Many banks and retailers across the world are in the process of re-defining the purpose of their physical network, as digital innovation continues to transform customer behaviour. Most are simply wondering: What true value, do physical spaces bring in a digital-first world?
However, every challenge that is being faced is also an opportunity for growth that could lead to a stronger, more resilient position. There are numerous solutions to these challenges, but with the ever-changing retail environment seeing a significant shift from product-based stores to immersive, brand building experiences, I see this direction as the future sweet spot for branch networks.
I wrote an article for the Financial Brand in 2019 that focused on financial wellness and the role that banks could play in making customers feel more confident about money. Today, in a post pandemic world, we do in fact see a softer more empathetic position being adopted by many banks. I believe that this approach still has many long-term benefits and can help provide a new purpose for branches. In many ways, the immediate challenge of customers disengaging with branches (while branch running costs increase) presents a great opportunity to transform spaces that are long overdue a rethink. Although the majority of customers say they still want bank branches in their lives, the reality is that the frequency of visits are now few and far between. It’s more of a theoretical, emotional or even nostalgic attachment.
In my view the future for financial spaces will see less of a focus on a network of would-be sales centres and more thought given to creating a life-led strategy that is integrated with the needs of the local community. Ultimately this could lead to a more balanced, symbiotic relationship where they regain their central position within communities by providing valuable recourses, knowledge and infrastructure in return for customer loyalty that would be sustained through digital channels. This balanced physical support system could take on many guises; I have outlined below a few of the possibilities.
We need to humanise branches by putting the right people in the right places, not creating machine-parks full of equipment. One example of the direction would be to focus on the role that banks can play in sharing knowledge. People value well-founded advice and knowledge centres, tailored to meet customer’s life needs could provide an invaluable local resource. Customers would primarily come to these places for complex advice or troubleshooting, but based on a better understanding of their wants, these physical spaces could also play a key part in making connections within communities to share ideas and bring opportunities to life.
This will allow branches to sit at the centre of a digital eco-system, reflecting the world consumers inhabit while also being a base for a mobile workforce, a shared space, used equally by customers and staff.
One inspiring example of a financial institution leveraging its knowledge and experience to the benefit of consumers is the initiative called 10000 Small Businesses from Goldman Sachs. The programme is designed to provide high-quality, practical education and business support to leaders of high-growth small businesses across the UK.The initiative is run in conjunction with Oxford University and shows the power of blending business and learning institutions, with the goal of sharing knowledge that will help people get ahead in their lives.
The work we have recently undertaken with Bank Danamon inIndonesia is another example of this principle. The branch programme supports the bank’s vision of helping people achieve prosperity by guiding them through life’s complex decisions by creating social spaces for people to come together and learn the skills they need to achieve their life goals. We are no longer talking about branches but platforms for sharing knowledge, learning, community engagement, showcasing local businesses and financial growth. These new interactive platforms will offer consumers the skills, knowledge and confidence they need for a better life, welcoming them within a community that seeks out the new and delights in learning. Reassuringly, this approach has also achieved considerable commercial success. Bank Danamon’s increase in sales performance from new sites shows an uplift of 43% and illustrates that the results will come, once the purpose of the branches matches customer needs.
43% increase in sales performance from new sites.
Health wealth Centres
In 2019, I stated that it is critical for banks to empower their customers to approach money with confidence. With economic pressures and the environment, we see today, this is even more critical. There is a great opportunity to create places where customers can discuss major life decisions in an environment that is open and welcoming. It is critical to be able to translate this into both the overall design and the personalised experience.
There are numerous parallels between finance and healthcare. When you look at the changes in healthcare, you'll notice an increasing shift towards holistic wellness, towards guiding people to live abetter life. Finance is similar in some ways. Rather than focusing on describing a solution to a problem, try to avoid the problem in the first place.In finance, by assisting people to be happier and more confident about money, you avoid a lot of the negative issues that are associated with people who struggle to manage their money: debt, stress, illness, and everything else.Additionally, there has been an overemphasis on product sales in finance.Again, this slightly short-term view is relatively counterproductive because it reduces trust and opportunities to have conversations that are broader than just finance.
A great example of a bank taking a more empathetic approach to finance is Discovery Bank from SouthAfrica. It is no coincidence that Discovery originates from the healthcare sector, which has led them to approach finance in a completely different way. They have created a set of behavioural banking tools specifically designed to change people’s financial health and improve their lives. Currently Discovery is only a digital bank, but it would be interesting to see how they would approach physical spaces.
For those working in banks it can sometimes be difficult to grasp how intimidating money matters can be to some people. However, the majority of the world’s population are not confident with money. Financial discipline can still be foreign to them, they can feel awkward about talking a bout it, and not particularly good at managing their money in general. Making people feel good about and in control of finances, making the subject something they can relax about and even enjoy, is a huge step forward.
