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Banks need to up their tech game to tackle vanishing branches

It’s no secret that everything is gradually making its way online, be it the weekly food shop, ordering taxis or searching for your next home. All of these and more can be conveniently done anytime, anywhere from a smartphone – and we know that banking is no exception.

It was revealed in January this year that Hull will lose its last remaining Co-op bank, with the branch scheduled to close in May. But Hull is no anomaly; the plans follow the closure of a record 800 UK bank branches in 2017, and at least 300 more are planned for 2018.

Closures are part of a widespread trend that’s sweeping the nation. Recent research found that online banking is now the primary method of banking for UK consumers, overtaking in-branch visits for the first time.

With a host of data available to back up the decline of in-branch visits and increasing competition from fintechs and low interest impacting providers’ profits, closures are only a natural reaction. So then, what can traditional banks do to increase customer engagement, and consequently loyalty, in this changing digital landscape?

Personalisation is key for digital banking

For banks, every moment of interaction is a chance to impress customers and make them aware of other areas in which they can add value, which can ultimately drive long-lasting engagement. Just because they have less face-time doesn’t mean there should be no personal touch. A recent report found that a number of banks are missing out due to a lack of personalisation. It found that 67% of consumers would be more likely to take out a loan or credit card with their current bank if they received personalised advice, with 68% saying that their relationship is purely a ‘transactional’ one.

Clearly then, personalisation presents an opportunity for banks to increase customer engagement and improve the customer experience in a world with fewer physical branches. Challengers like Monzo are already doing this well – the mobile-only bank uses data on its customers’ spending habits to offer them financial advice, ultimately helping them to save money, budget responsibly and find better deals. For example, in the past, its data showed nearly 30,000 of its customers used their cards for transport in London – so Monzo advised them they could save money if they invested in a year-long travel card.

Digital bank Atom is also leading the charge. In a clear sign that it wants to offer customers something different, it acquired software company Grasp, which specialises in games and virtual reality development, to improve its digital platforms. Atom’s app lets customers personalise the app experience by choosing a logo, name and colours. By allowing them to adapt the interface to suit their personal preferences, the banking experience becomes truly unique and improves customer engagement and experience.

At the heart of modern customer engagement lies data driven marketing and personalisation, and banks should learn from its challengers. Virgin Money is the latest to recognise this necessity, after announcing last month that it spent £38.3m in 2017 on building the technology behind its new digital bank, which is set to find tailored products for customers based on data held about them, including lifestyle preferences. No longer is it enough to just know your customer’s birthday. The next stage for customer engagement is to know the ages of their children, their favourite sports teams, where they like to go on holiday, how active they are on social media. Only then can banks offer rewards and experiences that are truly built for them.

Ultimately, banks need to make sure they’re interacting with their customers at relevant, opportune moments and in the correct ways to drive engagement. While face-to-face interaction should always remain an option, it is vital that providers begin to explore other methods of customer engagement. Personalisation is key for success and by building and offering experiences that are both personal and outside their normal remit, banks can demonstrate their importance in new ways and add real value beyond what their customers typically expect.

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Karen Wheeler

Karen Wheeler

UK Country Manager

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This post is from a series of posts in the group:

Digital Banking Trends

Digital Banking trends and Industry Intelligence for Bankers, Fintechs, and Solutions Providers


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