4.5. Retail branch
of the future
15.
While the global financial crisis slowed innovation in the
banking industry, the trends in consumerisation and
customer expectations of banking have only accelerated.
Over half a decade after the crisis, and with global
economies rebounding, the industry needs to ask how
the high street offer changes to reflect the face of modern
banking, as we move towards an online offering and away
from the over-the-counter banking model of the last 100
years. A 2014 report by Ernst & Young and the British
Banking Association
15
found that in the UK mobile and online
banking transactions have reached almost £1bn per day, with
customers downloading banking applications an average of
15,000 times each day during 2014.
Large legacy property portfolios on ‘High Street’ or ‘main
street’ now seem out-dated and expensive, often housed
in buildings that were designed for security rather than
customer interaction. But as retail adopts new models, banks
are beginning to look seriously at new formats and ‘branch
of the future’ ideas are being developed to change the
retail experience. One global bank told us that, “we looked
at Apple to help us understand the retail experience and
customer loyalty”.
To attract customers into branches, the hours, approach
and service offering need to change – or the purpose of the
branch network needs to shift altogether. For those branches
that remain, the industry needs to ask how best to attract
the younger generation and generate new customers. One
of the factors that has allowed the industry to be a little
complacent is that research has shown that bank customers
tend to choose a bank at a young age and stay with that
bank. But just as employees change companies and careers
more often, and consumers in an internet age become better
informed and savvier, bank customers may start to change
their bank more often.
The use of retail branches as ‘third space’, enabling
employees to work nearer home is an idea considered
by all the retail banks that we interviewed, but none
believe that this is a viable real estate strategy option on a
large scale. Various trials have shown that the expense of
converting unused retail space is not matched by employee
uptake because in most cases the branch space lacks the
convenience of working at home, the buzz of working in
a coffee shop or other third space, and the interaction of
working in the main office.
Prediction
Omnibank: physical meets digital:
Banks should use the return of the
service-led high street presence and the
disappearance of processing at a local level
to drive a new model of retail banking,
and a more interactive relationship.
Footfall in retail branches will continue to fall at
dramatic rates, forcing banks to respond with a whole
new model of retail banking. Retail banking’s saviour
will be customer interaction, and as banking goes
digital the physical space will need a new raison d’être.
We believe that this will lead to more consumer-
focused branch designs, where customers can
socialise, drink coffee and work, as well as bank.
We will also see the rise of a hub and spoke location
model, with only city-centre branches offering full
services, and a network of kiosks and pop-ups to
replace the suburban branches.
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The future of the financial workplace
|
September 2014
