Cashing in on the next wave of Britain’s bank customers

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Cashing in on the next wave of Britain’s bank customers

We’ve always needed banks.  But are online-only providers changing the face of banking forever?

Much research has looked into the effects of digital technology on the financial services industry, and how these mired-in-tradition institutions can ensure they remain relevant.

“Digital disruption and generational shifts are causing a few fundamental changes in customer behaviour that are rapidly influencing customer expectations from banks,” a recent Oracle research paper states.  Recommendations are, as you’d expect, that new technologies should be leveraged as part of overall strategies.

It’s hardly a surprise that banks are being encouraged to embrace digital.  But what of the physical spaces – what will become of the humble bank branch?

Branching out

Our own research into consumer banking trends has shown that the bank branch is more popular and relevant than perhaps Monzo-type disruption has led us to think.  In our poll, over a third (35%) claimed the branch was the main place they did their banking; and more than 2 in 5 (43%) said they’d go to the branch in order to talk to a real person.

This is borne out by our qualitative research with some of the industry’s leading figures, who report that branches continue to play an important role for many customers.

Less than three decades ago, branches used to be the place where everyone did their banking; so whilst a not inconsiderable number of people continue to use them, the fact remains that the majority have migrated to doing their banking online.

“[Digital banks] figured out really early on that because they had an online-only business model, they were able to save the whole expense having branches, employees... and offer better interest rates than everyone else was paying ...if you wanted to open a savings account in 1993, you went to a banking branch. There was really no other option.”  Matthew Frankel, CFP

But now there is.

So how to optimise the bricks-and-mortar assets you have?

Predicting behaviours, meeting needs

An opportunity lies here.  In a world where almost everything can be done behind a screen, there will always be times when people want to speak to another person, face-to-face.  Beyond offering advice and the usual products, bank staff can be educators; the bank branch itself could be transformed to serve more purposes, meet more needs.  Essentially, somewhere you quite like hanging out.

Some brands have already taken this approach.  Barclays Digital Eagles is a service aiming to equip customers with skills and confidence in an increasingly digital world.  For those most at risk of digital exclusion, this service meets a genuine need, delivered through a brand that’s well-established and already trusted.

And in 2016, Barclays leveraged the untapped opportunity of repurposing physical spaces, with their Eagle Labs – dedicated spaces in branches transformed to serve as places for local networking, learning and collaborating.

This has been taken to the next level in the US, where Capital One have launched over 30 coffee-shop style spaces, where banking meets friendly support (with a mix of self-serve and staff), local produce and community initiatives.

Recommendations

Our work with some of the UK’s biggest banks, as well as those catering to niche, exclusive clientele, has given Somo an interesting insight into what might be next on the financial services horizon.  Our research and experience tells us these are the things financial services providers should be keeping in mind:

  1. Change the branch, keep the custom: cater to the needs of those who want face-to-face advice, particularly millennials who may be digitally savvy, but not financially savvy.  The need is there: when it comes to major milestones like buying a first property, millennials want the support of a human advisor.  If the space is inviting, and more like a retail experience, you could secure lifelong loyalty by providing this advice at just the right time, and in the right way.

  2. Continuously interrogate what your customers want: researching customer experience (CX) needs must be a continual process.  New technologies are relentlessly driving change, and expectations of service providers keep on growing.  Our research showed that by far the most popular reason for choosing a bank was ‘Best offers/services for what I need’, so it’s never been more important to understand how and why customers shop around.

  3. Look at what the fintechs are doing: not because they are better per se, but because they are nimble.  Banks are notoriously encumbered with legacy systems and ways of working, but this is not an insurmountable problem.  One of Somo’s clients, the financial arm of one of the world’s largest manufacturing companies, used us to instil a digital, agile culture through a series of innovation workshops.  Principles of creative thinking, continuous test-and-learn and iterative feedback have helped our client to establish innovation champions in the organisation to drive the adoption of new, smarter ways of working and service provision.

Join the debate

Exclusive research and analysis from our team, together with interviews from sector experts, will form a new white paper on the subject, available very soon.  To dive deeper into this area, we’re holding an event on 12th June, as part of London Tech Week.  Places are limited; sign up today so you don’t miss out!

 

Author: Ellie Tish

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