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Banking

Quality over quantity

Quality over quantity

A bank’s architecture has long defined its purpose: stable, strong and secure. In recent years, however, the nature of bank branches has changed. Due to a number of factors, including the emergence of digital banking, the industry has witnessed a transformation in why or when people use bank branches, as well as the number of people still using them.

Branches account for a third of banks’ expenditure and transactions costs in-branch far outweigh their digital equivalents. In fact, PwC says that branch transactions cost roughly $4 each, whereas online and mobile transactions cost $0.09 and $0.19 respectively. It is therefore important that branches streamline services to reduce their costs while using video analytics to provide unique customer journeys.

A new role for a digital era

Bank branches no longer need to be as close as possible to their customers, as digital innovation has opened up the convenience of banking to consumers and businesses wherever they are. However, complete bank branch closure is far from a reality.

IBM found that branchless banks are struggling to grow as they have difficulty gaining trust and enticing new customers to join. This is because human interaction in banking is still necessary as there are still many services customers prefer to manage in-branch, such as business loans or mortgage consultations.

As the role of bank branches changes towards financial consultancy rather than traditional transactions, banks must be prepared to embrace a more human-centric approach. They should aim to operate on the quality, not the quantity, of bank branches to deliver a customer focused experience, based on trusted relationships where each customer feels valued.

The issues faced by bank branches

Martin Koffijberg

Martin Koffijberg

Historical events, such as the Lehman Brothers crash, have led to consumers becoming resentful towards, and less trusting of, financial institutions. The crash, which led to one of the biggest financial crises since the Great Depression, bought many businesses and financial institutions to the brink of collapse, wiped out millions of jobs and billions of dollars of income along the way.

Along with a lack of trust, banks are facing another issue: A change in the way people use and access money. Worldwide digitalisation and app developments have created a high level of customer expectation, with a 24/7 service via online and phone banking now seen as normal practice.

However, while it increases convenience, the remote, 24-hour access of everyday banking services has made it harder for banks to up-sell and cross-sell products to customers. This is because they are not visiting branches as regularly to see promotions and online ‘ad blindness’ means promotions in-app or on the website are often ignored.

By creating a customer experience journey as effortless as digital services, bank branches can maintain their competitive edge. Customers are more likely to come into the branch if they feel it will be easier, less time consuming and useful to do so.

Using untapped data to gain a competitive advantage

Looking at improving customer experience, banks can draw on the highly effective techniques of retailers. Under pressure from online stores, such as Amazon and Alibaba, retailers are using data in order to target consumers with attractive offers and improve in-store customer experience. By using various data sources, bank branches can better understand the customer journey and tailor their locations to suit the needs of consumers.

Using data will help deliver a better customer experience, vital for customer retention and growth by enhancing customer experience when they do come in-branch for a complex service. As a result, banks can increase the chances of attracting customers to new products.

For example, analyzing data across a branch’s opening hours around footfall, customer demographics and the most requested products can help branch managers optimize the branch’s customer service strategies across various time periods. Optimization possibilities range from promoting certain stage-of-life products when that age group is most likely to visit their branch, through to ensuring more staff are available on the branch floor to help customers during peak hours.

Along with providing great customer service, using the right data effectively can help banks reduce branch costs and improve efficiency. By analyzing how customers behave and move around the branch, banks can see where best to invest in automated services. By using automated machines to speed up the time spent with menial, lower profit interactions, banks can accommodate a larger number of customers during their working hours. This will allow branch employees to focus on complex customer demands for high margin products that necessitate human interaction.

How video analytics can be used to enhance customer service efficiencies

One way to gather data is through video analytics. Video analytics software examines video footage to provide the user with data that would otherwise not be easily obtained. In doing so, in this case, branch managers can understand the customer’s journeys from when they enter the bank to when they leave. The analytics can pick up data such as how many people enter the branch, where they spend the most time and therefore allow branches to adapt if they identify any issues.

Using video analytics in bank branches can create a tailored experience that the customer will enjoy more than if they to walk into a branch and wait in the first queue they see. Technology can also help create a relationship between the bank and its customers, with the latter feeling like a distinguished client.

In order to understand the footfall traffic, bank branches can use people counting technologies. This helps understand the comings and goings of people, including when new customers are likely to enter the branch. In doing so, the bank branch can determine when the most people are likely to enter the premises and can be better prepared to deal with customer requests.

For example, people often go to the bank during lunch breaks, but at this time, the bank employees are often on lunch break themselves. By staggering the lunch or asking the employees to take their break later, the bank is more likely to gain, and keep, clients as customers will be satisfied with the service provided.