Can we create physical environments in which it feels acceptable to discuss financial vulnerabilities; for those that may have never checked their bank account, are unable to use online banking, or are in debt. BarclaysLifeSkills programme is a great example that addresses exactly these issues. https://barclayslifeskills.com It is specifically designed to provide an opportunity for adult learners to increase their confidence and gain new skills in relation to employability and financial capability.
TheFinancial Gym is another such service, with its concept of ‘the B.F.F. - Best Financial Friend’ they are offering personal tutoring to customers looking to get their finances into shape. By using the format of a personal fitness trainer, they offer advice and guide people to where they want to be in a non-judgemental way.
By harnessing some of the thinking behind these examples it can be possible for banks to create inspiring places within communities that will facilitate people becoming more confident about money and the part it can play in a happier life.
It's essential for banks to stay relevant in the minds of consumers as competition increases and methods of managing money evolve. They could consider re-establishing themselves as pillars of the local community, a position they may have held 100 years ago but have since lost. There is a great opportunity for banks, building societies and co-operatives to act as a focal point, facilitating others to come together. This is a very different role from the typical strongly branded ‘Flagship’ concept; this sits subtly within its surroundings, allowing others to shine. By becoming the local ‘host’ banks could be able to recapture a skill that they once had, to be the ultimate ‘connector’. By going beyond finance, they can be at ease with allowing others to provide a whole spectrum of services, whatever else the community requires within their spaces. In this way, they stay relevant, providing a service that people truly value, and are apart of the conversation.
Our recent work for Turkey’s İşbank is a good example of a big bank re-engaging with its community roots and they have shown the confidence to take a step back and create a place for the people. With fewer clients visiting their branches due to the popularity of their digital platforms, İşbank sought new ways to connect top resent and future clients. The ‘İşMekan’ concept (Mekan means space in Turkish) creates a new generation living and working space by utilising the İşbank ecosystem, transforming the branch space into a place to engage differently and build lasting human connections. The new space plays host to a wide variety of activities and brands, these include a book shop, a pop-up (showcasing Isbank’s online marketplace Pazarama), events area, bookable meeting rooms, coffee shop and co-working area.
Crucially, the physical experience is supported with a mobile application that allows customers to find out and book for inspirational, educational and social events at the venue. One can imagine how that concept could evolve, where their presence becomes even more subtle as they become more widely used, and their roots reaching deep into the community. The local heartbeat, accessible to all, capturing the very soul of the neighbourhood.
US based Umpqua Bank who have more than 350 branches in Oregon, California, Washington, Idaho and Nevada have seen theirs paces as stores for the local community for over 50 years. These are places where people can hang-out, use meeting rooms for their own projects, attend workshops or even wellbeing classes like yoga or movie nights for kids. This approach also means that they are open outside of traditional banking hours, and each of Umpqua’s employees are trained as generalists, meaning that no customer ever has to wait to be seen by a specialist for their particular need. Umpqua have absorbed best practice thinking from the worlds of hospitality and retail in a way that creates a relaxing, harmonious environment that encourages people to hang out. Guests are welcomed with a coffee and encouraged to browse products from a roster of local companies or grab a book from the free reading library. We have cited Umpqua as a great global benchmark on many occasions and it is heartening to see their ongoing success, providing an inspirational point of reference within the finance sector.
The Next Chapter
Although there is naturally an overlap between these three directions, they each have a fundamentally different core to their purpose. It is not impossible however to imagine a concept that might blend certain aspects of each, or indeed all three. The closest we have come to achieving this mixology is B-Works, a concept that we created for CYBG banking group in the UK. B-Works blended social learning, knowledge sharing events and a venue for local entrepreneurs with an overall goal of making people feel happy about money. Rewardingly, it performed 300% better than any other branch in the CYBG network. This case study proves that generously giving over a valuable physical resource to the community and achieving outstanding sales performance are not conflicting goals.
For me, the future for spaces hosted by banks is very much assured, as there will always be a desire to sit down have a proper conversation about life and finances. However, there will be no future need for transaction spaces, as these will be conducted completely online (and cashless);self-service & ‘digital’ transactional branches will be consigned to history. Bank branches have relied on 80% of their footfall having to walk through the doors to transact and shifting to a position where people want to visit, rather than need to, This transition is a huge challenge, requiring a new set of skills and a refined purpose.
If you agree that physical spaces are essential, then the single biggest challenge that banks face for their branches is creating places that people want to come to. As we see also across the retail and hospitality landscape, the future of all kind of spaces, is going through a fascinating metamorphosis. In time however, we will see vibrant places, full of people who choose to be there, playing a vital role within communities and life in general.