The revolution has spanned multiple dimensions: banking as a profession has shifted from an art to a science; the core skill of the workforce has transformed itself from excellence in repetitive tasks to excellence in understanding customer behaviour; the operating model of a bank has evolved from servicing a high volume of transactions towards using information and data to manage complex needs; the delivery of banking services used to be exclusive to highly regulated entities – now it’s an ecosystem of partnerships.
And, the revolution continues. When I started out, we could move the dial on market share for a client by ‘modernising’ the look and feel of a branch. It was enough to apply retail concepts to an outdated industry.
Today, technology has shifted the balance of power from bank to customer, and with that shift comes a new frontier of personalisation, customisation, integration with lifestyle and knowledge engineering. We can already see some of the high peaks of the next cycle of this revolution because its already upon us. Payment is the new, core battleground for customer ownership and retention; e-commerce is the entry route into banking for many non-bank giants; mobile devices will become personal banking assistants switching will become easier and loyalty will decline..
Banking customers will use up to five service providers operating together; trust will be as much about service innovation as balance-sheet strength.
So what about the branch, you may ask? Is the destiny of physical assets to be displaced by digital channels? Can the branch survive the next 10-20 years in a recognisable form? I have always been clear about my answer to that question, about the need for branches to adapt or die. Selling that philosophy has been my life’s work.
A bank customer is, like any other citizen, a fundamentally social animal with a strong need to engage with a peer network to make complex decisions. Artificial intelligence can replicate human interactions in many important banking tasks but it cannot replace the need for human engagement.
So the branch is going to have to adapt yet again, and in three critical ways: firstly, it has to retain its appeal as a place to spend time; secondly, it will have to fulfill digital wants alongside physical needs, and finally, the branch will have to deliver value in excess of an online encounter.