Keal - IBM's business development manager for the financial services sector in the UK, Ireland, Netherlands and SA - is concerned that many banking institutions are turning away from the very channel that originates new and additional business.

He explains: "No matter how good or how convenient the technology is, people want to interact with people. Branches play a critical role in business development for banks, and yet they are probably the most neglected in the business' strategy."

The international vendor's investment in research and development of the financial services sector has shown that in excess of 70% of business is initiated in some form at a branch, with little indication of that number decreasing.

Locally however, SA banks have embraced technology channels with such enthusiasm that Keal believes that many developments already in place locally are only now beginning to enter the European market.

While these developments offer considerably lower operational costs to the bank and convenience to the client, they may also result in lost opportunities, he adds.

Keal says that, given the right environment, branches could provide long term profitability for banks struggling with decreasing profits due to lower interest rates.

"The potential for driving business through branches is boundless. Currently bank personnel, including branch management, are disempowered from delivering real value-based services to customers. For instance, as a customer I am unable to access the full realm of products from my financial institution from a single point. While most business organisations are reaping the benefits of consolidation and centralisation, the financial sector is keeping its products, divisions and service offerings separate from each other," he explains.

IBM's view of banking institutions of the future sees customers receiving a whole new banking experience at their branch.

Not only will all services be available for quick conclusion at the outlet, but technological advances will enable bank personnel to pro-actively identify new business opportunities.

In ten years we will see a complete transformation of the neighbourhood branch. Electronic channels will still be used for 'cash and dash' transactions, but the branch will become the hub of business activity, Keal says.

But before banking institutions can achieve these results, Keal adds that they will have to overcome the three hurdles of bandwidth, technology, and people development and empowerment.

"Bandwidth is probably the biggest hurdle that banks have to face in this country. While the other two can be overcome through internal initiatives and external partnerships, the local bandwidth is completely out of the realm of business control. Without an open and competitive telecommunications environment, SA will be held back by high-cost, low performance communications infrastructure," he says.

Keal states that in order for banks to make the best of branch-based opportunities, they will have to deploy real-time accessibility to their systems and data.

But within the current telecommunications environment, the cost of enabling this is prohibitively high, with very little in terms of performance guarantees.

However, with recent developments in the telecommunications legislation, this concern may be addressed imminently.

Interestingly, Keal says many large European and African banks still operate on IBM's OS 2 operating system, first launched in 1980s.

While it meets the needs for current banking environments, he states that technology entering the market will better serve the new banking environment.

"Banks will need to evaluate their own transformation process to determine when to deploy new or upgraded systems; however, they should be investigating ways to deploy real-time company data through to their branches now," he concludes.