By Mark Aldred, Head of International sales, Auriga
Bank branch closures are a frequent news item here in the UK, but they don’t necessarily herald the death of the bank branch. The trend reflects more on how customer behaviours and their requirements for banking services are changing. There is still a strong need for banks to have and evolve their bricks and mortar presence. The key is how can banks make branches part of their omnichannel strategy for improved customer service experience.
It is undoubtedly true that customers will choose a bank on the ease of use and reliability of their technology, but, as in the past, it will be the human interactions that create the trust that generates enhanced loyalty and a competitive advantage for banks in the future. Therefore, when making strategic decisions about bank branch networks, banks need to base their evaluation on how effective the branches are in retaining and attracting new customers. As well as how they improve the banks’ profitability. The answer seems to be that fewer branches are needed to serve customers. Branch closures are happening across Europe and in the UK alone it’s estimated that 40% of branches closed between 1989 and 2012.
The rate of closures is accelerating as customers change the way they bank. According to a study from the British Bankers Association (BBA), a branch has on average 71 visits a day which shows a 32% fall since 2011. By comparison there are 4.3 million logins into online banking sites and 11 million logins into mobile banking apps a day. Not to forget, spending using contactless cards, of which banks issued 15 million in 2015, has increased by 250% with £1.1 billion spent by March 2016.
Adapting the bank branch to these profound changes in customer behaviour is challenging but not impossible. While customers have a strong preference for autonomy in how they bank, they also value quality of service and personalised support and advice. This is informing a new configuration for bank branches around self-service and personal customer service to handle customers’ more complex questions and cross and up-sell other services and products. Even though we are seeing many closures, the BBA states that thousands of bank branches are being refurbished to make more space for meeting rooms. For example, Nationwide is in the midst of a £500 million programme to upgrade hundreds of branches while RBS refurbished over half of its branches in 2015 alone. On the other hand Barclays is using underutilised areas in its branches above or behind the main banking halls for its Eagle Labs, Barclays’ mentoring programme to build a stronger relationship with its community.
The importance of having a physical presence on the High Street is important when banks are today directing their customers to use Post Offices and other agents for basic banking services. A hybrid digital bank can differentiate the branch from these offerings and optimise how staff can offer a better customer experience. A hybrid digital bank branch is centred around many more self-service banking machines for cash and account management with bank teller staff acting as customer service helpers and advisors. Using new technologies like touch screen self-service, kiosks with audio and video support as well as staff tablet applications all contribute to a more flexible and comfortable customer experience. Overall the branch becomes more tailored and responsive to customer needs including earlier and later opening hours.
In developing these new hybrid digital bank branch models, it is important to get automation process right. Despite their heavier use of digital technology, studies show that, even if some clients are conservative with their relationships with their bank, they expect banks to offer them new and convenient ways of interacting that conforms to their changing lifestyle. Therefore, providing a “seamless omnichannel” experience presents an opportunity to generate revenue and nurture the bank-customer relationship. The “digital branch” must be a positive addition and benefit rather than a dehumanizing “robo-bank”.
The ATM channel remains a very popular banking service for the consumer and the most frequently used point of contact between the bank and its customers. When integrated with a new generation of assisted and self-service banking terminals, it can strike the right balance and support the staff in branch, as customers respond well to offers and promotional information that are relevant to them. The ATM presents several opportunities to display promotional activities to customers as there are natural pauses where customers are waiting for identity authorisation to go through or to receive their cash. These moments present more opportunities for banks to generate revenue. For example, financial institutions can selectively promote specific credit card, mortgage or other financial products to those ATM users who are prequalified. As well as use third party advertising strategies such as prepaid vouchers for music or online gaming for extra revenue generation.
The key is how much the bank is ensuring the branch’s self-banking, and assisted banking systems are seamlessly integrated with all the other channels customers use including mobile and web.
So, what does this mean for bank customers who come into the hybrid digital branch?
The branch represents the real “glue” between physical and digital channels, because in the customer’s eyes there are no borders between mobile banking apps, ATMs, assisted-service devices or consultants. They are all manifestations of the same bank. So, when a customer inserts his or her card into a device in-branch, the system should recognise the individual and the bank employee in the branch receives notification on his or her tablet, with updated information and personalised product offers. The tablet becomes a business tool, used to display brochures and connects via WiFi to an external monitor for an intuitive customer journey. And the mobile device is not just a way to target commercial opportunities; it is also a way to track self-service activities, allowing advisors to intervene in case the individual encounters difficulties or has a question during an operation. While most operations can be carried out by the customer, others require assistance. The tablet facilitates continuity of service even in the case of minor events, which increases their confidence in the use of automated services. Therefore, enabling the branch to deliver a consistent and well-orchestrated service across multiple consumer channels to meet changing customer behaviours.
In this new paradigm the bank staff and technology need to combine seamlessly to maximise the customers’ satisfaction and the sales potential of each interaction. To succeed in this new era, banks need to excel in the delivery of high touch, high value services that blends in the convenience of digital channels with a caring and tailored human element. Ultimately, those banks that can deliver real time and personalised customer information at the point of service will enhance the profitability of the customer relationships that they create.
The role of the bank branch isn’t disappearing but evolving. This does mean many less branches but those that continue will be the focus of investments in smarter customer service technology and skills. The branch will be an integral, not isolated part, of how banks provide better and more efficient services. Already we’re seeing branches being re-configured to be more attractive to customers with staff taking on new roles and a new generation of self-service and assisted banking devices appearing to offer a wider and richer set of facilities and services.