Against the backdrop of continued UK branch closures,
the Co-operative Bank is ramping up its branch expansion plans.
Co-op Bank managing director Rod Bulmer tells Douglas Blakey that
he is aiming to grow its current 350-branch-strong network to at
least 500 units to offer a real alternative to the Big
Five.
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So much for the
contention that the branch channel is dying on its feet.
While total branch numbers have
declined by 20% since 2000 – Barclays alone has shuttered a net 496
units from 2,129 to 1,633 outlets and HSBC has reduced its network
from 1,668 to 1,350 – UK mutual the Co-operative Bank is swimming
against the tide and plans further branch expansion.
Providing a welcome boost for the
UK high street, Co-op Bank managing director Rod Bulmer tells
RBI: “We need a minimum high street presence of 500
branches [up from 350] and can grow beyond that.
“We are striving to offer customers
a real alternative choice in the current market. I genuinely
believe that there is space in the UK for an alternative to the Big
5 banks.”
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By GlobalDataBulmer is adamant that there is
scope for the Co-op to grow its branch network, whether or not it
succeeds in acquiring the 600-plus-branches to be sold by Lloyds
Banking Group.
Bulmer adds: “The Lloyds branches
sales is very interesting as it gives us an ability to accelerate
our strategy but if [the bid] does not come off, the strategy will
remain the same.
“The big five are overbranched. We
need to grow to achieve national scale and branch based banking is
at the heart of our strategy but I would stress it is a
multi-channel strategy.”
The Co-op’s branch expansion
strategy is being boosted by a pilot project featuring eight
in-store bank branches – to increase to nine by the year-end –
within high street supermarkets operated by the Co-operative Group,
the world’s largest consumer co-operative.
The Co-op Bank in-store pilot
project follows Tesco Bank ramping up its efforts to break into the
mainstream retail banking market. Last year, the financial services
unit of the retailer Tesco opened six branches within its
stores.
“Bluntly, the results of the
project to date have exceeded our targets,” says Bulmer.
While the pilot
project kicked off almost two years ago, the in-store campaign has
accelerated in the past six months.
“We have learned a number of
important lessons already. Store layout and position within the
store is critical. Customers will not buy into something that is no
more than a little scrappy corner in a supermarket.
“Staffing is also key. The in-store
banking staff needs to be discreet and have more of a retail
orientation, confident in engaging in proactive conversations.”
Bulmer says that key questions
remain to be answered during the remainder of the pilot
programme.
“In effect, we are learning if an
in-store branch can offer an infill presence where we do not have
existing branches. Where we have trialled in-store branches in
areas where they work in conjunction with existing branches, they
are on the whole working very well. As such, the in-store branches
are not targeted at new customers but are aimed at existing Co-op
members. Based on pilot, the in-store branches could contribute 100
of the new branches I would like to see us open.”
The second type of in-store branch
is opening in areas where there is a Co-op presence in the wider
community, for example in suburbs of large cities where the Co-op
has a city centre presence.
“Those branches are working well
and are attracting new customers above target. The majority are
Co-op members but not currently bank customers. As such, they offer
a potential very significant boost to our cross sell performance
and the results suggest they improve not only the Co-op’s banking
performance but also increase footfall in the supermarket.”
The third type of in-store branch –
where the Co-op is new to the town and has no existing outlet in
the vicinity – is proving to be the most challenging.
“We wanted to learn: can an
in-store branch help us build a customer base from scratch? The
early evidence is that this is the toughest task as familiarity
with the brand is lower.”
Away from the branch, the Co-op’s
multi-channel strategy is being boosted by investment in the mobile
channel.
“We launched a basic text mobile
banking service four months ago and next year will launch a full
mobile banking service, across the Android and iPhone
platforms.
“Mobile banking has, very quickly
in my view, gone from being something sexy and incremental to your
offer and very soon will be core to being a multi-channel
player.”
Meantime, the Co-op proceeds with a
huge IT project, replacing its core banking system with the Finacle
platform from Infosys.
“We are re-platforming the entire
bank. We needed to be more efficient and more flexible if we are to
achieve our expansion plans and the current platform did not offer
the robustness to expand.”
Overall, the programme has gone well to date; although the
project requires a high degree of stewardship and is a big
programme to deliver, the prize is well worth it.