Alternatively, banks can use this data to understand, or at least estimate, when new customers will come into the bank. As a result, bank branches can adapt their staff by increasing the number of employees who will be able to open new accounts. By enabling this customer focused approach, branches can gain new clients and also increase overall efficiency by providing the right advisor for the customer.

To decrease queue lengths, branches can combine video analytics with banking apps. The data that determines how many people are in the branch can be passed on to a mobile app through which customers can see just how busy, or not, a bank branch is. In doing so, customers can adapt their visits accordingly and miss out on long unnecessary queueing.

Furthermore, a queue management system can be used in conjunction with people counting. By knowing when the bank will be busy, queue management technologies can deduce where best to lead the customers so that they spend as little time as possible waiting. A short queue means a happy customer, who will not see visiting the branch as a burden.

With this in mind, as most services are available at the touch of a button or just an app away, customers don’t want to spend a long time in a queue. Customers will, therefore, leave the bank if they become impatient, increasing their frustration and creating issues when trying to attract and retain clients.

While not common practice at present, facial recognition software has the potential to be used to identify VIPs. Alternatively, customers could use the bank’s app to upload an image of their face, sign up for facial recognition and get on the facial recognition system themselves. These more client-centric approaches would allow the customers who are known to the bank branch to build and maintain strong bonds with bank employees.

By knowing who comes in, at what time and for what, bank branches can create what feels like an individually tailored customer experience for all involved. This will not only increase customer satisfaction but will help the bank reduce unnecessary costs.

Why a customer services approach is important

Improved customer satisfaction will lead to the retention and differentiation in a highly competitive market. By putting customers first and foremost in a bank branch’s mind, it becomes part of a bank’s brand proposition as it permeates the bank’s culture meaning employees will make sure that customer satisfaction is a top priority.

By understanding who comes in when and for what, branches can customize employees’ rotation to better deal with customer needs. This would enable branches to offer an intimate tailored and more customer-focused approach.

Furthermore, banks can use IP Audio systems to play background music for a more comforting experience or to create a dialogue with the customers by alerting them to anything pertinent. This can be from alerting customers that an employee is ready and free to see someone to informing customers that the bank branch will close in 5 or 10 minutes. In doing so, it can make for a more open and informative atmosphere, which helps build a relationship between a bank and its customers.

The digital transformation will enable tellers to, instead of sitting behind a desk, roam the branch floor equipped with digital devices, such as phones or tablets, in order to find out what customers need. This will create a more customer-centric atmosphere, increase efficiency and boost customer experience as their time is tailored to their needs instead of waiting in queues.

By creating this environment where the customer is number one, through employee focus or the use of technology, bank branches can help increase profitability and continue their legacy through bank branches in each city.

A new omni-channel banking experience

Although going digital may heavily reduce a bank’s expenditure, the main reason for doing so is to provide a much more flexible and agile approach to banking. Gone are the days where all bank transactions have to be done within a certain time of day. Thanks to digital, it is now a 24hr service.

Banks are no longer just places where people need to feel safe enough that their money is in good hands. While digital banking increases convenience, it is very impersonal. Banks need to understand that in order to retain, gain and increase customer numbers, they need to also take a more human-centric approach instead of one focused solely and specifically on sales, safety and security, something for which bank branches are the perfect platform.

Banking

It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak

It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak 36

Before Covid, 23% of people prioritised helping younger generations out financially, that increased to a third as a result of the pandemic

A recent survey* conducted by Hodge has revealed that the Covid pandemic has led to more people wanting to help younger family members financially.

A third (31%)** of those questioned said that since the Covid outbreak giving a financial gift to children or grandchildren is more important to them, compared to 23% who said it was a priority before the pandemic.

The traditional “Bank of Mum and Dad” is still very much open for financial help, with parents being responsible for 72% of the gifts, but the study also revealed that financial gifts can come from all corners of the family – including children (14%) and siblings (14%).

The survey also found that a third of people have received a financial gift from family, with those aged between 25-34 as the most likely to receive

The most popular reason for gifting money to family is for special occasions such as a quarter of gifts were given for weddings and birthdays but 11% of people have received money to help with big purchases such as cars and houses. In addition, 19% of people have received help with day to day finances, with around 14% of those receiving a gift have done so to pay off debt.

Emma Graham, Business Development Director at Hodge, said of the research: “Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”

The findings come from a recent intergenerational study conducted by Hodge, who interviewed over 3000 people about their attitudes towards finances and their aspirations for the future. The full research findings can be found at https://hodgebank.co.uk/2020/05/19/money-its-all-relative/.

As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.

From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.

Hodge has produced a set of guides on how families can navigate the tricky subject of giving financial gifts within a family, as well as the considerations and steps that be families should think about taking before a gift is given, such as is it a loan or a gift and thinking about contingencies if the family member’s circumstances change. The guides can be found here: https://hodgebank.co.uk/news/

Emma continued: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.

