If endless headlines are to be believed, the rise of the digital-first generation and ubiquity of mobile phones, mean the days of branch banking are numbered. But are they? Ben Thorpe of cash technology innovator Glory thinks not.
Why? Mainly because a deeper look into the numbers reveals that even tech-savvy millennials want the comfort of being able to talk to human beings, face to face, when it comes to making some of the biggest financial decisions of their lives. But to build on that and persuade a digitally-enabled generation to trek to the high street, banks are going to have to wow them with a new kind of in-branch experience: something exciting and inviting that inspires confidence and trust.
The World Branch Report 2019, published by Thynk Digital and The Financial Brand, contains some surprising revelations about the true state of face-to-face banking. Among these, the fact that half of consumers – 51 per cent – find branch presence a reassuring factor when judging the trustworthiness of a bank. Chiming with this, 70 per cent of bankers believe branches are inherent to their brand’s survival.
A recent Banking Automation Bulletin published by retail banking and payments consultancy RBR, backs this up, stating that, worldwide, the fall in worldwide branch numbers during 2018 was actually modest, at 0.6 per cent, while their numbers grew in Asia-Pacific, the Middle East and Africa.
Yet, as Glory’s director of global marketing, Paul Race, highlighted in a recent blog, ‘though customers obviously value the branch, the reality is that footfall is declining. Research from CACI shows that, as things stand, by 2022 customers will, on average, only visit their local branch four times a year’.
As a result, banks worldwide are realising they need to fundamentally rethink their branch strategies – all of which was the main focus of last November’s RBR Branch Transformation conference, at which Glory was represented. And the consensus there was that human beings will be integral to these ‘branches of the future’ – both the customers dictating what experience they want to receive, and the staff delivering them, whose roles look certain to change.
It’s a fact echoed by RBR’s post-event Banking Automation Bulletin: “It is tempting to characterise the changes to the branch as simply automation of processes that used to be done manually, but this is a massive simplification… people are at the heart of what is happening; staff roles are changing and customers are receiving an improved and much more personalised service.”
The challenge – and opportunity – for Glory, is how it can play an influential role in helping banking clients across the globe define and reflect that new world order.
Keeping the cash flowing
Established more than 100 years ago, the Japanese-listed cash technology organisation with 10,000 employees, offices in 28 countries and revenues of around $2billion, works with all the major banks and retailers, ‘anyone, really, who touches cash’, according to MD for Asia Pacific, Ben Thorpe.
Another reason demand for physical branches doesn’t seem set to fizzle out any time soon, according to Thorpe, is consumers’ ongoing preference for cash – despite a considerable amount of hype and effort to the contrary. If all else failed, he adds, branches would continue to fulfil a functional role in providing access to this important commodity. So, Glory is retaining its focus, very firmly, on enabling the flow of cash in the most efficient and cost-effective way possible, and in more places.
“We absolutely believe cash is still king, and we’re looking at how we ensure we help our customers reduce the cost of cash and make it more efficient,” he says. “We’re helping organisations to digitise cash and ensure they’re getting more information on where cash has come from, where it’s going to, the volume, the value, and making it easier to handle.“Contrary to lots of opinion, cash is still a big driver of transactions in the branch, not just in the UK, but, according to our research, in pretty much every country. In research we’ve undertaken internationally, small and medium-sized enterprise customers say that more than 80 per cent of the transactions they undertake are cash-related and in-branch, and that’s driving challenges and opportunities for the banks, and for the businesses themselves.”
Glory’s strategy involves helping its bank clients be there for all their customers, in more places, where and how they need them, to create a more personalised experience while optimising cost and efficiency. This includes servicing a new ‘hub and spoke’ model with master branches capable of offering a deeper, more personal and wide-ranging service, and satellite outlets – sometimes run jointly with other businesses – offering people more practical, often digital or self-service options, in more places but at lower cost.
“One of the things we talked about at the RBR Conference was extending the reach for banks to both their personal and their business customers; creating more service points, closer to where their customers actually need and want them to be; extending the reach of the branch network and making the branches fit for the right kind of purpose,” Thorpe continues.
“People aren’t using the branches so much anymore, and what they’re using them for has changed in the last 10 or 15 years, but by putting cash technology where customers want it to be, in petrol stations or, for small business customers, digitising cash transactions through smaller retailers, we can meet their needs while enabling branches to be better centres for customer service, reducing their footprint but giving them a chance to focus more on the people coming in and extend their service.”
Come in and relax…
What does Glory believe the future branch might look like, then? In the same blog, Race outlined his personal vision as being the kind of self-enhancing, ‘way-of- life’, social experiences delivered by venues from coffee shops to yoga studios. Flexible spaces suited to different activities, with cushions, wall art and sofas – as he puts it ‘more like a living room than a retail space’.
He writes: “As banks re-examine their role and endeavour to create ‘sticky’ customer relationships, the focus has moved away from being a place to store money and sell financial products, to helping customers prepare for and manage life events.“It’s about giving people reasons to come in and helping build an affinity with the bank that converts into increased financial activity. The bottom line is that the real product that banks provide is trust and the branch plays a key role in that. However, the bank branch must change and evolve. One way of doing so is to become a ‘consumer destination of choice’. That being the case, what services does Thorpe see branches offering and how can Glory help facilitate them?
“The future purpose of branches might not be traditional transaction services, it could be advice, it could be as community centres, but helping people on their financial journey, literally from cradle to grave, assisting them in making better financial decisions. I think that will be what drives it in the future,” says Thorpe.
“Glory’s aim is to make sure we can provide the types of services banks need
to offer their customers in those branches, keeping them secure, taking away the pain and hassle of dealing with cash and giving them more time for their customers and better face-to-face interaction.” And digital technology will, he believes, serve as an enabler of the human touch. “Branch transformation should be written in capital letters. It is a question of how organisations engage through all channels, and the internet has made everybody very impatient. We expect a consistent delivery of service, on a phone, via tablet, from a call centre or face-to-face. Many banks are spending a lot more time trying to make sure that consistency of service exists, digitally, yes, but people really still want to engage with people. “That might sound trite, but our research shows that, globally, despite technology getting better and better, 75 per cent of people, though happy to start digitally, if they hit a problem or want to complain, want to do it face-to-face with a person. If there’s a problem and they have a person to help them fix it, then really enjoy the experience, they’ll come back for more.”
And Glory’s plans for supporting this evolution are ambitious ones.
“We continue to invest significantly in next-generation technology,” says Thorpe. “We spend more, as a percentage of our revenue, than Apple on research and development. We may not have the iPhone 11, but we certainly have the next generation of cash automation solutions, and they are constantly evolving. So, keep watching this space”.