Speaking to customers could be a good start.

Computer says: “I’ve got no real-life event experience myself, but I know exactly what you need ….”

I’ve generally always liked retail bankers. If I had cash to save, needed cash to spend, needed a house etc. Financial Institutions were solid partners, held my hand and made me feel valued. From my first salary at 16 to when I left home, bought property, got married, had a daughter and in turn, she needed student facilities – these guys have been knowledgeable partners smoothing out my frowns.

However, as modern FI’s effectively evolve into digital giants, minimising advisory networks and accelerating towards a model reliant on analytics to maintain customer loyalty and profitable relationships, I worry about how the next generation will manage those same, complex life events.

Consumer Says: “Ok, I’m willing to give you a try, but I prefer my way if I’m honest”
I get it. Business models need to move with consumer trends, and if we all genuinely want to bank in our pyjamas then which FI wouldn’t want to enable that? But do we actually all want to bank differently and are branches unprofitable, because we don’t visit them every lunchtime? I think that’s worth testing. Here’s a bunch of stats, which to my mind, lay out a self-fulfilling prophecy

• McKinsey* says 70%+ of consumers are willing to open accounts digitally, BUT, in the same breath only 30% prefer to do it that way.
• Cap Gemini** says that a whopping 75% of customers rate Mobile, Physical and Phone channels as equally important.
• That same survey states that over 45% of customers say banking lacks personalised integration in their lives.
• And the final inevitable output? 44%** of FI’s say they struggle to boost product use frequency.

So, are we really getting what we need from our rapidly evolving FI? I’m not sure.

Financial Dating in your Fifties
As a daily banking app user, hopeful that AI and other digital advancements can predict exactly what I need – I’ve been excited, patiently waiting for the online magic to happen. If maturity and financial product ownership was translated into a dating profile, I think I’m a potential “catch” with 12 separate products up for grabs by a prospective partner. But for the last 5 years, my app hasn’t engaged. It has been an efficient, but silent partner that I wake up with every day, seemingly unwilling to pop the question: “How about a relationship review with me?” to which I would have cried “Yes, oh Yes please!!”

For those 5 years, I’ve had the lonely job of self-managing my financial well-being and smiling meekly as friends boasted of “dynamic, fulfilling partnerships” that breathed new purpose into their previously dull, financial lives.

An Autumn Romance
To my delight, the attention drought ended this summer! However, not via my passive “award winning” banking app, but thanks to fresh management in my local city centre branch, pro-actively picking up the phone and simply offering me a short relationship review, “at my convenience”. Oh the joy!

What a successful first date! After 45 minutes of free-flowing chat, I felt part of a valued partnership again. My Personal Banker’s enthusiastic questioning and interest helped me open up, daring to share all my goals and life dreams! And what did they get? A calendar jammed full of authorised sales opportunities for them to sign me up for their products over the next 24 months – a pretty fair bargain I’d say.

Do we really need a whole new look?
Let’s draw some rapid conclusions here. Covid tested our fundamental buying habits, and Retail Banking felt that. Globally, Banking Product sales dropped 14% as we stopped attending branches. BUT there was only a 4% increase in digital sales*. New accounts, savings and investments typically command the highest product ROE*** for FI’s begging the question – is migrating sales of these important products to self-service channels the right balance for customers when over 70% prefer to do it face to face?

Clearly potential still exists in branch networks, as digitisation can’t yet replicate a motivated, well managed Personal Banker, capable of generating up to 6x their fully loaded cost in annual revenue. Furthermore, McKinsey estimates that performing branches deliver 7x* the value of underperformers – how many decisions to permanently close branches have been taken because they have lacked investment that would have assured sales staff achieve peak returns?

Take a fresh look at your wardrobe
Branch performance used to suffer all the issues of a physical store: Staff sickness, staff holidays, staff travel issues which, when combined with insanely high volumes of transactions, made sales performance very hard to manage.

Now that routine transactions are shared so equally across multiple channels freeing staff to engage in branch, isn’t this the time to leverage the channel where 70% of customers prefer to open accounts and discuss investments? To take control of product sales rather than leave it to chance, amongst a sea of online competitors?

The final word
If 75% + of customers see Branch, Phone and Online banking channels as equally important then shouldn’t this be the driver for how FI’s balance investments.

Glory provides a range of Branch Transformation solutions supporting staff to manage routine cash and non-cash interactions as they work with their customers to develop mutually profitable relationships. Learn more here.

*McKinsey Best of both worlds: Balancing digital and physical channels in retail banking 2022

**Cap Gemini World Retail Banking Report 2022

***McKinsey Value Creation in Banking 2023