Now, more than ever,
banks must recognise how to get value from their branch networks.
Consumers in mature banking markets are visiting branches less
frequently and when they do, it is to conduct low margin
transactions.
The number of in-branch
transactions in mature markets has declined by a quarter over the
last four years, from roughly 11,400 transactions per day (on
average) in 2006 to 8,550 in 2010.
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The biggest obstacle facing retail
banks is their underlying reluctance to rejuvenate the bedrock of
their back-office operations. Innovations involve high costs and
disruptions to customer service, and this is something banks are
sensibly trying to avoid.
When the current infrastructure was
devised and rolled out, the banking habits of consumers were vastly
different.
The emergence of technological
innovations – internet, smartphones, contactless payments – has
meant that individuals have been provided with more efficient ways
to meet their banking needs.
Banks must realise how to create
the right channel mix for their products. The branch can no longer
be seen as the priority channel and the success of service delivery
in the future will hinge on the relationship between the branch and
other, alternative channels.
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By GlobalDataMobile banking is more convenient,
faster and if customers want independent advice, they can get it in
real-time from other consumers. Customers are beginning to see the
tangible benefits of alternative channels and are questioning why
the same technology does not exist in their branches.
Although it is beginning to
plateau, the uptake of online and mobile banking is still high.
There was a 300% growth in Bank of America’s mobile banking
customers between 2007 and 2008, while Japan currently has more
than 40m mobile devices capable of making mobile payments at the
point of sale.
The top three requested services in
a branch – balance check, funds transfer, cash withdrawal – can be
described as non-revenue related. They could also be automated.
In the last two years, the
significant uptake of social media by the two oldest age segments
(50-64, 65+) shows that social network ubiquity is starting to
materialise.
Customer loyalty is no longer
guaranteed in retail banking. For a bank to compete and
differentiate itself from its competitors, it must ensure that the
customer experience of is the nucleus for all strategic
decisions.
Product offerings innovation and
channel delivery provide areas for banks to enhance brand
perception and raise market share.
Improved usability should be seen
as a priority for channel-centric banks and need to rethink the way
it engages with customers.
If banks had timely reporting of
vital information such as customer spending habits and channel or
product preference on their fingertips, it could be converted in
real-time into more attractive sales propositions.
But although some banks are moving
towards comprehensive, integrated core systems, the majority of
banks still operate on a network of separate databases.
Branch closures in remote and
low-revenue areas are commonplace, and often they are met with
protests from angry customers who see the branch as a community
asset.
In fact, hundreds of UK branches
face closures over the next couple of years as banks try to
resuscitate operating efficiencies. A number of banks have seen the
tangible benefits of putting the customer at the heart of their
branch design.
This article is an edited passage
from
the VRL report,
Next Generation Branch Banking. For more information on
this or other VRL reports, contact us on +44 (0)20 7563 5605, or
info@vrlfinancialnews.com
