Author: Simon Cadbury
Digital money management and the evolution of the banking industry
Customers’ relationships with their banks are changing. In November, Lloyds Banking Group announced it will close 150 branches over the next three years due to a sharp increase in mobile banking usage. It’s clear the banking industry is evolving to meet customer needs as more people than ever choose to manage their money digitally.
What does this mean for financial services providers and in particular the future of the branch services they provide?
For many retail banks, renting, equipping and staffing branches can easily account for 40-60% of total operating costs. This, combined with the fact that 81% of consumers now prefer to manage their money digitally, according to our recent research, has caused a major rethink for many providers.
Various studies have shown that branches still remain an important part of the banking relationship for many customers, however, especially for application and advisory purposes. For example, according to PWC, 50% of consumers would rather apply for a loan in branch rather than via any other method. With this in mind, we think it’s time to assess how digital can improve branch services.
Bringing digital service into branches
In fact, many UK banks have already experimented with bringing digital services into branches to merge the on and off line customer experience. Barclays has recently installed 10,000 iPads in branches, allowing customers to open up an account in three minutes (compared to 60 minutes via conventional methods). Merging the digital and physical experience leaves staff free to spend more time providing advisory services for customers.
Digital isn’t just about replacing traditional face-to-face services, though. In some cases it is facilitating them in more remote areas, where specialist advice has not always been available. Nationwide is currently testing video conference technology in 60 branches to deliver specialist face-to-face advice on mortgages. Customers at their Oban branch in Argyll previously had two options if they wanted to see a mortgage consultant: have an appointment over the phone with the Dumbarton branch or undertake the 200-mile round-trip to have a meeting in person.
Combining digital and branch banking
Despite several branch closure announcements over the past few months, recent research has proved that adoption of digital does not spell the end high street services. Rather, it is now the perfect time for banks to explore how digital technology can complement and enhance the branch experience. By doing so, providers can drive branch banking forward and create an effective, multichannel service for customers.