There are always discussions in our industry about how best to build and maintain relationships with customers, and that’s a good thing. Too often, however, it comes down to forcing a choice between rethinking the branch approach and relying heavily on online and mobile technologies. That’s actually no choice at all—we have to make them work together.
First, let’s acknowledge that despite shrinking numbers, the branch isn’t exactly going away anytime soon. Sure, a whopping 80% of retail banking transactions are now conducted through self-service channels, admittedly including ATMs and voice-driven instructions. However, it also appears that a majority of retail customers now visit the branch at least once every six months. Those face-to-face interactions are surely important for long-term relationships.
That‘s why, on this blog, we’ve often admired alternative approaches to branch banking. Some institutions have introduced innovations such as teller pods and community rooms, while others have become interchangeable with event spaces with cocktail lounges. Odd as all this sounds, especially out of context, it’s exactly the sort of new thinking the industry needs to keep customers coming in.
There are plenty of other good ideas in this vein. For example, one institution getting positive interest is Umpqua Bank, which launched over 60 years ago in Portland, Ore., and has since spread quite wide. The concept behind its operation—it calls its outlets ‘stores,’ and goes very far in making the personal experience quite personal—has since been adopted by much larger corporations.
Here’s one sign of its success: Umpqua has gone from four branches in the mid-’90s to 400 ‘stores’ today. There are numerous stories of its commitment to customer service, and it hosts ‘business therapy’ sessions at its stores. (The jokes about the connection to the IFC network comedy show Portlandia virtually write themselves.) This is down-home banking with a billion-dollar payoff.
On the flip side of the equation—but not really, and that’s the point—is the relentless focus on digital tools that ease the banking experience for every customer, regardless of the complexity involved. For example, as mobile banking increasingly becomes the norm, there is ongoing debate about how to develop a mobile web presence to match the flurry of mobile apps. In particular, has the institution done its job if the mobile app links to a ‘traditional’ website, or should there a mobile-specific site option?
To many consumers, this is a discussion that belongs firmly in geek world. For financial services professionals, however, it could spell the difference between success and failure. One potential problem here is a factor that’s always been considered a luxury, the wealth of options. Google alone supports no less than three smartphone-optimized site configurations, and it’s unquestionably a critical differentiation. Add in the other complications: a broader range of forms factor and even operating systems than ever before, the staggering variety of customized mobile apps (some heavily customized for specific technologies, others with only a mobile wrapping), and of course, the varying levels of technological sophistication involved.
It’s easy to assume that everyone has a smartphone, since everyone we know seems to have one. And yet, according to the Pew Internet Research Project, the reality is very different. As of January 2014, 90% of American adults have a cell phone, yet only 58% of have a smartphone. Yes, that’s not too far over half, which means that a great many consumers can’t get e-mails, receive promotional messages, download custom apps or conduct financial transactions via the phone.
And finally, there’s this. Just because we can do something doesn’t mean we will do it—as consumers we’re fickle, and so are our tastes and habits. We might be notified of a possibility via the phone, follow up later on the PC, ask someone about it at the branch because we’re in the vicinity, then complete the deal on the ATM. You might call it human behavior, but in our industry it’s come to be described as omnichannel banking.
It’s not about the branch or the app, per se. It’s about developing options for each customer-facing channel as it becomes available, then ensuring that they all work together seamlessly. That means it will be increasingly difficult at the back end, but it should be increasingly simple at the front end, for customers. That’s the only way to offer true service.