With the UK in the midst of a long, hot summer, we wanted to take the opportunity to reflect on what has certainly been a big year for banking to date. The newspapers have been packed with stories of the fight-back against a cashless, branchless society. We attended some great events across Europe which showed just how much potential there is for branch technology. Furthermore, we have been continuing to help our customers across Europe transform their bank branches to make the branch of the future a possibility today.
Back in December, we outlined our predictions for the year ahead, and the pivotal changes which could be coming to the industry.
Now it’s time to reflect on how these predictions are shaping up, and whether we were right or wrong!
Automation of banking services
We predicted that banks would be maximising their use of self-service technology and automation, and ATMs becoming an increasingly valuable part of that trend.
Based on the real-life case studies we heard at Self-Service Banking Europe and Efma’s Channels & Customer Experience Forum event earlier this year, it seems that banks are fully embracing the self-service trend for a better customer experience. Halifax embraced this when it opened its flagship Oxford Street store earlier this year, using interactive tools to free up staff for more personal customer service.
This builds the momentum we saw in the industry last year, when Lloyds launched a £3m state-of-the-art branch which includes a digital zone helping consumers with internet banking, biometric Safe Deposit technology and free Wi-Fi and phone charging.
Emergence of new infrastructure
With the cost of branch and ATM infrastructure weighing on banks’ minds, we predicted that 2018 would see the rise of “white label financial hubs” and third-party ATM ownership.
With Open Banking coming into force this year, white label hubs look like an ever-increasing possibility, especially with the political pressure now increasingly concerned about an ATM and bank branch desert, particularly in rural areas.
Earlier this summer, Link was forced under public pressure to scale back on changes to interchange fees. While banks may not have fully embraced pooling their resources just yet, we think that it would be wise if they start to think through their options carefully to deliver the best access and service to customers possible.
Need for personalisation
We expected to see the ATM become a key touchpoint for personalisation in 2018, and we still think this is just around the corner for UK customers. We’ve seen it with challenger banks such as Atom allowing customers to customise the look and feel of their app, and the name and logo of their “own” Atom Bank.
Use of big data
Back in May, GDPR took effect across Europe. While no banks have fallen foul of the legislation to date, use of customer data is thoroughly under the spotlight. Financial services were expected to be a top target for customers when the new rights kicked in.
Banks were quick to respond, with updated privacy policies and websites explaining what it means for their customers. While it might take a little longer to change the attitudes of the British public, perhaps a clean record of GDPR compliance could be the ticket to boosting banker’s reputation in the eyes of Brits. Challenger banks have also risen to the challenge, with Starling planning to make data available at the touch of a button.
More to come
While our predictions have captured much of what’s been going on in the industry since January, in an industry as essential to day to day life, and increasingly technological as banking there is always lots going on.
Cash machine charges have been a big deal in parliament, with a bill currently passing through the House of Commons to:
- Prohibit cash machine charges;
- Require banks to enable free cash withdrawals from current accounts in other circumstances
- Require the Financial Conduct Authority to supervise an access to banking standard
- To impose penalties for breaches of that standard
- To establish a financial inclusion fund and provide for amounts received in such penalties to be paid into that fund
Supermarkets are waiting on a decision from the Court of Appeal about whether ATMs are part of supermarkets or not, and therefore the business rates they are liable for.
Research from Which? highlighted just why it is important that all parts of the economy act to protect and invest in our bank branch and ATM network as they found that almost 1,500 ATMs disappeared from the UK in just five months.
The industry is at an inflection point, and it seems the march of the cashless, branchless world is starting to meet real resistance. People and banks alike are beginning to understand the risks that removing financial access can have on an economy.
If done correctly, the increase in customer appetite for value added services at ATMs will more than compensate for any slowing in demand for cash and conclude that ATM estates should grow as branch networks shrink.
It certainly is an interesting time for the industry, and we look forward to seeing how the rest of the year shapes up.