The latest stats by the ONS have shown that 3 in 10 Brits don’t use online banking services, with many more choosing a mix of on- and offline banking. We need to make sure that their voices are heard.

Figures by the Office for National Statistics have shown that 69% of UK consumers use the internet for online banking. While this number has seen a steep rise in the last decade, it leaves almost a third of Brits relying solely on physical banking services. This number cuts through all age groups – contrary to popular belief, it is not only the elderly and citizens in rural areas choose to bank offline. With CACI counting 33 million branch visitors this year, we know that many more consumers prefer the choice of online and offline banking services for different occasions and purposes: A variety of reasons such as accessibility, privacy or security lead to people relying on ATMs and bank branches for their personal finances. A survey by MoneySupermarket found that 65% of people choose traditional banks because they trust them more in security questions. And over half of UK consumers are concerned that a cashless society would endanger their privacy and they worry about how this opens them up to the risk of cyber-crime.

What can we learn from these numbers? The future of payments does not lie with digital services and challenger banks alone. While the digital revolution marches on, there will continue to be a huge demand for basic physical services for years to come and those that fail to address this fact will lose out on a large and loyal customer group. We need to find efficient solutions to build bridges between the digital and the physical worlds of financial services in our communities. How? By innovating our bank branches and automated solutions in order to meet customers’ needs today and into the future.  Bank branches in particular should provide a positive experience for consumers and focus on providing personal advice on the important milestones of their customers’ lives, such as mortgages, inheritances or business loans.

Channelling offline innovation

Take The Halifax as an example: It has been leading the way with its new Oxford Street flagship branch. Rather than focusing only on traditional banking offers, the multi-faceted outlet has areas dedicated to travel and mortgages, and even hubs where children can learn about how to manage their pocket money. This layout is topped off with biometric safe deposits and an integrated café, offering free seminars on personal finance topics. While setting up branches at this scale is not feasible outside the UK’s largest urban areas, branch designers need to pay attention and banks should consider facilitating communal and educational meeting spaces in their branches. By integrating with local communities, banks will be able to use their space more efficiently and connect directly with their customers. Of course, reforming bank branch strategies means that banks will find it harder to provide physical services in some areas, especially in rural and isolated communities. This is where the UK’s ATM network comes into the mix because of its existing substantial physical footprint across the country.

Innovative self-service machines are able to provide those basic banking services that UK consumers rely upon on a daily basis. A strong ATM network is essential to provide easy and convenient access to cash across the UK, thereby boosting communities and local economies. Research by the ACS shows that 76% of customers in local stores pay in cash. This demonstrates the vital role that cash machines play in our town centres and high streets. This service isn’t just convenient for the general public – it has a positive influence on the sustainability of local businesses.

For local businesses, ATMs represent much more than a means for customers to withdraw funds. BRC research has shown that card transaction fees have drastically risen in 2017, with businesses spending almost £1bn on card handling fees. In light of this, it should come as no surprise that many independent retailers prefer cash as their main payment form which makes the availability of some form of banking service crucial for businesses to deposit their takings. This sort of facility could be offered by automated banking hubs, and enhanced ATMs offering cash deposit functionality, however recent moves to reduce the fees payed by banks to independent ATM deployers is making investment in this sort of innovation very difficult. There is a strong argument for an increase in ATM interchange that reflects the cost to serve and encourages innovation.  

Finding the right balance

What consumers are looking for in banking services is flexibility and convenience. Only the banks able to find the right balance between physical and digital services will find real success in the future. This may well be delivered through shared utility services, or partnerships with independent ATM deployers. At the centre of our thinking in this respect must be the consumer, the vast majority of whom are not single-minded when it comes to the online/offline question. They want to be able to pick and choose services depending on the situation and their individual needs. A mix of smart ATMs and innovative branches will be a cost effective and efficient way to satisfy these needs long into the future.