Getting to the root of the branch
What is a bank, and what does it mean to our community? Is the branch an integral part of your perception of banking, or is it superfluous to your needs?
Press headlines are reporting that banks are backing down on the “last bank in town” pledge, with reports of 900 branches at risk of closure across the UK. However, with so many services available online, on mobile, and through telephone banking - making access to our money easier - why do we feel the pressure to maintain the high street branch? The British Bankers’ Association (BBA) reports mobile and internet banking is now being used for transactions worth nearly £1 billion a day, and the 2014 Accenture Customer Survey on the UK Financial Services market found that 1 in 4 people would consider using a purely digital bank. In light of these statistics it is easy to understand why the future of the high street branch is under scrutiny.
Perhaps the start of our journey in understanding the future of the high street branch is to take a quick look at its past. “Back in the day” you could walk in to your bank and identify the bank manager by name, and more importantly, he or she would also know you. A bank manager was at the centre of the community. They knew the local area and the local businesses, and used this knowledge to serve customers in the best way possible. By bringing together local businesses and understanding local issues, the bank manager could give tailored, relevant advice, and provide the best financial services for the customer.
The evolution of the high street
Today, customers could be excused for feeling things couldn’t be more different. Flagship stores for high street banks are changing the face of banking. New branches have broken from the convention of reception desk followed by rows of till points with staff behind screens. A modern branch can be an airy space with discreet terminals giving individuals personal access to their own accounts online, with staff on hand (iPads at the ready) to help. Customers simply carry out the transactions they need without assistance. Staff step in only if technical support or specialist “value added” help and advice is needed.
With a BBA poll reporting that 77% of customers use online banking at least once a month, it’s clear to see how it has revolutionised the industry. As customers have more flexibility over how they make their transactions, and banks report a 10% year on year drop of branch use, the purpose of the high street branch has been put under the spotlight. The value of having a presence on the high street to reassure customers and reinforce the brand is disputed by few, but the branch needs to be more than just a billboard if it is to sustain a profitable future.
The key to understanding the branch of the future is to understand what customers need. The 2014 Accenture report highlighted that customers are already using self-service points for transactional activities such as withdrawing cash and checking their balance, but are still turning to advisers for value added services such as finding out about new products, opening new accounts, and receiving complex advice. Other high street stalwarts, such as coffee shops, have had to rethink their raison d'être, and now banks are finding they must do the same.
To remain competitive on the high street and meet the changing needs of modern customers, Costa realised it needed more than just good coffee. It now serves a variety of customer needs, acting as everything from a place for young families to meet up for a drink, to a place for professionals to stop and grab a quick lunch while connecting online. Crucially, Costa also stopped expecting the customer to go to them, and instead they moved to where the customer was already: you can now get a Costa coffee from many hotels, cinemas, bookstores and DIY shops.
In a similar way to coffee shops, high street banks need to give customers a reason to engage with their branch. If they can do their banking online and from their mobile, why would they come in to a store?
Technology-enabled, social business
The answer is in the personal nature of finance. Customers need to feel that their unique circumstances are understood, especially when these circumstances have high emotional value, are complex, and require expert advice to fulfil. This is difficult to achieve today with online forms or through a mobile device.
My personal vision for branches is one of community “hubs” enabling people across both virtual and physical communities to come together for valuable services. These services would stretch beyond those traditionally offered by branches to include new opportunities, such as business networking events and youth job clubs. Expert advice could be available to enable community members to prosper. Young adults could receive financial planning related to accessing the workforce for the first time. Those thinking of setting up their own business could get practical advice and meet others who have already been through the journey. The branch would offer other services of course – just as great coffee is the minimum requirement for a coffee shop, so would banking services be for a branch.
I do not claim the ultimate solution here but rather part of it – thinking differently. The branch should serve a community purpose, and at the same time deliver to the requirement for financial services help and advice. It should feel like a natural extension of a banks digital presence.
For the immediate future, I believe the technology behind the branch will underpin its effectiveness and its value to the community it serves. By utilising the best in infrastructure, banks can provide a service that delivers efficiently at the point of need – making customers’ lives easier. At Nationwide Building Society, branch customers can now talk face-to-face with specialist mortgage advisers located across the country – at the touch of a button, via a screen. This means they don’t have to wait for an appointment with a specific adviser in their local branch, or travel further afield.
By shunning technology on the high street in favour of traditional service, banks risk outdated processes that simply do not match the expectations of the consumer. Customers are no longer happy to accept a multiple day wait time for help and advice.
Know your customers
While branches are being used less often, by fewer people, customers young and old still expect them to be there. The challenge for retail banks is to build customer trust by providing reliable, accessible, easy to use services. This is where customer service is vital. The best specialists in the branch can distinguish the customers who want to pop in, do what they need to do and then leave with minimal fuss, from those who need support and further engagement – and treat them accordingly.
I urge caution too, to the banks that use their customers’ age to defend outdated processes. Customers of any age are willing to accept new technology, as long as it comes in a way that enables them to stay in control. Here it comes back to the value of customer service. Success will be dependent on banks’ ability to guide customers seamlessly across both their physical and virtual services, so that they focus on what they have achieved rather than where they have achieved it. This is the essence of an outstanding customer journey in an increasingly digital world.