The return of the branch?

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The return of the branch? is a BT report, written in co-operation with the Economist Intelligence Unit. The research, which explores the future of the retail bank branch, is based on the following research activities:

A European survey of 190 banking executives was conducted by the Economist Intelligence Unit in June 2006. Thirty-three percent of all respondents are C-level executives, from a range of functional roles. A range of company sizes are represented: 40% have global assets or revenue in excess of US$200bn, while 34% have revenue under US$50bn. All respondents are based in Europe.

To supplement the survey results, the Economist Intelligence Unit conducted in-depth interviews with eight senior banking executives and industry experts.

Our sincere thanks go to the survey participants for sharing their insights on this topic.

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The return of the branch?

  1. 1. The return of the branch?
  2. 2. Executive summary A decade of innovation in the high street has left many banks’ retail branches looking tired and out of touch. While other retailers competed for the attention of customers, banks and building societies (mortgage banks) seemed oddly content to sit back. Many even made the mistake of thinking they knew best. Fed up with being pushed around, many of their customers deserted them in favour of Internet start-ups that promised to listen and do as they were asked. Belatedly, European banks are waking up to the fact that their branches are not just cost centres but sources of new business and potential profit. In a survey of 190 senior banking executives, conducted by the Economist Intelligence Unit, nearly one-half of respondents say their companies expect to increase the number of branches they operate over the next three years. This is a significant turnaround compared with a decade or so ago. Then, most banks regarded their branches as little more than cost centres. As a result, many were closed, even though customers were inconvenienced. This BT briefing paper highlights the changes underway in the European retail banking sector. Among the key findings of this report are the following: I Nearly half of all banks are expanding centre, compared with just 19% who say it is their branch networks, while just one in run as a cost centre. While online banking is an five are consolidating. important means of facilitating better customer service, customers still have a strong Fully 46% of survey respondents expect to need for physical branches to do their increase the number of bank branches they business, which provides banks with a major operate over the next three years, compared opportunity for cross- and up-selling. with 21% who expect a decline. More thanThe return of the branch? is a BT report, written in co-operation with the Economist one in ten banks polled expect to grow their I Many banks are prioritising self-service, branch networks by more than 30%, whereasIntelligence Unit. The research, which explores the future of the retail bank branch, is enabling more tellers to become sellers. just 3% anticipate a decline of that proportion.based on the following research activities: About three-quarters of executives believe More than 70% of survey participants say that that investment in their bank branches will their firms plan to increase the proportion ofI A European survey of 190 banking executives was conducted by the Economist either stay the same or increase – and one out advisers engaged in selling products and Intelligence Unit in June 2006. Thirty-three percent of all respondents are C-level of five believe investment will increase by services, rather than focusing on transactional executives, from a range of functional roles. A range of company sizes are represented: more than 20%. processes. Different banks favour different models to do this – some have no tellers or 40% have global assets or revenue in excess of US$200bn, while 34% have revenue I The Internet is the dominant growth cash machines and focus entirely on advisory under US$50bn. All respondents are based in Europe. channel, but branches are playing a services; others use self-service technology key role in handling more complex heavily to automate mundane transactions,I To supplement the survey results, the Economist Intelligence Unit conducted in-depth transactions. thus releasing time for staff to focus on value- interviews with eight senior banking executives and industry experts. added activity. Fully 75% of respondents agree Fully 94% of respondents believe that online that they plan to automate more transactionsOur sincere thanks go to the survey participants for sharing their insights on this topic. banking will increase over the next three years, within their branches, for increased customer highlighting its importance to the business. convenience. Some 61% of participants expect Ironically, however, it has taken the maturing the number of self-service machines (for of the Internet age for banks to realise that withdrawing and depositing cash and cheques) bricks and mortar are no longer simply cost to increase over the next three years. However, September 2006 centres but, if managed imaginatively, overall staff numbers in banks are likely to fall conduits for value-added business. Sixty-three as this new technology encourages more percent of executives surveyed say that their customers to serve themselves. company’s branches are operated as a profit 3 THE RETURN OF THE BRANCH? 2
