The face of the UK banking landscape has been shifting and evolving for decades. Virgin Money landed on UK high streets in 1995, claiming ‘we are not like other banks’, and just 15 years later – as most traditional banks were announcing rafts of branch closures – Metro Bank launched with a huge statement, opening a flagship branch on High Holborn. Fast forward five years to 2015 and Revolut was founded, marking the start of the digital challenger bank era. Throughout this, traditional banks have remained a steadfast presence in the banking landscape, serving millions of customers every day. However, to keep up with this pace of change ‘traditional’ banks have been trying to separate themselves from the very guise of ‘traditional’ banking, but in a customer culture fuelled by post-pandemic behaviour changes, this trend is accelerating.
The majority of customers no longer want to be greeted at the door of their high street bank with a queue to speak to someone behind a glass window. Their needs have shifted over the last 15 years to being more flexible, instant, and tailored. They want a truly personalised service that fits in with their everyday lives. As a result, we’re seeing banks learning from other sectors when it comes to experience and service – particularly the journey that the retail sector has been on over the past few decades. From immersive experiences, using artificial intelligence to creating hyper-personalised journeys, a seamless experience across apps and in-store and 24-hour access, the push from banks to mimic the experiences that retailers give customers has gathered pace.
The growth of online banking has been fundamental in how customers now use banking services and interact with their banks at any time of day. The demand for 24-hour accessibility has only gained momentum since the rise of Amazon which fundamentally shifted behaviour, that we now consider the norm. Ultimately it has normalised the expectation that all services should be available 24-hours a day, seven days a week and banking is no exception.
In 2011, RBS launched the UK’s first-ever banking app and as the popularity of smartphones grew, other banks followed suit, developing apps for customers to check their balances and – if you were lucky – transfer money to other customers at the same bank. Of course, these apps are a lot more sophisticated now, being used to track spending, saving, transferring cash, and applying for products and services. Over time challengers and online-only services have disrupted the market delivering the latest functionality. Open banking has also played a significant role in shaking up this space and enabling customers to see even more data on their mobile devices. In this fast-moving landscape banks have to make a significant and sustained effort to keep pace with the competition, let alone lead the pack.
Despite the evolution of banking, new services, apps and ways of banking don’t suit the needs and wants of every customer. While the mass closure of physical bank branches is well documented, chatbots and social media have – in part – created a solution for those customers who want to speak to someone. But does this really create the connection they are perhaps seeking? For some, having a human-to-human experience is central to what they want and need from their bank. The ongoing challenge that banks face is enabling customers to choose how they bank whilst retaining consistency of experience and brand however and wherever they choose to bank.
When online fashion and beauty retailer ASOS launched its next day delivery subscription service it meant that for only £9.95 a year, customers could receive next day delivery on all items ordered before 10 pm. The service boomed and is popular among evening scrollers, last-minute purchasers, and regular shoppers. With Amazon Prime guaranteeing next day delivery on almost anything you could ever need, the exploration of drone deliveries and cities like Milton Keynes using Autonomous Delivery Robots, consumers are well used to experiencing next or same-day delivery from their favourite retailers.
The expectation that this experience translates into the banking world is real and challenger brands are stepping up to the plate. Would-be Monzo customers can open an account and have a digital payment card in their mobile wallet in 15 minutes. Progress like this hasn’t been achieved without challenges; traditional banks have had to work hard to stay competitive when it comes to speed. They weren’t built for this and to innovate, they have to change legacy systems and processes, rather than starting from scratch and building an experience which suits the needs of customers today.
Making it personal
When shoppers click ‘check-out’ on their online supermarket shop, they’re prompted to add items they might have forgotten; “you usually order four pints of semi-skimmed milk” or “have you forgotten to buy cereal this week?”. Artificial intelligence has made the online retail experience seamless, stress-free and easier than going to the physical store – after all, you wouldn’t find the cashier reminding you to grab some milk!
In some instances, the banking sector is already harnessing the power of artificial intelligence for the same purpose – but in this new era of customer behaviour, we will see this accelerate. Not only does it fill the gap that branch closures are presenting, but it addresses loyalty – a hugely important focus for all banks, especially the traditional high street ones who are staving off competition from new, nimble and innovative challengers. By developing bespoke, personalised services, banks are able to build and nurture better connections and relationships with their customers. It’s an opportunity to demonstrate how well they understand their individual values and needs and reassures them that they can – and should – trust them.
Banks continue to take inspiration from the retail sector to create memorable in-person experiences. What these branches offer ranges from Metro Bank giving customers’ dogs treats and water, to Barclays, transforming its branch spaces into innovation hubs for entrepreneurs and Halifax, among others, providing family friendly spaces. Consumers are driven by experience and these innovative branches offer them the opportunity to build positive associations with the banks.
In 2019, RBS opened the first ‘cashless bank’, with no cashier services, in central London. The idea was to meet the needs of those who still want a physical space to carry out banking transactions but are happy to self-serve. Instead of cashiers sitting behind glass booths, staff were on hand to support customers in applying for savings products and mortgages.
A future vision
There are many trends that the retail and banking sectors are exploring and making happen for their customers every day. The retail sector will continue to provide inspiration to every type of bank, demonstrating the different ways of offering customers services and engaging with them. Immersive experiences could see banks curating spaces for their customers to learn; or the Metaverse may be harnessed to give everyone the option of ‘visiting a bank branch’, married with the convenience and speed of the online banking journey.
Time will tell what the future holds, but for now, we know that the agile, smaller fintechs within the banking landscape are paving the way for the online banking sector, mimicking the experiences that the retail sector provides its customers If traditional banks are to stave off the competition, harness loyalty and innovate to future-proof their business models, they must do more to meet customers’ needs for a ‘retail experience’, engaging and exciting them across an integrated network of touch-points.