Last August, it was reported that the UK ‘big banks’ have shut 1,700 branches over the past five years, effectively reducing the number to just 25 branches per 100,000 customers. That number is set to reduce further, following a decision earlier this month by Royal Bank of Scotland to close further RBS and NatWest outlets. It contrasts with Spain, which offers 70 branches per 100,000 customers. Yet research suggests that 68% of UK customers still want access to a bank branch even as they welcome the digital transformation of banks.
The finding comes from an independent study by MindMetre Research and commissioned by Matica Technologies into the key services that bank customers would like to receive through a digitally transformed bank.
It’s important to note that the preferences influence the customer’s ultimate choice of bank. Understanding these preferences are crucial to those banks that want to remain relevant and competitive in an increasingly crowded marketplace.
Respondents were asked about the services they value from a bank branch, and how they expect their physical and online banking services to interact. The 68% of UK customers who want to retain branch services were both young and old and they also want these services to be connected to their online activity.
When consumers were asked about their preferred customer benefits arising from digital transformation, their top two were: accessing a joined-up customer service – where online services can be done just as easily as face-to-face in the branch – and being able to collect, renew or replace bank cards in the branch itself.
Benefits of digitisation
These two findings alone tally with the retail banking’s new focus upon the broader and more strategic perspective of digital transformation rather than ‘branch transformation’; explored in the Boston Consulting Group (BCG) report ‘Global Retail Banking 2016: Banking on Digital Simplicity’ and also a BBVA study of millennials. Digitisation aims to seamlessly link the online world to the physical world to produce ‘omnichannel’ customer services – when the customer experience is as accessible, and feels the same, online or offline and creates a more efficient and memorable customer journey. Thus positively affecting customer recruitment and retention. Similarly, banks can collect valuable customer data (big data).
For banks, one of the useful features of the digital transformation is the dual ability to manage a customer’s queries online or in the bank branch itself without having to repeat the original issue during the meeting (‘omnichannel’ service). In Britain, 81% said that they would like to be able to resolve it online first but still go into a branch and discuss it with an advisor. This adds competitive advantage for retail banks.
Another key finding lies with customers wanting in-branch advisors to be able to view their details once they have identified themselves through the card and personal identification number (PIN). For the majority of retail banks this is an everyday feature, but serves as a reminder that the digital journey seems to be providing the right customer experience.
Producing customers’ debit and credit cards in the branch – whether for a new card, a card renewal, or replacing a lost or stolen card – is one of the hallmarks that distinguish leaders in the digital transformation journey. As ‘instant card issuance’ technology is now available there is no excuse for banks not to consider this strategy as a means of recruiting and retaining more customers.
Saving banks money is the other advantage to instant issuance. Show me a bank manager who won’t like this! Since more cards are actually activated (because one can do it during the card’s collection), more cards are used. Across the world, a staggering number of bank cards are never even activated. Customers can leave the bank and immediately start spending. Equally, the expense of couriers to deliver the cards is significantly reduced.
The UK research says that customers look to the online bank as a place to browse product information, possibly before they go into a branch for a meeting. Only when the online browsing is combined with personalised and interactive services does it become ‘highly valued’, however.
Overall, it is fair to say that bank cards are here to stay and the annual increase in the production of debit and credit cards year on year backs this up. People like digital, yes, but they also like human interaction. Otherwise, why do all four countries insist there should always be bank branches alongside their digital service?
We may hear more about mobile payments and other novel payment tools such as the Kerv ring – people will always like buzzwords – but it seems safe to put money on it that those banks that retain their market leadership are under no illusion that bank cards still have unleashed potential and will remain in the number one payment spot for many years to come.
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