what you've said and I've noticed that in the convenience stores and in the grocery stores, everything gets hyper busy too fast for a store to react.

Jerry Langfitt:                    Because all of us has been in this situation. You either walk into a gas station and I need a quick soda and I need a quick snack. And suddenly six other people had that same idea and the store has a single tenant working and they just can't react quick enough.

Joe  Skorupa:                     Yes.

Jerry Langfitt:                    For my own tastes and I think for a lot of people because then all of a sudden the five of us [00:20:00] finally check out and it's done. It's gone. Whereas self-service allows, an always on checkout experience to where it's like okay that can kind of take care of that.

Joe  Skorupa:                     Yep.

Jerry Langfitt:                    And that's your peak and valley. That peaks happens so rapid and customer satisfaction can drop like a stone if I'm sitting in a line. I've watched my wife do this, I've watched her do abandonment's as well where it's just like we go up to the line and she just, "Never mind. None of this stuff in my car is worth that line." To experience that, it's funny to see that.

Jerry Langfitt:                    Now the other thing I was kind of curious what [00:20:30] you had said is with staff in the store, employees in the store. I come from a point of purchase background. I design a lot of point of purchase displays and we always used moment of truth as very, very important. The decision time when you make your purchase decision, it's not at the checkout, it's already passed at the checkout.

Jerry Langfitt:                    So I can check myself out and I just want a good clean experience. But the staff can actually influence those moment [00:21:00] of truths and they cannot influence at the checkout. So I just feel like a self service can enable more customer staff interaction and that's going to give you a much greater hit rate, conversion rate at those moments of truths.

Joe  Skorupa:                     Right. I've seen that many times.

Jerry Langfitt:                    I won't look for somebody if I have a question, but if you're there, the convenience is okay, since you're there, I'll ask you.

Jerry Langfitt:                    So let's talk for a second. Lets go future state. We're talking self-service. There's a lot [00:21:30] more things that everyone's trying to come up with to make it even smoother, frictionless. If we want to use that word. Where do you think they're going to find the biggest improvement in the self checkout experience? Is it with the Amazon Go video analytics? Is it with video analytics just on a self checkout that helps you decide on your purchase what you purchased with cameras? Is it facial recognition? I mean what is your experience been in a direction of the trends?

Joe  Skorupa:                     [00:22:00] Well all of those are in play, but if I were to pick one that is the most practical and certainly the shortest horizon line, and I do have some study evidence showing this, is that a checkout on the customer's own device is something that is not really that far away. I mean, I think that my internal data shows that retailers have placed that on a two year horizon line that that is actually relatively [00:22:30] short for a net new technology. And so I'm guessing that we're going to see checkout on a customers own device very shortly.

Joe  Skorupa:                     I don't think we're going to see the Amazon Go experience outside of Amazon and a few others. And that's, as you indicated, that has to do with several technologies. One of the main ones is video and image recognition. There are others associated [00:23:00] with it. It's really a cluster of technologies honestly including product recognition, but you can't really ... you have product recognition with that facial recognition as well and those technologies are actually templated and available. So that's part of it.

Joe  Skorupa:                     So I think facial recognition checkout is actually possible. I just don't think that customers are going to be comfortable with it. But I do think yeah that checkout on their own mobile device, you know if you [00:23:30] go into a Whole Foods and you want to use the Amazon checkout capability, I think that's going to be something that we're going to see a lot of. And then of course retailers are going to have checkout on their own mobile devices and that's going to be a big one as well.

Jerry Langfitt:                    Do you think taking the self checkout lane that we would consider traditional and enhancing it with ... I know Ikea's testing this, where I just slide my stuff [00:24:00] across ... and kind of taking what a more controlled Amazon Go look ... and it's just like I'm just going to set my stuff on this basket and it's going to then scan everything for me, either with image recognition or RFID. Two things that seem to have been in the industry for a couple years now, but you think that will reach a tipping point sort of like iPads and McDonald's. Do you think that would be a stepping stone to making self-checkout more efficient?

Joe  Skorupa:                     You know, I have to smile when I hear about that image [00:24:30] recognition. I went to an IBM, who was no longer really in this space, a lab, back in more than 15 years ago when they had image recognition checkout. But of course it wasn't ready for prime time, but it's certainly a technology that is really on the cusp today.

Joe  Skorupa:                     So yes, I do see image recognition in many ways being a major component of the retail shopping experience and checkout [00:25:00] is definitely one of them. I also think that that there's a lot of benefit to image recognition there a way for shoppers to actually have a better shopping experience with doing their research, doing their comparisons, in a way that is kind of better than barcodes in some way areas. Particularly in fashion, there's a way for image recognition to really to improve the shopping experience by getting recommendations [00:25:30] based on color, based on the style, and things like that. Right in the store that could come either on a customer's device or on a self service device. And so image recognition is going to open up a big area for retailers to get interactivity with their shoppers and shoppers feel like they're getting a better shopping experience.