  3. 3. MANAGING RISK Introduction I About one-third of banks are setting up branches From tellers to sellers reaches a target of 100. Other banks, such as The targeted at specific customer demographics, as banks Royal Bank of Scotland, also plan to open new finally embrace proven retail techniques. At the height of the Internet boom, everybody was outlets in selected cities. All told, the opening predicting the demise of the bank branch. Sooner spree amounts to the biggest addition to the stock Along with the rise in the number of branches, banks are also or later, observers reasoned, customers of all ages of bank branches in the UK since the 1970s, when finally trying to improve the atmosphere within branches. The would be banking online or over the telephone. So banks last recognised the benefits of courting styles of branches are also varying, with specialist advice centres who needed branches? customers by expanding their branch networks springing up alongside bigger self-service-oriented branches. and, in doing so, investing in their brands. For once, banks also profess to be listening to their customers. The trends up to that point seemed to support that More than 60% of those questioned in our survey say their logic. For example, research by the University of True, compared with the pre-Internet age, physical firms are responsive to shifts in their customers’ needs. For Nottingham shows that, between 1995 and 2003, branches are less important to a bank’s overall instance, while the majority of firms still say they do not have banks in the UK closed 22% of their branches. In business than they once were: only 67% of branches that are specifically customised for a certain customer total, just over 4,000 outlets owned by banks and respondents to our survey say that a branch demographic, such as 18- to 25-year-olds, 36% say they either building societies (mortgage banks) across the network is important or very important to their do have such branches or plan to introduce them soon. country were shut during this period, while only business, somewhat fewer than thought so three 1,000 or so new ones were opened. years ago. After all, a number of banks run I Banks are setting up shop in more convenient locations, successful (and profitable) businesses with no but rural users are losing out in the rush to capture new At the same time, the number of households with branches at all. Yet those banks that do have business. access to the Internet has mushroomed in recent branches are beginning to appreciate just how years – to the point where nearly 50% of the total Just as retailers aim for the biggest footfall, so too are banks. under-used as assets they were. population in the European Union goes online The number of branches in shopping malls, along the high regularly. The result, according to the UK’s Alliance street and within inner cities is expected to rise, with at least & Leicester, which likes to be known as an online 30% of respondents expecting an increase. However, people bank, is that nearly one-half of all Britons with From contraction to expansion outside of metropolitan areas are being hit by a double bank accounts now manage their affairs online at whammy: a decline in the number of available branches, along How do you expect the number of bank branches your least twice a week. with a rise in the number of fee-charging cash machines. Fully company operates to change over the next three years? 29% of respondents expect the number of branches to decline Yet, despite all this, our survey found that not only in small towns or rural locations. have most banks and building societies stopped closing branches, many have re-discovered a love I Technology is playing an important role, but the for bricks and mortar. In quick succession earlier emphasis is on easy wins. this year, HBOS (which owns Halifax and Bank of increase 46% Bank branches are finally embracing technology, but few are Scotland) said that it was spending £100m on doing so aggressively. Along with more cash machines and self- opening at least 50 new branches as well as service kiosks, about seven out of ten banks already have or are enlarging a similar number; HSBC is spending four soon to install customer relationship management (CRM) tools. times that amount to open 50 new branches and stay the same 28% Also, 49% provide or plan to provide mobile-phone phone- to refurbish 200 of its network of more than 1,500 based text message alerts for their customers. outlets. As new technology relieves bank tellers of the drudgery of handling Not to be outdone, Abbey (which is owned by decrease 21% basic transactions, many will be re-trained in order to advise Spain’s Grupo Santander) plans to open at least 50 customers on new products and services. Tellers will become sellers new branches, while Northern Rock intends to open around four new branches a year until it by more than 30% by 20-30% by 10-20% by less than 10% – or so their employers hope. For this to happen, however, banks will need to do more than spruce up their branches. They must embrace new ways of working as well as new technology, so that they respond to customers’ needs. And they must marry their new front offices with the software that manages their relationships with customers, so that they can anticipate what their clients want.4 THE RETURN OF THE BRANCH? THE RETURN OF THE BRANCH? 5
