Technology is transformation. And in banking, around the world, we are seeing the biggest evolution of retail banking for centuries. When you can pay with your watch, transfer money from your mobile, open a bank account from your iPad, why would customers want to visit their branches any longer?
There’s actually a very good reason, and it has to do with the difference between quick, everyday transactional interactions and the more “relational” interactions that customers demand.
Transactional vs relational interactions
It has been predicted that we’ll see two million jobs cut from the banking sector in response to greater automation and use of technology. For some, this shift promotes a fear that banking will lose its human touch and may lose sight of the importance of incredible customer service. However, done right, these things work together to generate a greater strength.
There’s no denying that technology makes day-to-day transactional interactions faster and more satisfying for all involved. As long as you have a “safety valve” in which a human can quickly jump in and help if the customer gets frustrated, everyone benefits from greater use. But these transactional interactions are a commodity. And they are also some of the most vulnerable to competition, especially as the first challenger banks are now getting licenses and creating new ways to add value.
Take an app such as , which pairs a customer’s card with an app and instantly keeps a tally of spending to reveal habits and budget. Or Acorns, which rounds up every transaction and donates those last few pennies into a savings account or investment. Areas of traditional banking are under threat from these newcomers, and this is only the start. So retail banks should try to make their processes as efficient and technologically assisted as possible.
Meanwhile, there is another set of interactions with customers to which branch staff can now focus more of their attention: the highest-value customers.
Harnessing human knowledge
What retail banks should really be thinking about is how they can use their own advantages, including long-established national and international branch networks, to offer something competitors cannot. The numbers speak for themselves; an Accenture poll found that the branch was still the second-most valuable channel after online, with 87 percent of US consumers planning to use their branches in the future. Reasons cited included increased levels of trust and the belief they would receive greater value when speaking to someone in person. It’s true. The highest value interactions you have with customers will always take place face-to-face, in branch, with a trusted advisor. For huge life moments, such as mortgage and business-loan applications, technology alone will never be able to replace this advantage.
This is the real opportunity in retail banking. It marks a return to the branch as a place to seek trusted advice, not just a wasted lunchtime standing in a queue. But it only works if you bring it all together properly.
Omnichannel retail meets unified banking
If apps and streamlined services become the most common way for customers to interact with financial institutions, retail banks must make it as easy to bridge the online-to-offline gap toward high-value in-store services. The good news is, this is exactly the same challenge that has been faced by retailers across the high street for years.
Retailers have asked themselves a simple question: what can they offer that the Internet can’t? This is how stores such as John Lewis in the UK have become as much a service business as a product business, now offering everything from bra fittings to personal stylists, wedding gift list appointments and jewelry-measurement services. Applied to banking, this means creating friendly spaces at which customers can consult experienced advisors about their most important financial decisions. And that requires a way to engage them in a bank’s website or app when they are ready to make that enquiry.
The race is on. Can retail banks break down silos to implement the systems and strategies that will turn their branches into the real advantage? By getting the balance right between transactional and relational interactions, I think they will quickly reveal the new reality of retail banking. Face-to-face service is an essential part of the most valuable services—everything else may as well just be an ATM.