The digital transformation of society as a whole has changed the expectations of customer services within the financial services sector. As a result, retail banking operations face testing times as the industry goes through significant and rapid modernisation.
Increased regulation, the development of new services, a serious push to open up competition and the rapid adoption of digital channels have come together to create a period of unprecedented change. However, perhaps the most important issue banks face is that of changing customer expectations.
The 2016 FIS™ Performance Against Customer Expectations (PACE) Index™ found financial institutions around the world are falling short of meeting customer expectations in areas such as deposits, advice and borrowing needs. This supports the view that financial institutions are already under pressure from customers who have developed high standards from interactions with digital giants such as Amazon and Apple. They want a fast, simple, and easy user experience; and if retail banks can’t evolve to provide what customers have come to expect, they will rapidly be left behind.
This level of disruption within the industry is, however, creating opportunities to redefine business processes and enhance end user experiences in our high street branches. Executing effective in-branch journeys for both customers and staff is critical to achieving a compelling overall customer experience – but cash journeys shouldn’t be ignored as a key part of the overall strategy. Implementing process efficiencies which reduce operational costs can also add to the overall user experience.
Implementing branch transformation strategies
The right transformation strategy is essential to ensure a sustainable future for individual branches and the larger branch network. Many high street branches are already in the midst of a transformation process with varying degrees of success. Truly effective branch transformation strategies require a customer centric design, enabled through intuitive technology which delivers a more seamless service – empowering customers to do their everyday banking quickly, conveniently and confidently.
Customers do not differentiate between banking channels and neither should banks themselves. A customer should be able to start a transaction on a tablet or mobile phone and complete it in branch, experiencing a seamless and personalised service throughout.
In order to successfully implement such redefined in-branch journeys, many banks are assessing how to realise efficiencies and cost savings within their branch networks. Recognising cash as an area where significant cost savings can be achieved (over 20% in many cases), financial institutions are only now starting to see cash as the hidden link between true operational effectiveness and service improvement.
Alternative payment methods have rapidly grown in popularity in recent years but cash remains vital for UK consumers. The LINK Consumer Council Annual Report 2016 found the number of cash withdrawals in 2015 rose to 2.064 billion from 2.047 billion in 2014. The average value per transaction also reached a record high of £69, with cash still accounting for around half of all payments made. Despite a cash-free – and sometimes even card-free – focus by many digital businesses, cash is set to remain an important payment instrument for many years to come.
When compared to other payment forms, cash is expensive to handle, mainly due to the level of manual intervention required by a bank. Whether that is through CIT visits or the movement of cash around the branch, the need to count, check and recount cash is a constant. However the advent of cash recycling could drastically change this.
Embracing cash recycling in the UK
Cash recycling is now a reality where banks can for the first time, pursue a strategy where no member of staff has to touch cash at all. The cash journey can be entirely reengineered and reimagined; reducing costs and freeing up staff to offer enhanced personal interactions. This delivers quantifiable benefits not only to operational costs but also to customer service (and NPS scores) where an improvement in process, reliability and availability impact a customer’s experience through reduced queuing times and fewer cash outage incidences at self-service devices.
Whilst the benefits of cash recycling are clear, it is only just beginning to become mainstream in the UK. Those financial institutions that have trialled and implemented cash recycling are realising significant benefits and with increasing pressure from existing competition and flexible Fintechs, such innovation is imperative to the branch network remaining relevant and competitive.
A recent report from The Future of Retail Banking claimed that there is a short timeframe of just three to five years in which retail banks need to change. It states: “new technology, changing customer behaviour and fierce competition can be expected to hit the mainstream and change banking operations forever.”
As all banking professionals know, three to five years is a very small window of opportunity and it requires banks to begin acting now if they are going to secure a role for their branches in years to come. The in-branch experience is something many customers rely upon but in order to satisfy the digitally-minded, change is necessary.
Cash isn’t going to go away in the short term – it remains a critically important payment method – but how we handle cash can certainly change for the better. Cash management is tightly linked to the whole in-branch customer journey and in turn the wider in-branch experience, as well as the necessary process of branch transformation. Financial institutions who want to evolve need to look for solutions which consider customer, staff and cash journeys collectively rather than independently.