  4. 4. Refocusing the bank branch This is almost as many (45%) who say that their firms have already slimmed down their workforces The shift from tellers to sellers will probably still over the last three years. Not everyone is cutting result in banks employing fewer people overall, staff, however: one in five banks expect to have even though a larger number of staff will spend more people, on average, manning their branches, their time giving advice instead of handling a touch more than the percentage that have transactions. To achieve this, many will have to be increased staff levels over the last three years. re-trained. Our survey shows that banks already recognise this trend. Fully 37% of respondents say Yet there is growing evidence that the number of their companies conduct regional training sessions branches operated by banks and retail financial as required, while 34% say they carry out training institutions in general is set to continue rising. within each branch as needed. Some 46% of those questioned say that they expect the number of branches their company operates The survey nevertheless found that nearly 40% of to increase over the next three years. More than Why the sudden change of heart? Partly, it seems, of bank branches. Not only are customers respondents expect their companies to employ one in ten firms believe their branch network will banks are listening to their customers: in polls and increasingly serving themselves and so cutting fewer people within branches in three years’ time. expand by more than 30% over that period. focus groups customers are telling their banks that banks’ costs by reducing the number of tellers they still like to do business in branches. Far from needed for mundane transactions, but this trend is cutting off clients from their banks, as many also freeing up tellers to do potentially more Location, location, location close around 100 of their branches, leaving them feared, rising use of the Internet is encouraging profitable tasks such as giving advice and selling with about 340. This was largely because many While the number of branches in inner cities may outlets were in semi-rural locations or near other people to use more than one channel to carry out products and services. remain roughly the same, customers could find branches where it was hard to attract an average their business. So, as well as checking their As Eric Mackor, head of branch development for new outlets opening up in more convenient of more than 4,000 or so customers per branch. balances online, customers are visiting branches to ABN AMRO in the Netherlands, says: “Our aim is places, such as shopping centres and malls. deposit cash or to ask about new products and Since then, most of the banks’ remaining branches to have fewer tellers and more sellers.” Mr Mackor Indeed, 36% of respondents believe that the services. have moved closer to the national average of is not alone. More than 70% of respondents say number of branches in such locations is likely to 9,000 customers per branch, says Steve Reid, Partly also, it seems, banks realise that the that their companies are increasing the number of increase. This is slightly more than the proportion mechanisation of csed notes and then re-issue advisers within their branches focused on selling who feel that the number of branches in high them almost immediately to those withdrawing products and services to customers. streets could rise. When it comes to location and cash – is leading to a sea change in the usefulness the uses to which branches are put, flexibility Inner cities and shopping malls are winning out seems to be the key. Some 36% of those over rural locations questioned say that the aim of their firm is to provide a mix of approaches for customers, each How is the number of branches your company operates Most banks are reducing staffing level changing in the following types of locations? customised for different locations, from inner and shifting from tellers to sellers cities to urban shopping malls and even rural areas. Is your company increasing Tellers, handling Unsurprisingly, banks are following shifts in the or decreasing the number routine transactions population and the wealth created. Even those of employees in the following areas at its bank branches? banks that have recently shut down branches in (% of respondents) former industrial centres, where demand has Customer service, handling routine enquiries fallen, are opening them in other, more vibrant parts of the country. Take the UK’s Clydesdale and Yorkshire Banks, Advisers, focused on Inner cities High Street Shopping Small towns cross- or up-selling both owned by National Australia Bank. The banks centres/malls or rural locations bucked the trend when competitors were pruning increasing staying the same decreasing their own networks a few years ago and are now playing catch-up. Last May, Clydesdale and decreasing staying the same increasing Yorkshire said that between them they plan to6 THE RETURN OF THE BRANCH? THE RETURN OF THE BRANCH? 7
