The growth of mobile is accelerating the shift of banking interactions from physical channels to digital ones, leading banks to change the culture of their branches, according to new research by Ovum*. This is driven by banks’ desire to cultivate greater levels of loyalty and profitability from their customers, with the in-store experience a key differentiator.
Digital channels are changing the way customers use banking services. Their convenience means consumers are now more likely to access their finances on their mobiles than ever before. This has been beneficial for banks, as digital channels are cheaper to use, with the cost per transaction being much lower for them compared to stores. Although the infrastructure costs for branches are fixed, they are under scrutiny to streamline their operations, but this is a short-sighted approach. With improving economic conditions, organisations realise they cannot grow by solely cutting costs and need to look at new revenue opportunities. Research from Ovum** demonstrates major banks understand this, revealing that branches were the third highest investment priority for them, behind online banking and mobile banking respectively. This is reflected in another Ovum report*** in which it is predicted spending on branches will rise by 3.44% annually on average between 2014 and 2018.
“For many banks, the long journey of branch transformation is just beginning. The first steps will involve rearranging stores. This will take inspiration from retailers, who are experts at the science of sales-driven store design,” says Jaroslaw Knapik, senior analyst, financial services technology, Ovum. “With people unlikely to sign-up for new products and services after queuing, making customers relaxed throughout the experience is key in transforming branches. This will occur alongside a focus on increasing efficiency, including reducing headcount and the installation of express banking terminals.”
A successful branch transformation project requires the right technology. Consumers now expect banks to have a seamless, single view of them. Banks on the other hand, desire to sell to their customers in a more informed manner, meaning they need consistency and unification, something CRM integration technology enables. Staff must also be supported by technology in new branches, with services that speed up processing of queries critical. Video technology can also play a key part in transforming stores, as it means specialists can hold dialogue with consumers wherever they are, reducing costs and improving customer experience.
The shift from physical to digital banking means banks to need to alter their stores to become sales-orientated, rather than focusing on service. Jaroslaw Knapik concludes: “It is key for banks to increase customer intimacy in branches, as this can lead to greater customer loyalty and profitability. They should invest more in enhancing the customer experience, in turn creating a sustainable model for the branch network of the future.”
NOTES TO EDITORS
*The Impact of Digital Transformation on Bank Branches
** ICT Enterprise Insights – Global: Retail Banking (September 2013)
*** Retail Banking Technology Spending Through 2018
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Ovum is a leading global technology research and advisory firm. Through its 180 analysts worldwide it offers expert analysis and strategic insight across the IT, telecoms, and media industries. Founded in 1985, Ovum has one of the most experienced analyst teams in the industry and is a respected source of guidance for technology business leaders, CIOs, vendors, service providers, and regulators looking for comprehensive, accurate and insightful market data, research and consulting. With 23 offices across six continents, Ovum offers a truly global perspective on technology and media markets and provides thousands of clients with insight including workflow tools, forecasts, surveys, market assessments, technology audits and opinion. In 2012, Ovum was jointly named Global Analyst Firm of the Year by the IIAR.
In addition, Ovum operates a large portfolio of technology conferences annually in Europe under the OvumLive events brand, presenting a more interactive opportunity to learn from its analysts. Its flagship event – Ovum Industry Congress – attracting over 300 end-user attendees every year.
Ovum is a division of Informa plc, one of the leading business and academic publishing and event organisers globally, headquartered in London. Informa is quoted on the London Stock Exchange.