Jerry Langfitt:                    So, only a couple more questions. I was curious, I was looking at your report and again looking at the laggards and the people ahead and everyone [00:26:00] seems to be installing something. I wonder if the retailers are using all of the data they have at their own hands. You had said the data collection and analytics is very important and this enables that. I wonder if they're truly looking at their transaction data and saying, okay, what should I do next? How do I follow my consumer?

Jerry Langfitt:                    Do you feel like the analytics realm is ripe for retailers to be leveraging more of that? This is data they've always had. It just doesn't seem like they are leveraging it to make their store as efficient [00:26:30] as possible. Especially with the changing in the 70s ... 60s and 70s and 80s was all about cookie cutter pattern and making sure I can go across the country with the exact same store.

Jerry Langfitt:                    It feels like that I need to follow the consumer within regionalities as well, both from a card and cash usage and the types of journeys. Do you think that's something that we'll start exploring more and more to try and make better decisions and less risky technology decisions?

Joe  Skorupa:                     Well, I think [00:27:00] data is an asset and I think that it's an asset that in some instances, and I can point out a couple of segments in retail where it is underused and under utilized. And I think the the reason for that ... Now I'll name one segment. I just did a in depth analysis of of grocers and the grocery industry and investing in analytics is one of the things that they are behind the curve with other retail segments [00:27:30] and retail industry in general.

Joe  Skorupa:                     If you looked at, as I frequently do, just the average of all the respondents without filtering out what segment they're in, grocers are definitely behind in investment in analytics. Now why is that? It's there, it's data they already have. But when you think about the self service capabilities of self service technologies and touch points in the stores, there's more data that they already have.

Joe  Skorupa:                     So why would it be that they're not optimizing that and maximizing [00:28:00] the use of it? And I think it's just that they're racing, grosses in particular, are racing ahead at full speed. They have so many competitive challenges to deal with. And they have a consumer that is basically shopping them because of a necessity, but then the consumer has the ultimate wide choice. So I think they're keeping up with the consumer but they're not looking ahead using the data. And I think that's the big, critical issue that they're missing. And certainly, [00:28:30] when they take advantage of that data through the self service touchpoints and through other areas that they have data coming in, I think that you're going to find that their 1% margins and their growth rate, which is well below the rest of the industry, will actually increase.

Jerry Langfitt:                    How interesting. So just to kind of wrap up a little bit, I was reading your article and you close with the most successful retailers design their stores to strike a balance between full service function and self service options. If you had [00:29:00] to sum up your research in a couple of sentences, how do you think you would say what you most learned with this study?

Joe  Skorupa:                     Well, let me sum up by giving a couple of key recommendations that I believe emerge from this study. And one is that a recommendation to deploy self-service kiosks now, to think about it now. And this is for those retailers who don't actually have them. More for retailers who have them and are considering adding them to their store camp. And the reason [00:29:30] I am recommending it is because 48% of retailers in our study are actually in a preliminary phase of deployment now. So this shows that in next year or two a huge number of retailers is going to come online and making this a race toward mainstream adoption for self service technologies in the stores. And I call this a recommendation because if you are behind that curve, and this curve is coming, this is something that I'm recommending you [00:30:00] think about and actually consider adding it to your one year plan or two year plan or two years to do list.

Joe  Skorupa:                     And I also am recommending that you focus on checkout and that sounds pretty obvious, but if you're going to be building a business case, focus on checkout. And as I pointed out, not only does that help the shopper, but it helps the retailer gain potentially lost business. As I mentioned, the thing that a self service technology will do in [00:30:30] your store is to make sure you are fully manned at every throughout the day. In other words, the peaks and valleys that service is there when your peak hits and when you're stressed. Every one of your staff and associates operating at full speed and perhaps not operating as efficiently as they can. Well this helps make sure that any overflow is not lost and that your shoppers aren't walking out [00:31:00] of this store unhappy. And as you indicated, Jerry, that sort of this increases your conversion.

Joe  Skorupa:                     And then the final recommendation I would say is build your business case on improving customer service and satisfaction. This is going to help your loyalty. This is going to help your return visits. And what we find is that 76% of retailers feel that customer service and customer satisfaction are the primary benefits of self service. [00:31:30] And if that is the case, then I recommend that you use self-service to increase those. And also, as we just talked about a minute ago, gathering that customer data which you can use to help improve your store operations and increase again, customer service satisfaction.

Joe  Skorupa:                     So those are kind of recommendations I would end with. And then one final comment, Jerry, is that as you indicated, I believe the most successful retailers designed their stores to strike a balance [00:32:00] between full service functions and self service options. Self service is not going away. It is only going to increase. So retailers have to decide, what's the balance they're going to choose. And while the line will differ for each retail segment and customer base, I believe there is no doubt that balance is shifting toward an increase in self service capabilities in today's stores to stay relevant with consumers.

Jerry Langfitt:                    I think this is a great place to wrap up. Thanks again Joe. This [00:32:30] has been incredibly enlightening. Some great data points that you've provided and some great insights. To learn more about retail topics like these, log on a dieboldnixdorf.com or click on the link in the podcast show notes. Until next time, keep checking back on iTunes or however you listen to your podcasts for new topics on Commerce Now.