  5. 5. the banks’ general manager for retail banking and open about four such centres a year until its UK (see box on MultiBank). With young A loan with your groceries? wealth management. Clydesdale has also network of outlets rises from its current total of populations, fast-growing economies and a successfully launched new outlets – called just over 70 to around 100. rising middle class, these markets are ripe for If banks recognise that they should become more like Financial Solutions Centres – in bustling regional innovation. They are perhaps the most retailers, then how good at banking are supermarkets? Northern Rock is not alone. More and more banks towns such as Chelmsford in the south of England. successful in the broad deployment of Answer: mixed to middling. It is ten years since Tesco decided are considering opening outlets which offer advice These specialise in offering integrated business intelligent deposit ATMs, creating more to shake up the market for financial services in the UK, yet only. Others make a clear distinction between and private banking services convenience for their customers and reducing areas in their branches where automated supermarkets still pose only a “limited competitive threat” to to operators of small to queuing, and are now looking at how they can transactions take place and private rooms where the country’s high street banks, according to a report by medium-sized businesses. further optimise the remaining teller activity. customers can meet staff in comfort in order to BankEcon and European Card Review published in June. “We realise that many people seek advice and to ponder the merits of products “Banks are now evaluating techniques for and businesses are looking for Not only have supermarkets chosen to ignore the market for or services. As routine transactions become dealing with customers pioneered by the airline a one-stop shop where they automated, the distinction between the two types industry,” says Mr Bailey. “For example, in the current (checking) accounts, usually regarded by banks as a can get joined up advice of function or branch is likely to become even same way that passengers flying with short- gateway to other profitable products and services, but, across a whole range of more marked. haul carriers identify themselves using self- between them, supermarkets in the UK probably account for products and services,” says Mr Reid. service check in machines before they drop off only about 5% of the country’s total market for unsecured their luggage at a desk, so banks have an lending (such as personal loans and credit cards). The concern for people living Technology rules opportunity to enable their customers to pre- outside of metropolitan areas stage their transactions.” In other words, More surprising still, only one big supermarket offers is the shrinking number of Wherever their local branch is located, customers customers use a self service interface at the residential mortgages despite the fact that such loans branches for them to do their are likely to have to do more for themselves in teller line and do much of the introductory account for 80% of total personal borrowing in the UK. Tesco banking, which coincides with years to come—in effect, acting as their own work, such as identifying themselves using a Personal Finance, which is run in tandem with The Royal Bank a rising number of cash teller. Some 61% of respondents to our survey say card or PIN and selecting their required of Scotland, made profits of £50m during the six months to machines that charge for cash that the number of self-service machines (kiosks transaction, before actually using a member of the end of August 2005. But Sainsbury’s Bank, which is 45%- withdrawals. Citizens Advice, a for withdrawing and depositing cash and cheques) the teller staff to execute the transaction. owned by Halifax Bank of Scotland, is still losing money. UK charity, notes that more will increase over the next three years. This is on top of the changes of this type that nearly 60% of In the future, too, banks could follow the than four out of ten cash machines now charge a What went wrong? According to the report, it is partly respondents say their firms have already example of retailers in encouraging customers fee for transactions. It says rural communities are because the supermarkets underestimated the differences experienced over the last three years. to check themselves out. As happens already at among the worst affected, with some people some supermarkets, a teller would supervise between selling groceries and retail financial products, and having to travel miles to the nearest free cash NCR, a manufacturer of cash machines and three or four transaction points where partly because they have been reluctant to tackle markets machines or face a high charge. banking technology, reckons that on average customers visiting a bank branch would do that have not already been prised open by other rivals. Northern Rock has taken a similar step to more than 50% of transactions carried out by everything themselves, from depositing or Clydesdale. The bank, which specialises in tellers at most bank branches could be moved to withdrawing cash, to shifting money from one Professor Steve Worthington, of Australia’s Monash University mortgages for homeowners, has rationalised the self-service points. Not only does this reduce account to another, paying bills, topping up and a co-author of the report, says: “The supermarkets have number of its branches so that they are now banks’ costs, it also frees up tellers to offer advice their mobile, or simply altering a standing been very selective in the services offered. They have focused concentrated in larger towns and cities. Over the and carry out more profitable tasks. Brian Bailey, a