The scale and pace of bank branch closures over the past decade has been unprecedented. Once the heart of thriving communities, building societies and banks are rapidly becoming a thing of the past in hundreds of towns and villages. According to a Which analysis, almost 4,300 physical bank branches have closed since the beginning of 2015, with around 50 locations shutting their doors each month.
As with other industries, the pandemic has sped up the shift of banks to digital, with social distancing measures making in-person banking an unnecessary risk for many. Yet, the remaining bank branches are still a lifeline for vulnerable members of the community, including the elderly and disabled.
While it is critical that Building Societies fully embrace digital channels to attract new and retain existing members, the value of their branches cannot be underestimated. Mutuality, the DNA of Building Societies, means being able to service all members’ needs in a way that suits them, and that includes offering a quality in-branch face-to-face experience.
To their credit, many Building Societies kept their branches open during lockdown, offering some members something far more important than financial services, a place to go for possibly their only human interaction of the week. That sort of relationship and the resulting goodwill is impossible for digital only players to replicate. The challenge for building societies is getting the balance between human and digital right in this rapidly evolving space.”
Brendan Gilmore, Managing Director, BPG Strategy
In response to the new financial ecosystem, banks find themselves operating within, new concepts and innovations are being trialled. British high-street bank Barclays has been one of the most forward-thinking in their retooling of branches from offering traditional services to providing a range of start-up banking advice, business incubation and mentoring under the Eagle Lab name. With Barclays opening their 24th Eagle Lab location in Cumbria last month, it’s clear they are committed to this new form of mixed-use branch.
“The pandemic taught us that there are no barriers to offering personalised interactions as long as your employees are supported by the right tech platform to listen and understand where and how customers want to interact with them. Research from McKinsey reports a 10-20% rise in digital banking in Europe and customers are more willing than ever to shift to the banks that will better meet their support needs – something that is no longer restricted to the branch location.
With 62% of financial services customer service leaders managing remote staff, and customer engagement in the industry up to 19% globally in the past year, your customers are dictating that choice; and as of now, personalised interactions through digital engagement are leading and framing the future.”
Céline Allain, Senior CX advisor at Zendesk.
While major, multinational banks may have the resources to try new branch ideas, where do Building Societies fit within the future of branch banking? In an industry already dominated by big players, Building Societies urgently need to pivot to remain competitive in the financial services landscape.
“We’re now seeing a need for financial institutions to serve their customers and members on their terms, be it with stellar service in-branch or over digital channels,” said Christophe Langlois, Global Marketing Lead, Fintech and Developer Ecosystem, Finastra. “With 90% of innovation coming from outside of the bank from purpose-built fintechs, the ability for financial institutions to partner to provide in-demand services is essential.
Finastra developed FusionFabric.cloud as a platform where financial institutions can easily find and consume these technologies and bring them to market quickly. Leveraging the platform, banks, credit unions and Building Societies can meet customer expectations with the latest tech innovation, from conversational AI for voice banking, to powerful predictive analytics tools to drive actionable insights that ultimately lead to an enhanced customer experience – both inside and outside the branch.”
Just before the emergence of the pandemic in early 2020, building society The Cumberland invested in their flagship Carlisle branch to modernise how they interact with customers. Core elements of the conventional banking experience, including banking counters and other dividers between staff and customers, have been adapted to update the banking experience.
Now, customer service is placed at the forefront and comfortable spaces are available to discuss an array of financial issues with specialist staff. The two upper floors have also been reserved for local businesses and customers as a collaborative co-working space.
During their research around the future of branches, The Cumberland found that while less transactions happen in-branch than ever before, customers still deeply value the ability to talk to a human being. The ‘sweet spot’ for building societies is finding the balance between capitalising on their strengths in customer service and personal interaction, whilst also keeping up-to-date with the digital banking experience that is expected.
“As Financial Services moves further into the digital age, Building Societies have an opportunity to play a key role in delivering services that are helpful, relevant and valued by our members. Critical to that is the role of the Branch – What purpose they serve, how they support our members and communities are key to our mission and to the relevance of the high street,”
Jonathan Hull, Head of Resource Delivery, Nationwide.
“In my research, I have found that not only are Building Societies and smaller financial organisations working extremely hard in meeting the overarching challenge of moving forward into the digital age, but they are confident in retaining physical branches and blending the two, to create a seamless customer experience”,
Julia Main, Producer, VC Innovations.
With research from Legal & General finding that Building Societies are particularly dependent on branches for product sales, it’s vitally important that they refocus their physical offering to match customer demands. Just 19% of Building Society customers bought their mortgage in-branch, compared to 45% that purchased it online, indicating the need to provide an industry-leading service in-branch. As is the case elsewhere in the financial sector, building societies need to innovate or fall behind.
As David Marlow, Chief Executive, Nottingham Building Society notes, “The essence of branch success is to offer a proposition that is demanded by savers who want a High Street relationship. This means that branches should increasingly be located where that demographic of customer choose to live.
A big factor in our recent success in branches in recent years has been to offer a tailored service focused on the needs of the 55+ market locating ourselves in traditional agriculture- based market towns like Ashbourne, Uttoxeter, Buxton, Stamford and Dereham. Our success in these towns as newcomers has been phenomenal”
Written by Finbarr Toesland, Editorial Contributor.