I read a recent article by Richard Dyson on Muzak and retailification of bank branches with great interest. Dyson highlights how some customers can feel alienated by the pace of change in branches. And yet banks are going through a revolution of change and becoming more retail. How can these trends be reconciled?

Some banks have sought to create an environment similar to retail stores with music. Others have launched interactive smart stores with touchscreens, self-service kiosks and staff wielding tablets. For the older generation, these changes are not always welcome. However, banks want to attract the younger generation and make them feel comfortable when they come into a branch. The younger generation are used to a more retail experience of the kind they find in malls and that, amongst other things, will include in-store music.

 Attracting a younger demographic is very important for banks, as they are the future revenue stream. A recent report by Celent (Myths, Misconceptions, And Enduring Truths - A Survey Of Digitally Directed Consumers, Sept 2013) stated that is it a myth that young people will no longer use branches. Whilst young customers don’t use branches as heavily for transactions (61% past 30-day usage among Gen Y compared to 79% among those 60 and older), as soon as a more significant conversation with the bank is required, young customers are just as likely to go into a branch as all the other age segments.  

To cater to these customers, we will doubtless see more change happening in branches. We will see more branches in supermarkets (http://www.bbc.co.uk/news/business-24853732). We will see more branches that look like Apple stores (http://thefinancialbrand.com/16452/citibank-new-york-hong-kong-flaship-branches-of-the-future/).

As well as changes to the formats of branches, banks need to think more ‘retail’ in other ways as well. Banks need to think about each customer interaction and how it can be personalised. How can banks provide personal service or sales information to each customer as they interact with staff in a branch?

To do this effectively, branch staff need to have access to all details of a customer; their relationship with the bank, their turnover, credit rating, etc - in a way that gives full picture of that customer. Branch staff need to be more effective at identifying and following up on sales and service leads. This will help the bank to make more personalised and suitable offerings to customers based on their needs. This can only be done by providing clear lead information across all branch systems. With the latest technology this should also be made available in portable devices like tablets.

Branches will keep on learning from the retail sector – and will continue to have to balance the interests of established customers with the need to attract the customers of the future.