order. For the most part, banks are ready for on credit cards, savings and insurance—markets already last two years it has opened new specialist centres director within NCR’s financial solutions division, this transition. Fully 75% of respondents to our shaken up by others such as Direct Line.” In his view, no across the UK in places such as Chester, Derby, says one European bank has managed to shift as survey agree with the statement that their retailer has competed head-on with the banks by offering a Norwich, Swindon and, like Clydesdale, in much as 60% of deposit and payment transactions organisations plan to automate more full range of products based around current accounts. Chelmsford. All of them have sizeable, and often to self-service machines. To facilitate the transactions within their branches. A further expanding, populations. Interestingly, none of migration, the bank’s tellers spent part of their 62% of those questioned say they are very Nor perhaps in UK are they likely to in the near future. Since Northern Rock’s new outlets contains counters or time showing customers how the equipment responsive to shifts in customer preferences for Marks & Spencer sold its own financial services offshoot to cash machines. They dispense only advice and worked; now they are free to answer queries and new technology. The same goes for extending HSBC in 2004, retailers have been put off by the pitfalls of provide specialist services for those seeking offer advice which may lead to sales. opening hours at branches too. banking. It may take a retailer as big as Wal-Mart, which mortgages and personal loans. The bank plans to wants to start a quasi-bank in America and owns Asda in the Ironically, says Mr Bailey, emerging markets such as Turkey, Romania and Poland have much to UK, to make them think again. teach bankers in more mature markets such as the8 THE RETURN OF THE BRANCH? THE RETURN OF THE BRANCH? 2
  6. 6. Multi bank starts from scratch In recent years, the Polish economy has expanding strongly, with more and more families having money to spend and save, But are banks and their customers really ready for Banks also realise that, to succeed, they need to 1,500 of its branches across the country. Gone are a change? There can be little doubt about the marry all the elements. “We see the branch the cryptic signs written in “bankese” and the providing significant demand for financial services. As a result, benefits of new technology. Most visits to banks network as an important part of our retail offering ubiquitous black pens on chains; in their place is firms such as BRE Bank are responding with new ideas. In 2001, it still involve simple tasks that can easily be and a source of new customers. But we have to what the bank hopes is a more customer-friendly launched MultiBank, an up-market institution aimed at the automated: 51% of respondents to our survey say complement that with our CRM tools,” explains approach to doing business. Says Jim Hytner, country’s rising middle class. the most common transactions among retail Mr Reid. Barclays’ marketing director: “Banks have for a long From nothing five years ago, MultiBank has since become one of customers are cash deposits; 44% point to cash time come across as unfriendly simply by the way Poland’s leading online banks with an affluent and growing withdrawals, 32% to money transfers and 32% to they communicate to customers. The chain on the clientele. MultiBank realised, however, that it needed more than deposits of cheques. pen sums up the relationship banks have had with just an Internet link and a call centre if it was to become a trusted their customers for too long – basically we don’t institution in its own right. So now the bank has 60 branches trust you to leave this pen behind after you use it, throughout the country, many of them in Poland’s thriving yet we expect you to entrust us with your life savings.” Instead of chaining its pens to the wall, regional towns. Banks are focusing on automation Barclays now gives them away free to customers “We wanted to combine the best in friendly banking with the who want them. latest in new technology,” says Bartosz Brzozowski, a director at How has the average number of self-service machines within each of your company’s bank branches (eg, cash That said, the bank still has more to do in the parent BRE Bank. To achieve this, the bank set about creating machines, self-service kiosks) changed from three years integrating Woolwich, a former building society a network of branches that were in tune with the aspirations of its ago, and how do you expect it to change over the next that it bought for £5.4bn in 2000. In June, Barclays affluent customers. Modelled on the homes of its clients, three years? (% of respondents) Compared to three years ago Expected in three years’ time said that it was re-branding 373 Woolwich MultiBank’s branches smack more of Ikea than the premises of a branches as Barclays and closing down about 10% traditional, high street bank. of the total in locations where they were too close more, on average same, on average fewer, on average The reason is simple. “Everything is designed to have a positive to each other. Eventually, around 2,000 of the impact on the customer,” says Mr Brzozowski. While there are bank’s branches will sport “Woolwich zones”, specialising in mortgages – a sign of the machines for dispensing and handling cash, much of the branch is importance that