Digital transformation continues to disrupt traditional banking business models and attempts to predict what the bank of the future will look like remain difficult. Technology is rapidly changing customer behaviour and customer expectations. How banks address this challenge will vary and banks will need to establish their own unique business models depending on their target customer base, their history and location.
The growth in digital banking has accelerated the decline of ‘traditional’ bricks and mortar banks, increasing numbers of customers are now choosing to bank online rather than visit their bank branch. The forecast for branch visits over the next five years helps to support those claims that the physical branch is a ‘dead’ prospect. However, is it time that we challenge this assumption? Evidence is emerging showing that face-to-face engagement alongside a physical location to facilitate services remains an important feature for customers.
In its 2016 case study, BT Global Services revealed the following:
- Up to 45 per cent of customers ‘expect’ to have an in-branch wait for banking services and advice. Eighty-one per cent believe free Wi-Fi access would benefit their experience and 75 per cent expressed positive interest toward online appointment booking.
- Customers favoured instant gratification services with 84 per cent positively responding to branches that offered immediate issue of new debit and credit cards. Similarly, 67 per cent would prefer to remotely deposit cheques than use postal or in branch services.
- Assisted self-service channels satisfy the customer desire to operate independently and to interact for advice and support when needed. Fifty-one per cent would like more staff who can advise on products and 69 per cent would be more confident if that advice was also accessible through human interaction on the website. Tablet access to jointly research products with branch staff would appeal to 63 per cent
In light of these statistics, there is little doubt that the ‘branch’ is here to stay for the foreseeable future. What is clear is that customers, particularly younger people are equally as keen to have face-to-face contact inside a branch as well as using digital channels.
The challenge facing banks will be in how they design and develop an effective strategy (use cases) for new branch models. These will require a detailed analysis of the three pillars underpinning the branch: accessibility, interaction and space.
The impact of the changes must be analysed and monitored in order to make the appropriate adjustments that will enable financial institutions to adopt the new model quickly and smoothly; even the most gradual changes can sometimes lead to Application Design errors that require adjustment. The monitoring of these changes is supported by a new Branch Dashboard that will measure four different types of indicator:
- Counting: measures traffic in the general environs of the branch (clients walking past the branch, entering the branch, executing transactions)
- Performance: measures transactions compared with traffic
- Feedback: measure client satisfaction after visiting the branch
- Health: measure the accessibility of the branch, either with respect to human resources or technical devices
At the GFT Digital Banking Labs based in Barcelona and Stuttgart, a working method has been developed that enables us to provide broad-based support to financial institutions during the process of defining, developing and testing use cases for their proposed new branch models. The Lab’s methodology is designed to tackle the change through a detailed analysis of the three pillars of: accessibility, interaction and space.
The application landscape in a branch plays a critical role in achieving the right experience for customers. We are beginning to witness some highly innovative approaches to the physical nature of the bank branch, its location and more modular approach to the overall concept of the branch.
Over the years the bank branch has seen a number of experiments, from the introduction of ‘coffee shops’ (Abbey National, UK) to the staffless branch experiment of Huntington Bank in the United States more than 20 years ago. What underpinned these early models was the combination of location, experience and automation – in the case of Huntington, the staffless branches were often located in an office complex with high footfall.
The customer experience
Today, what we consider new is often created by a greater synergy of service and technology. An example of this can be found with the innovative Tangerine Bank in Canada. The bank acquired from ING by Scotia Bank has strong digital bank credentials but has also been looking at how it brings its presence to the physical world. The bank has adopted three specific models for their new ‘pop-up’ strategy.
Tangerine Cafes, kiosks and the more extensive Pop-Ups are located in high foot-fall locations such as shopping malls and retail spaces. Here, they are able to maximise on their rapid on-boarding of customers for current accounts and savings products as well as emphasising their focus on empowering customers to manage their own banking.
These pop-ups can be in place for any period between six and nine months – sometimes longer. The pop-ups allow Tangerine to generate greater brand recognition and having a face-to-face platform for the bank enables Tangerine to create a distinctive customer experience. However, as these ‘branches’ are only temporary Tangerine is able to keep its overall identity as a ‘digital bank’.
It is clear that banking is facing an unprecedented level of change. As we look to provide winning formulas in the new digital economy, the notion of ‘customer engagement’ in the physical world is changing and not necessarily dying. At the heart of this change is the redefined customer experience which should be both convenient and frictionless. Future business models will focus on the continuing integration of the banking experience across physical and virtual environments. As more consumers use digital devices to access financial products and services, the role of the physical branch will be to compliment the digital experience.
Customer experience is at the heart of future bank branching, the ability to provide a seamless and engaging experience both in the physical and virtual world, one that offers the most value to customers will remain at the forefront of future business models.
Christian Ball, Head of Retail Banking at GFT
Image source: Shutterstock/MaximP
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