“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time. Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”

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Banking

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery 37

·         Analysis of the performance of over 1,000 UK small and medium-sized businesses by Allica Bank provides roadmap for SMEs 

·         Regular training, an openness to innovation, and a clear vision all contribute heavily to an SMEs’ chances of success  

·         Allica Bank has launched a programme of free workshops to expand on the findings and support business owners 

Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a multiple regression analysis to determine what factors most closely aligned with an SMEs’ chances of success and separated the highest-performing businesses from their peers. These ‘rules for success’ have been compiled from the research data to support British businesses as they look to chart a course to post-Covid recovery.  

The full report identifies six behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. The six top-line rules emphasised by the data were: 

Rule 1: SMEs should regularly train staff 

Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.  

Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy. 

Rule 2: SMEs need to focus on innovation and technology 

Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities. 

Rule 3: Small business must have a formal, long-term vision  

Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision. 

Rule 4: SMEs should broaden their customer reach and find new markets 

Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses. Among the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success. 

Rule 5: SMEs need to develop reinvestment plans 

22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%). 

Rule 6: SMEs should engage with local business organisations and networks  

Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs). 

Chris Weller, Chief Commercial Officer, Allica Bank, said: 

“All small businesses are different, as are all small business owners, but one trait they share is an innovative resilience. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on.  

“To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow small enterprises to thrive and that they can consider individually for their business.  

“This research has identified common ‘rules for success’ that speak to every aspect of running a business, not just the financials. Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy.  

“Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Our commitment at Allica Bank is to give them the support they need to do so, every step of the way.”

The full report contains a wealth of additional data and insight into each of these topics. As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.

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Banking

New research finds that financial wellbeing should be at the heart of banks digital experiences as the UK enters recession

New research finds that financial wellbeing should be at the heart of banks digital experiences as the UK enters recession 38

MullenLowe Profero have today launched a new report focusing on two communities who will be hardest hit by the recession: 18-25 year olds and small businesses. These communities need financial wellbeing support at the core of an increasingly digital relationship. MullenLowe Profero partnered with Censuswide to survey 1,004 18-25-year-olds and 504 small businesses.

Concern around financial shocks is harming individual’s wellbeing

The survey finds the ability to absorb financial shocks being the critical worry affecting wellbeing and 40% of 18-25-year-olds are sometimes afraid to look at their bank account.

They are seeking financial education to relieve worries

With over two-thirds of respondents demanding financial education in order to find peace of mind and 40% of 18-25-year-olds state that thinking about their money has a negative impact on their wellbeing the report highlights the audience are open to more active support from banks. 60% of the audience feel banks should help them have the capacity to absorb a financial shock.

When our bank is in our pocket reminding us of our anxieties, is there now a duty of care to support our wellbeing?

The survey finds that the digital experience is now the number one reason for choosing a bank for 18-25 year olds.

With this shift in digital preference, people are expecting banks to play a bigger role in wellbeing. 58% of those worried about their money want banks to help them take control.

More than half of 18-25 year olds agree that a bank’s role is now to:

  • provide education on money management
  • help them keep on top of financial goals
  • help them save enough money to cope with the ups and downs of life

People are feeling closer to local communities, but there is a gap in how brands should engage communities in a digital world

Half of 18-25 year olds agree that in the last few months the importance of their local community to them has increased. 40% agree they’ve engaged more with their local community in recent months. There’s a tension between how to engage a community as 60% agree they prefer a bank with better digital tools over a bank that offers more local branches. However, 60% feel banks need a branch presence to support local communities.

The importance of Global Wellbeing rises

Over half of 18-25 year olds agree that the events of the last few months have made them seek out brands that do better for the world. The research findings show that what they want most is to be recognised for their positive behaviours. 56% of the audience highlighted that they would find rewards and benefits for purchasing ethically and sustainably most useful.

Banks digital experience today lack empathy

In this time of reset, the survey found a third of customers and small businesses are considering changing banks in the next year as a result of the impact of the pandemic. The report concludes that brands that will win will champion financial wellbeing in the digital experience through empathy and emotional intelligence.

For the full report, get in touch with MullenLowe Profero at [email protected]

Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero, said: “Our findings are a wake up call for digital innovation in banking relationships.  With digital experience being the number one choice for selecting a bank, there’s a huge opportunity for banks to support individual wellbeing at scale by understanding and responding to our goals and anxieties to build better money habits.”

Methodology

The research was conducted by Censuswide, with 1,004 18-25-year-old current account holders and 504 small businesses with business bank accounts and annual revenues up to £2m between 23.06.2020 and 29.06.2020. Censuswide abides by and employs members of the Market Research Society which is based on the ESOMAR principles.

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