branding has in competitive given over to comfortable areas where customers can browse through brochures and meet representatives of the bank. Up close and personal require. If, for instance, somebody comes in markets such as mortgages. clutching a travel brochure, it is a clue that they With the housing market in Poland taking off, many of If the technology already exists, what is holding the may have some specific financial services needs MultiBank’s customers are eager to take out mortgages. Others industry back? One concern is that, by getting that we may be able to help them with,” he says. Automatic seller machines are interested in the bank’s credit cards or stockbroking services. customers to do more for themselves in self-service Not only is the system welcomed by customers, it Many such products break new ground. For example, the bank’s kiosks and the like, banks will lose face-to-face quickly becomes apparent, too, according to Mr It is not just within the branch itself that banks are changing their style. Many realise that they are credit cards can be secured against a customer’s home, so giving contact with the very people from whom they seek Neal, how many opportunities to help and advise missing out in other areas too, particularly when it the bank extra security and the borrower a keener interest rate. more (higher value) business. Once that day-to-day customers were lost under the previous branch contact with customers is lost, banks fear there is a comes to identifying customers and capitalising on Off-set mortgages and accounts which consolidate a customer’s layout. risk of losing them altogether. opportunities, however brief, to sell to them. Take banking and stockbroking are also becoming more common. Like those of competitors, Alliance & Leicester’s the ubiquitous automatic teller machine, or ATM To overcome this problem, Alliance & Leicester has Yet an increasing amount of cash still circulates in Poland’s new branches do more than simply break with (another unfriendly acronym that Barclays has turned to a system pioneered in America. The tradition. “The whole look and feel is retail. We banking system – partly, it seems, because of the rise of the chosen to ban). Under the guidance of technology ensure that they get access to the right service in have turned to retailers for our inspiration: the shadow economy and higher taxes. Does this mean that banks will firms, banks are examining ways of using cash order to meet their needs. This could be self- walls are constantly changing to different colours, continue to rely on their branches to handle cash? Yes and no, machines to strike up a dialogue with their service equipment or a specialist sales advisor. The there is music. The branches are much more like a according to Mr Brzozowski. To cut costs, institutions are customers. For example, if cash withdrawals are results are encouraging, says Tim Neal, the bank’s shop than people’s idea of a bank,” adds Mr Neal. encouraged to introduce new technology, such as machines that one of the most common transactions in branches, senior manager of retail development. “The why don’t banks use the few seconds it takes to accept used bank notes and re-issue them to customers wanting welcomer is in a position to speak to every single Barclays, the UK’s third-biggest bank, is moving in cash. But in the long run the branches of up-market institutions clear a transaction to talk directly to the customer? customer who comes through the door. He or she a similar direction. Earlier this year the bank such as MultiBank will concentrate less on transactions and more can engage them at a human level to see what they unveiled a new format, which is to be rolled out on dispensing advice and selling high-value products and services to the most demanding of customers.10 THE RETURN OF THE BRANCH? THE RETURN OF THE BRANCH? 2
  7. 7. Many banks would like to, but have yet to link shots and produce better results. The bank found their ATMs to the software that manages their that this way the take-up on offers for credit cards relationships with customers. was 50% higher than by conventional mail as well as a lot cheaper. In a market such as Singapore, Those that have done so are often surprised by the where time deposits are popular, OCBC also sends results. In late 2003, Singapore’s OCBC Bank was messages in this way to remind customers that one of the first to connect its network of ATMs to their deposit is soon due to expire. its data warehouse and system of customer relationship management (CRM). The bank had It may not be long before banks in Europe adopt already extended its CRM system to its branches similar tactics. For example, ABN AMRO already and to its call centre. As a result, when using the greets customers by name when they use cash bank’s ATM machines customers can now skip machines in the Netherlands. The next step, says certain sections and so personalise the steps they Mr Mackor, is to pass on messages such as: “Your take – rather as if they were on their computer at new credit card is ready for collection at your local home. For example, instead of having to go branch.” Before long, too, the bank could be through every sequence or screen shown at the sending personalised marketing based on its ATM, a customer can go to the equivalent of “my knowledge of a customer’s banking and credit transaction” to withdraw a regular amount of history—for instance, "If you would like an