The value of places and people in banking

07 January, 2014 by Caroline Lund | Events

I recently attended a conference about digital and innovation in Financial Services, Next Bank Europe. Next Bank is an organisation that aims to drive change in Financial Services and the event was well attended by banks, start-ups, researchers and disruptive thinkers alike. It was a very thought provoking day overall, but one particular topic stood out for me. One of the speakers (James Moed from Anthemis), talked about the value of ‘people and place’ in financial services - interesting in light of the steady stream of investment that banks are making in digital services!

With the rise of online and mobile banking, most big banks in the UK have been steadily closing branches over the last few years, with around 2,000 branch closures over the last decade1. Alongside this, however, they’ve also been upgrading their remaining branches - 2,274 branches have been refurbished in last two years2 (this is about a quarter of total branches) and many of these upgrades have involved introducing technology like video chat, intelligent ATMs and tablets into their branches in order to modernise them, recognising that branches still have a role to play with customers.

However, as was pointed out, many of these ‘branch of the future’ initiatives are simply replacing elements of a bank branch with technology that meets the same customer need, like replacing cashiers with ATMs, advisors with video chat terminals or brochures and forms with iPads. The technology is of course great, but has largely been focused on reducing costs or streamlining processes, and not necessarily attracting new customers or creating loyalty.

He pointed out that banks could take a step back and really examine the value that people and a physical place can provide in banking. This got me thinking.

Big banks have a unique advantage in that they already have a lot of valuable real estate. Why not use their branches in new ways, to meet unique customer needs, in a way that complements their digital offering? There are a lot of lessons in this to be learned from the leading omni-channel retailers at the moment. The value of a place can be that it’s local, provides a warm and engaging environment, or a chance to play around with products (like the Apple store). Thinking about coffee shops, Starbucks has become a place where people go just to work for a few hours. What if a bank branch felt like a cosy, welcoming place where you could go just to have a coffee, work, or explore a few products?

Places can also be a part of your local community. What if banks tailored their branches based on the local surroundings like some restaurant chains do? Going beyond the financial side of supporting small businesses, they could even support local businesses by using or selling their goods in store – like selling treats from the local bakery. 

The people there can provide an emotional need: a friendly face, reassurance for the moments that matter, help in an emergency. As well as that, bank staff have knowledge to share and can do so in a personable way, making branches a place to gather and learn. A bank in the US recently experimented with this idea, creating a friendly place for young adults to attend seminars and learn about managing their finances from banking experts.

Big banks should transform their physical presence as they become increasingly digital, to truly embrace the value of an omni-channel approach. They should explore what unique customer needs could be met using the power of people and place, in light of digital banking habits today (77% of customers use online or mobile banking at least once a month3), and how technology can complement or facilitate this. The modern branch network could then sit nicely alongside a strong digital offering to provide a great all round customer experience.




2. BBA, 2014

3. BBA, 2014