In my previous blog on the subject of bank branch renewal, we looked at how the role of the branch was changing, and how IT applications in the branch underpin a successful renewal of the format. We have all seen the significant decline of ‘traditional’ bricks and mortar banks in the European and North American markets – with falls in the absolute number of branches numbering in some instances as much as 50% or more, with many seeing the branch as a ‘dead’ prospect for the future.
This presents an interesting conundrum for the financial services strategy of many firms, as there is clear evidence that the need for face-to-face customer engagement is not at an end, and therefore by extension, neither is a physical location in which to facilitate both services and contact.
The strategy of many organisations’ has been to rationalise the branch footprint, seeking to drive customers to an ever smaller number of branches. As one senior executive at a Tier 1 bank commented recently, “…there are no more efficiency gains to be made in our branch network” the challenge now is how to best “…adapt and adopt…” the branches for the customer expectations of today and tomorrow.
An environment that reflects customer expectations more in tune with an assisted sale and a self-directed experience translates into a model that not only sells, but also provides added value services – with a strategy to eliminate, as far as possible, the ‘dead-time’ in the experience.
The application landscape in a branch is a critical success factor in achieving the right experience, but we are also seeing some highly innovative approaches to the physical nature of the bank branch, its location and a more modular approach to the overall concept.
The history of bank branch model has seen a number of experiments, from the introduction of ‘coffee shops’ (Abbey National, UK) to the staffless branch experiments of Huntington Bank in the US over 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. For those of us just over the millennial cut-off we might also remember the ‘travelling branches’ in converted lorries – a service that still exists in some rural locations, albeit a rarefied sight, now gone the way of the travelling library.
What is perhaps new in the mix is a greater synergy of service and technology that has shown a new way to blend footfall and location in a more flexible and cost effective model. What is more, the blending of supply with advances in logistics, supports an ever more innovative approach to the real-world ‘branch’ experience.
As good a place as any to see this in action is the innovative Tangerine Bank in Canada. Tangerine, the direct 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. It 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, and make a virtue of the rapid ‘on boarding’ of customers for current account and savings products. In the case of Kiosks, these are literally mobile bank venues, appearing in shopping malls (in the case of Kiosks) and car parks for Pop-Ups. They can be in place for six to nine months’ – perhaps even longer – and allow brand recognition and a face-to-face platform for the bank, changing a client’s real world landscape and increasing recognition for Tangerine.
Banking is facing unprecedented change. As we all look to provide winning formulas in the new digital economy, the notion of ‘customer engagement’ in the physical world is changing, not necessarily dying. At the heart of this change is the redefined customer experience (ideally both convenient and frictionless) enabled by evolved technology and informed by the improved relentless drive for applied, relevant customer data. In short, taking its guiding principle of frictionless convenience and transplanting them back to the physical world.