adviser cash. OCBC also uses the software to send a range to call you tonight to explain a new product or of personalised messages to customers via the service, answer Yes now”. ATM. Such messages cost a fraction of direct mail technology (37%), only 13% have started using therefore prepare themselves for a conversation. However, a number of customers are likely to be wireless terminals, which enable staff to serve By downloading a simple version of the customer’s put off by such tactics, regarding them as an customers anywhere in the branch. profile, an adviser can quickly focus on that Different branch styles are emerging intrusion and many would resent the fact that persons needs. “Big Brother” seems to be prying into their affairs. Being able to identify customers quickly and easily Which of the following most closely matches your company’s If they are wise, banks will allow such customers to is the key not just to better relationships but also Are such systems about to be rolled out by most intention for the majority of its branches? opt out of the system or risk losing them to increasing sales, reckon many observers. The banks across Europe? Not yet it seems. Few banks Other altogether. Auto-ID Labs, Accenture and IBM are among a seem ready to spend hard cash on equipping their number of technology firms working on RFID branches in this way, partly because they first 4% It is no surprise perhaps that 70% of respondents applications. This is a system that, among other need to spend a sizeable sum revamping them. to our survey say that their firm already has or will things, alerts businesses when a valued customer Only 2% of respondents to our survey say they soon install sophisticated CRM tools that will allow walks through the door or shows an interest in a already use RFID tags, and less than 10% reckon 22% them to make better use of opportunities to 37% particular product or service. their firms will install them within the next three We aim to provide a market products and services to individual mix of these approaches, years. Other technologies, such as biometrics, customers. Just under one-half also say they are The system is usually triggered by an electronic customised for different might receive a boost in the future, especially if, locations set up to deliver text alerts by mobile phone. tag embedded in a customer’s card or 10% for example, the UK government’s plans for incorporated within, for example, product Thereafter, however, the picture becomes less biometric identity cards move ahead. For the time 6% We aim to create literature. This allows a company to update a We aim to focus on being, however, implementation is limited. smaller branches clear. Few respondents (28%) say their firms have, self-service, by supplying customer’s profile automatically if the customer numerous cash machines that provide a more or intend to have within the next three years, We aim to create intimate service departs with a brochure on, for example, products and self-service kiosks for remote access so that staff can bring in experts for customers larger branches with to help them manage their wealth. The idea is that numerous till points for consultations with prospective clients over the valued customers are not only given preferential rapid service Internet or via video links. And although a treatment, but that staff are forewarned and can reasonably high proportion of banks have implemented technology to speed up the way staff handle transactions, such as cheque scanning12 THE RETURN OF THE BRANCH? THE RETURN OF THE BRANCH? 13
  8. 8. Conclusion At issue is not whether customers continue to visit branches but what they do when they get there. The pattern then is clear. Guided by technology New technology, and customers’ increasing companies, banks are not only beginning to reap familiarity with it, will cut the cost of handling cash rewards from the investment they have made in and so free up tellers for re-training. Branches will CRM systems. They are also learning how best to become places where their customers do business, capitalise on their branches – or, as some American not just shuffle paper and carry out mundane bankers with retail backgrounds prefer to call transactions. them, their “stores”. The investment that is now going into banks’ Without doubt, customers will continue to drift outlets is certain to involve more than a nod in the towards the convenience of online and telephone direction of retail trends. Banks will need to draw banking: 62% of respondents believe that Internet heavily on the experience of successful and banking will continue to increase significantly over enlightened retailers. If they do not, like many the next three years, whereas only 19% expect any tired brands before them, banks risk undermining kind of increase in the usage of bank branches. A their retail franchises. further 34% believe that there will be no change in the usage of bank branches. The return of the branch? The five technologies most likely to be adopted Which of the following technologies do you anticipate will be implemented within your company’s bank branches? Customer relationship management tools Cheque scanning technology Video displays Mobile-phone-based alerts Virtualised call centre yes, we already have this yes, within the next three years yes, but no timeframe has been established no14 THE RETURN OF THE BRANCH?
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