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What is the future for Retail Branch Banking..?

I’m not going to comment on the content of Chris’ and Michael’s blogs, but do look forward to the “event” that may bring them together into the public arena in February – I hear Sky Box Office has had strong demand for pre-ticket sales! :-)

And I may be partly to blame for stoking the flames with a previous blog (To IP, or Not To IP..?) that could have inadvertently turned the argument into a black-and-white one, when it is clearly full of shades of grey.

I also suspect that Messrs Skinner and Goldman are in fact violently agreeing with each other on 80%-90% of the issues.

Anyway… my questions to both gentleman, and anyone else who feels like sticking their head above the parapet, are these:

1)      Why do people go to a retail banking branch in the 21st Century?

2)      What is the future of retail banking in terms of products and services?

My personal opinion and experience is that I only go into a branch because I need to do something that I should be able to do without going into the branch – but can’t yet in the UK! – e.g. x-boarder or x-currency payments, urgent withdrawal, depositing or moving of large sums, etc.

Does anyone go to their retail banking branch shopping for new products or services? Why try to sell, or cross-sell, to people in an environment where they have come in under duress and out of frustration because they can’t do what they want to do outside the branch?

If I was looking for a new credit card, loan, mortgage, deposit, savings, or insurance product, wouldn’t I be shopping for it on-line where I can compare the options?

In my experience, trying to sell to people in a situation where they are NOT looking to buy is a waste of energy compared to selling to them in an environment where they have already decided to buy!

Some other factors that must question the future shape of retail branch banking in the UK:

1)      UK Faster Payments – from May 2008 it will be possible to move sums of money in almost real-time, so there will no longer be a need to withdraw cash from one branch and run to another bank’s branch to deposit the same in an urgent situation.

2)      End of Cheques - Major retailers that no longer accept cheques include; Argos, Boots, Next, Sainsbury's, WH Smith, Currys, and those that could soon follow suit, include Asda, Morrisons, PC World and Tesco.

I apologise if I seem negative about the need for retail branch banking – but I do struggle to see its relevance in the future?

I can see a need for branches servicing SMEs who may, for now, have to deal with cash on a daily basis - but even that is likely to change in the future!

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Comments: (4)

Clive Munn
Clive Munn - MFTSE Affairs S.A. - Luxembourg 18 December, 2007, 17:45Be the first to give this comment the thumbs up 0 likes

As an ex branch & retail banker but also a colleague of Alan Goodrich in a previous life, I hate to say it but I, once again, find myself agreeing with an American, Michael regarding the future of branches!

Just because we have all new sorts of new technology and channels available or which will eventually become available to us, we must not forget that we are still human. We both have a need and enjoy meeting with others to discuss all sorts of things including our financial problems, questions and perhaps even innovative ideas. Some of this can be satisfied on the computer or mobile screen but it would be a sad world if these became the sole points of contact. Clearly we need a bank before we have all these tools and services but equally today we cannot envisage a bank existing or surviving without them. 

Banks are notoriously slow at being innovative but the message regarding the change from Retail Banking to Bank Retailing is starting to get through with the branch definitely still being the corner stone as Michael says or even maybe the centre. We have seen innovate products such as Richard Branson’s ‘one account’ , internet mortgages and deposits as well as, perhaps, securities and investment management facilitation but there is still a long way to go to bring these services and products to the masses in the same way that they are currently available and cherished by private banking or wealth management clients.

Automation will play a big part in all this but so will the new branch when fully adapted in the same way as the music shops are adapting to the fact that you can buy or listen to their products  on the internet after you have gone home. Many banking products will become more seamlessly attached to other products such as finance and insurance for the purchase of a car, house or holiday (clients may even not be aware that there is a bank involved).  

One of the major functions of the branch will indeed be to educate and advise the masses as this cannot only be done online or within the confines of one’s home office. Those of us that are financially savvy forget what a strange world it can be to those who may not even be really interested or, for example, only know the bad side of being involved with a credit card as opposed to cash. I am thinking of the students in my family or my wife who prefers financial business to be handled by others!

Whilst only just touching on this subject, it is therefore my belief that although the branch will change completely from the empty, echoing banking hall I once knew in the 1970’s it is here to stay and may even make somewhat of a ‘come back’ as part the western worlds financial make up. Must go, as believe it or not, I have just been automatically sent a new cheque book – therein lies another story!!
A Finextra member
A Finextra member 19 December, 2007, 06:32Be the first to give this comment the thumbs up 0 likes

As an ex online banker and current SME, Corporate banker I strongly support the idea of combination of banking channels. Online is still, hence the fuzz of web 2.0, one way communication channel and suitable for transactions (payments, transactions, loan agreements, funds, etc). Branches are better for consulting customers, if and only if all the employees have skills to advice.

After building one of the best online bank services for Nordic countries, I have seen for branches to become consultative units. Branches should give advices, teach, cross sell, and foremost LISTEN what customers are telling. Most of the new productive ideas comes from customers. As I have seen in brances, if you meet your customer only once a year for 15 minutes, you have a difficult task to sell all of your offerings at once. And when online banking is still on the web 1.0 phase, customers do not find new offerings, when they have bills to pay.  

Alan Goodrich
Alan Goodrich - ERI - Luxembourg 19 December, 2007, 11:28Be the first to give this comment the thumbs up 0 likes

Clive, glad to hear from you! Even if you choose to agree with an American ;-)

Michael, you seem to suggest that the future of retail branch banking is to move away from retail banking products and services to become; wealth managers, travel agents, estate agents, insurance brokers, etc... all of which already exist in abundance!

Anyway, have fun watching what investment bankers do to earn their crust at: http://www.youtube.com/watch?v=SJ_qK4g6ntM

Enjoy! :-)

 

Clive Munn
Clive Munn - MFTSE Affairs S.A. - Luxembourg 20 December, 2007, 08:51Be the first to give this comment the thumbs up 0 likes

I am pleased to have joined this network and to be in touch also Alan. Thanks for the link to the different ‘youtube’ videos - you see ‘Playmate’ there are always ways of attracting people down to the branch to discuss investments or whatever!! 

Seriously though, we know that many retail banks already have travel agent, estate agent & insurance broker arms but have so far (to their own admission) not been too great at integrating and selling such products. We must not forget that the first remit of a Retail Bank is to provide essential services to the masses so we should not try to turn them all into “wealth management centres” in my view.  

Clearly we are all in business for a profit but don’t let’s fall into the trap of the investment bankers in that other 'youtube' clip. Know your market and talk to your customers. Help them to fairly manage and grow their assets even from small and modest beginnings. Remember also that the money in this market is in the aggregate number of clients not the size of each individual’s wealth which is where Chris Skinners argument comes again to the forefront.  

We could never improve services, products and financial savvy for the masses without IT (specifically IP). The perpetual argument about who is running the show, who understands what or who should be up there first simply hinders progress. Openness, yes frankness but also diplomacy and compromise are the ways forward. It seems that many in IT have understood this and are improving programs through sharing and open architecture as well a general appreciation that the big bang is not necessarily the best method but more natural progression through SOA (specific Service Orientated Architecture).  

After all, whilst recognising that a little stress gets us all moving; does the human race always have to be in such a rush? Although it may frustrate some, a well considered evolving approach has always been the natural way ahead. 

Seasons Greetings to all.

Alan Goodrich

Alan Goodrich

Regional Sales Manager

ERI

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