Retail banks blew it with millennials – they waited too long to go after them. The lesson to be learned? Start building relationships with consumers while they’re still young, or risk missing out on opportunities to help shape their financial perspectives that builds brand preference for the long haul, argues David Martin
Enter Gen Z. Generally defined as those born after 1 January 2000. Many don’t even know what bank branches are for these days – and feel they have no reason to use them. In fact, only 48% prefer to conduct most of their banking face-to-face, according to a recent study by Raddon Research Insights.
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As much as banks move to digitisation, and channels become more seamless, the physical offline channel is still lagging. It’s true that retail banks are working hard to redefine and repurpose their physical offer, and branches might look friendlier with more welcoming staff. But from a consumer perspective, especially Gen Z, this is often just a ‘makeover’ rather than a truly customer-centric compelling offer.
Tailor experience to customers
Branch experiences and environments are still by and large reactive, process-led, and counter-based. Gen Z’ers are digital natives so they don’t need to be taught about that, but they do need to be introduced to what the physical channel can do for them. Branches need a dramatic reframing to remain relevant – with compelling propositions and fresh ideas tailored to customers.
There are some great pioneering examples of these kinds of changes. Over in the US, Capital One doesn’t just offer a café in a bank (like so many others). Instead they’ve adopted all the positive attributes of a café to reframe the whole bank experience.
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By GlobalDataIn the UK, Metro Bank offers instant customised card creation. This really appeals to the ‘now’ generation that thrives on instant gratification. FRANK by OCBC has a format that specifically targets students. Located in Singaporean shopping malls, it’s modeled after familiar youth shopping experiences, like those for gadgets or fashion items. The store’s design allows ‘young’ customers to take their time to browse, touch, ask questions about the products, and discuss banking needs.
Events and shared workspaces
Bank branches are also starting to connect to people by providing meeting and shared co-working space for start-ups, entrepreneurs and local community groups. Not only does this increase footfall and relevance, but it elevates the bank from ‘reactive product supplier’ to ‘proactive service and information provider’.
Umpqua Bank remains true to its community approach in the USA – it not only lends space to community groups and local businesses, but also actively promotes them in-branch.
Another excellent case in point is Lloyds Bank’s flagship branch in Manchester. A dedicated Business Hub provides local start-up businesses with specialist help and a professional space in which they can work and network. An on-site Business Connector works both in-branch and out in the community to link entrepreneurs with sources of advice, funding and training.
Every week, free events and seminars cover everything from first-time buying to hot topics such as GDPR and Cyber Security. Partners like Google and Microsoft lend an international perspective. The space also supports community partners, local employability initiatives, and even teaches kids to code through Minecraft. The space is truly dedicated to help local people and businesses to upskill and thrive.
Financial services supermarkets
Historically, banks have been quite territorial and not particularly good at sharing resources, but more and more are beginning to embrace the idea of partnering with other specialists within the branch.
Imagine if some day you could pop over to your local financial services wellbeing supermarket – a hub of brands in a shared space that caters to all your financial needs? There’s much talk about this in financials services circles, but it hasn’t quite reached reality yet.
However, the idea of shared space with complementary service retailers (rather than shared space cafés and suchlike) to fill space and drive footfall is indeed happening now. In Scandinavia, Nordea shares space with estate agents and Arion Banki is being integrated within Hagkaup supermarket.
The future: data is the new currency
Open banking provides the opportunity for banks to play a more proactive role to help customers navigate across an increasingly complex landscape. Many suggest said that banks must behave more like tech companies, insofar as the data they hold about customers, their habits and money is the new gold.
To better personalise and customise the branch experience, banks must leverage this data. Mobile devices, biotech, augmented reality, and virtual reality will bridge online and offline with individualised content – and help with product and service activation.
Consumers are taking more responsibility for their wellbeing – witness the growing phenomenon of health, beauty, and fitness in shopping malls. It’s ironic that personal finance plays a huge role in our overall wellbeing, and yet so many people are at best ‘not confident’ when it comes to their finances, and completely illiterate at worst.
Leveraging data to provide truly relevant branches to support the next generation in their financial journey will result in a win-win scenario for banks and customers alike.
David Martin is Joint Managing Director, M Worldwide
