Banking on the experience – the future for UK retail banks

The world is changing at an incredible pace. We all have those moments when we think, ‘I used to do that, but it’s changed now’. Like handwriting a letter. Using a rolodex. Or browsing teletext on the television.

Or what about the time when you used to go to into your bank?

When was the last time you went in to your bank? Can you even remember where your bank branch is?


In 10-20 years most bank branches could close

Industry analysts forecast that in the next 10-20 years the majority of bank branches could close. At best, a bank could serve the UK with 500 branches. With some high street banks currently having estates of 1000-2500 outlets that would involve significant closure. Some simple facts command attention:

Santander has acquired 200,000 customers for its innovative 123 accounts with just 1000 branches

RBS Group with 2000 outlets have seen online and mobile transactions rise by 232% in the last 3 years and branch visits decline by 30%

Co-op Bank has also reduced its network by 30% over the last 18 months

What is underlying this change in the physical retail landscape? In a word: technology. It has transformed the market from the traditional branch model to a digital user experience.

There was a time when our primary touch point with our bank was our local high street branch – the friendly branch staff and bank manager. Then came the ATM outside the branch. We didn’t need to ‘physically’ go in the bank to get cash. In 1989 the pioneering First Direct gave us direct banking via the telephone, a completely new touch point and 8 years later, online banking.

In the globally-connected digital world in which we live, ATMs, online and mobile have made everyday banking easy, simple and convenient. For banks, this shift has been a business imperative as in-branch transactions can cost as much as 50 times as those on a mobile.

Banks now have a multi-channel retail approach of connecting with us all and a myriad of touch points. In effect, we have 24/7, 365 day access to our banks via ATM’s, online and mobile platforms. What more could we possibly want? We can transfer money in real time on our smartphone while having a coffee with a friend. We’re all so busy we absolutely value convenience. But we still want an experience. As humans we want interaction and connection. We place a premium on it. And sometimes we want good, expert advice. More complex decisions like mortgage or loan applications for example may require a visit to a branch to meet someone – an expert.

So how is the multi-channel digital world in which we live shaping the way banks deliver their brand experience – through the branch and quality of customer engagement? What are the ingredients of the successful branch?


Brand experience is being re-thought

It seems to me that the Jonathan Ive quote, ‘It’s very easy to be different but very difficult to be better’ is really appropriate. Every bank wants to create a differentiated brand with a purpose that is coherently executed across all touch points and channels. To translate that brand concept into a seamless customer journey where that differentiation counts at every point of interaction. But with the rapid progress retail banks have made in mobile and internet banking empowering customers to take control of everyday transactions, the brand experience needs to be rethought – its going to be about personal engagement and a human level of interaction.

It may sound obvious, but banks really do need to focus on their service and care of customers – these are areas of powerful differentiation and cannot be easily mimicked.

First Direct set a benchmark of customer service in 1989 and 25 years on is still leading the way. In a recent customer survey, ranking the service delivered by the UK’s top 100 brands, First Direct came first, with the nearest physical bank being Nationwide, ranked 19th. There is no escaping the fact that brands with the highest levels of brand ranking are driven by great service at their heart. Products are easy to mimic but outstanding service is cultivated and nurtured over time. It is integral to the brand’s culture and DNA. Again, look at First Direct. It exudes customer centricity at every brand interaction.

But today’s brands need to be more than customer focused. They need to be ‘people focused’. Success starts within the organisation and the cultural DNA, which creates a successful climate to deliver the right level of customer brand engagement. Because building relationships is crucial to gaining trust.

We believe the bank branch still has a vital role to play in the next 10-20 years, as part of the bank’s omni-channel strategy. However, it must be underpinned by some core ingredients.


Four vital ingredients for success

Relationship retailing: The human touch will be all-important: tailored advice precisely when it is needed with a quality of advice across diverse products from mortgages to insurance. After all, brands are what make businesses human.

Simplicity pays: A characteristic central to all highly ranked brands is the simplicity of their experience, from the products through to the brand language and content. Financial Services products are complex to understand and the use of plain-speaking language can put the brand on the side of the customer. This makes cross-selling much easier.

Experiences not branches: As customers have become accustomed to fulfilling basic everyday transactions in the digital realm, the retail environment will be centred on advice, service quality and brand engagement. As banks innovate to rebuild the trust lost in the financial crisis they must consider best practice from other retail sectors and wider geographies. The benchmark set by Apple’s ‘Genius Bars’ where customers can get support from specially trained staff is universally admired. The concept creates the opportunity to arrange a face-to-face meeting with an expert and get the best advice. This presents a golden opportunity for banks to educate their clientele and build long-term relationships.

Empower the customer: Recognise different customer types have distinct requirements. The techno-savvy value and love technology, the more conventional want to talk to someone. Let the customer set the agenda.

To conclude, technology may have made our banking lives much easier but brands that have a strong human spirit at their core will win our hearts and minds. Banks will reap the benefits as a result.

What do you think?