Branch as brand. Delivering your customer manifesto, face to face.
Dalziel & Pow | Nationwide
The UK has been on a long journey towards lowering it’s banking branch footprint. With the BBA reporting just 71 visitors a day in an average branch (in 2016!), it’s easy to see why. But bank cost-reduction programmes, and the politics they attract are far from the most interesting angle on a much more radical story.
Banks and building societies are losing their everyday touchpoints with customers.
Debit & credit cards are hidden within mobile wallets and retailer check-outs. We don’t search out ‘preferred ATMs’. Statements are increasingly likely to be paperless, and junked. And under OpenBanking mobile & web banking will be displaced by slicker, sexier, more capable money management services from tech players large & small.
Banks are starting to think about their branches like brands do
Somewhat late in the day, banks are waking up to the potential of bank branches as both advisory environments and as brand showcase – taking lessons from experiential retail. It’s not a wholesale switch of course, but we anticipate most networks to stratify into three tiers:
Relationship experience centres. These showcase branches are all about substantiating brand promise and teeing up a higher quality cross-sale. If you drop in for transactional support, you’ll be directed to digital services (including video) – and sorry, we don’t do cash. Check out Nationwide’s new branch concept as an example, albeit a slightly unambitious one.
Microbranches. Mirroring activity from banks in Sweden, Australia, and NZ we’re seeing the emergence of pureplay transaction branches – open all hours, small footprint and highly automated, these limited-service environments are all about low cost customer handling & problem solving. In a market that is rapidly bringing together open data AI and more natural human:computer interfaces, these low-value, low-functionality branches will have their work cut out to do anything useful for banks or customers, but they do enable cost reduction without the political fall-out of leaving town.
Pureplay cash shops. Cash is of course the enemy of modern banking – expensive to process, risky to handle, problematic to audit. While many of us take steps away from cash in our everyday lives, it’s going to be part of our banking reality for the foreseeable future. Cash-centric customers tend to be disproportionately expensive for banks to serve, tend to be a noisy minority and demonstrate limited potential to justify investing in a deeper relationship. On the flip side, many businesses operate in cash-intensive environments, and they require (and are prepared to pay for) cash handling services. We expect to third parties stepping up to offer ‘rainbow’ branches – dedicated cash processing shops that operate alongside other cash-centric services - like convenience retail, FX, bill payment and cheque cashing. With a sufficiently efficient operating model, there could be a sustainable business in serving these ‘remnant’ cash businesses – while the rest of the world goes digital.
It’s time to use branches to reshape customer perceptions
Research tells us that customers have polarised views of banks today – they like & relate to local staff but doubt the integrity of the faceless corporation. It’s time that branch banking mirrored the way in which customers already manage their money and manage other services in their lives. It’s also a fantastic opportunity for banks to step out from behind the façade and demonstrate their customer manifesto face-to-face.