Torture chamber to engagement space
There is a change going on in the banking industry that is not about balance sheets and liquidity. It’s about what people need a high-street branch for, and how the banks are trying to get better utilisation out of hectares of retail space.
It is not news to anyone that banking is in a state of flux. The relationship between the banker and the customer is shifting, the category is over-banked in every developed country of the world, reputations have suffered around the economic meltdown, and New Zealand’s banks are under scrutiny for tax irregularities. In effect the shine has gone off.
250,000 reasons to innovate
The physical relationship between customers and the branch has also been tipped on its head. The increase in online banking capability has enabled customers to do their banking remotely, allowing them they avoid the queues and the in-branch sales pitch. The upshot of this is that the branch as we know it has started to morph into something new and better.
But the big banks have a big problem on their hands - over 250,000 square metres of under-utilised banking chambers in New Zealand alone. A big bank in here might have over 50,000 metres of space that would make any retailer’s eyes water with regard to ROI. The branches are overly large, in high rent districts (e.g. main street NZ) and for the most part are doing incredibly low value transactions (cash in and out). However, the downsizing of retail networks that started a few years ago has eased back as the banks have realised customer-staff contact is a key relationship-stickiness enabler, meaning they are still paying for a lot of space.
Around the banks, other retailers (their neighbours) are lifting their game and customer expectations about what makes a good high street experience. Most retailers are now talking about knowing their brand idea, creating a memorable experience, basing their business on substance not style, being constantly innovative, engaging the frontline, giving people permission to linger and integrating their online and offline experiences. The smart ones have read Paco Underhill's "Why we buy" and regularly quote from it. They live or die on visual merchandising and making their stores inviting and engaging, creating places where customers will linger, chat and buy!
Balancing customer and business needs
There is also the dichotomy of what customers want versus what the banks want to consider. Customers typically want to do one thing in the branch - complete their transaction and get out fast. They want speed and efficiency, and anything that gets in the way of this is pure torture. Conversely, the banks want customers to linger in branch. They want them to ask for advice and receive information so that they can solidify relationships and sell products. They want engagement.
Somehow, banks need to create a happy duality. They need to provide a streamlined experience for the ‘transacting’ customer. But they also need to find ways to draw in new customers while interrupting existing ‘browsing’ customers with meaningful information (without annoying them), to enable greater engagement and meaningful conversations. The retail space needs to be designed to remove the sense of trepidation from the bank visit (e.g. the queues and delays) and cater to different customer needs.
So ultimately the branch environment must be, well, different...more retail like, which is why the torture chamber is turning into a place for engagement. As is often the case, learnings around service benchmarks and technology application are being taken from other sectors. The lead that airlines and telco’s took with in-store digital screens is now becoming central to the branch environment. Product information and packaging is being given more priority. While delivering a customer focused retail experience is becoming par for the norm.
One of the banks making a real push in this area is BNZ. With it’s Out of the Box banking approach BNZ has created a merchandising system for its products using 'packaging' on merchandising fixtures that would be at home in a department store. The packaging itself is akin to a fine range of coffee or mobile phones, with bright, clean designs and a sophisticated finish that draws the customer into picking them up.
Customers can browse the packs like they would a range of products. They are encouraged to take them home or read the material in branch. The packs contain information and content designed to empower them to make product comparisons and to better understand complex financial services, and decisions. Secondly, and perhaps most importantly, by watching what the customer is browsing staff can start a meaningful conversation.
So the development of the new high street banking experience is well underway. Maybe it will be the retailers playing catch-up to the banks in the future? This will be an interesting space to watch.
Related to this topic is the article by Sherryn Macdonald (DNA) on how understanding mental models is imperative if you are to package products and engage customers in ways they have never seen or experienced before.
Disclosure: DNA works for the BNZ and did work on the Out of the Box banking project.
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