Putting aside the financial turmoil of recent years, the passage of time has been generally kind to many of us in terms of banking service and convenience. When I was a boy, we had to go to the bank to withdraw money; cash we'd have to use to pay for almost everything, cash for dad's wallet and cash to slot into many payment books. These days it might appear many of us hardly use branches: we get cash from ATMs, make payments and arrangements through direct debits and internet banking, and we can compare hundreds of insurance offers in moments. And yet, banks seem to be failing to realise the potential power of the branch.
Recently, the world's local bank – of which I've been a customer for close to 20 years – eventually persuaded me to come in for a financial health check. I was asked to ensure I had all documentation with me so we could have a productive meeting. Interested in moving my mortgage and open to other ideas, I took the morning off work to go into the city centre branch. Five minutes later I was walking out having had my direct debits read out to me to make sure they were still valid. I walked back in to tell a supervisor I was confused and disappointed and they assured me they'd 'look into it' – they didn't.
We all have our own preferences for how we do things. Some may be open to switching mortgages online; some may be averse to getting a house insurance quotation. But if the branch is for anything, surely it's to provide the personal touch, the fabled 'corner shop' experience, where all the insight, all of the data is right there, unfettered by email exchanges, display ads, poor telephone connections etc. Surely, whether a small, perhaps rural branch or a large city centre branch, their role is to be the flagship experience, retention magnet and cross-sell kernel of their customer experience marketing.
The branch needs to be an integrated part of that customer experience and journey. Banks and insurers have moved with the times in some marketing areas but what of the branches? In the summer, a study revealed that 40 per cent of UK bank and building society branches have closed since 1989. The findings from academics at Nottingham University cited 7,500 shutdowns in that period; just recently Barclays announced the closure of branches and the loss of 1,700 jobs. Banks seem to think it makes great business sense, and some research including our own would tend to agree with their findings, but the situation is more complex.
Such is the pace of change in the brave new world of contact centres and digital marketing that it's perhaps understandable banks continually review their branch portfolio in the context of their overall customer touchpoints. Perhaps time-poor consumers would agree that face-to-face banking is less relevant in the digital age. However, scratch the surface of customer contact preferences, and a very different picture emerges.
To understand how people want to communicate with their bank, we analysed extensive data collected on behalf of our clients in the financial services industry (as well as to enhance our own database of UK consumers). This amounted to around 130,000 responses. The headline finding may well be a surprise: more than three-quarters of people (77 per cent) say it's still very important to have a local branch.
Meanwhile, we can see which demographics prefer to bank in-branch. For example, four in 10 under-30s say a local outlet is of little or no importance, but just one in 10 over-65s feels the same. That should come as no surprise given the greater likelihood for younger demographics to embrace digital banking.
Meanwhile, London-based customers place the least importance on local branch availability, with a quarter saying it is of little or no importance. Out of this group of people, 75 per cent prefer to do their banking online and the remaining 25 per cent interact over the phone. In terms of regions most reliant on branches, respondents based in Wales showed the highest propensity to regard face-to-face communication as important.
Further examination reveals a disparity between different income bands and the need for local branches. Those in the highest earning category (annual salary of more than £150,000) are six times more likely to say having nearby access is not important than those on incomes of £20,000 or less. Perhaps the cross-sell opportunity in branches isn't so high after all? It's even possible to split out channel preference – and also interest in branch banking – by occupation. Some 81 per cent of manual workers describe branches as their favourite method, with 15 per cent citing online and just 4 per cent phone banking. In contrast, branches were viewed as the most important by 55 per cent of senior managers, while 38 per cent rated online highest and 7 per cent phone banking. Even so, among all age groups and occupation types branches were ranked as top choice for banking, and by some distance.
So what does all of this information mean for banks? Put simply, regardless of differing preferences by demographics, three out of four customers still clamour for the personal touch; there is enormous interest in having access to a local branch network. But the learnings from the statistics go beyond that headline. People who enter high-street banks do so in the main for help with their current account or mortgage. Yet the opportunities to cross- and upsell other products to them shouldn't be ignored, particularly when they are face-to-face with a customer adviser.
Banks must see their branch as a fully integrated part of the marketing mix and need to integrate customer data across this and all touchpoints to avoid a schizophrenic brand experience. Armed and informed with the right insight, created themselves and through third-parties, bank staff can have a much more personalised conversation which is far more likely to be helpful for the customer, but will also make selling wider services easier; it will feel less 'bolted on'.
Understanding the customer, and where they are on their journey, whether you're dealing with them through a contact centre, online or face-to-face, is crucial; especially if they are to avoid the negative experience I encountered, despite being a long-standing customer.
Recently, the UK government introduced new rules that force banks to allow any customer who want to switch provider to do so in just seven days. Now that moving finances really is as easy as 1-2-3 there can be no greater incentive for banks to make sure their customer marketing experience is up to scratch.
By Jed Mole, European Marketing Director, Acxiom