What is the future of the high street bank?
High-street banks are having a tough old time. Early last year, Barclays announced thousands of job cuts. This came after Santander revealed will close all 139 agencies in rural and suburban areas in the UK, and Lloyds’ closure of more than 200 branches from 2014.
Gemalto said in a recent report of over 1,000 people aged 16-24 and found 77% of those use online banking and 27% never even visit a branch.
The figures suggest that the majority of the population are moving to online banking. Particularly the younger generation who will start to dominate the market as they age and establish themselves in the workplace. The draw for it in irresistible. Instant transactions, easy access to your personal accounts, no need to make the trip up to your local branch or ATM for a balance check. Pure convenience.
However, many elderly customers still swear by local branches, and there are many of any generation that still prefer face-to-face advice when taking a loan or arranging a savings account. Each demand pulls in the opposite direction. This sees banks standing on unsure footing. Which direction do they take?
It’s an uncertain time, but we can see banks making their moves already. Barclays have been rolling back their branches since 2010, while increasing their online functionality. Nationwide on the other hand, have not been progressing with any mobile apps, but have recently been pushing to open many new stores and upgrade current ones across the country. An interesting and important time for banks, as each must find their place in a new market, or be left behind. And with increased competition from small lenders and cheap financial advisors, Banks must find a new niche to settle themselves in, or risk collapsing completely.
The secret to survival relies on customer retention. This shows a change in the winds for banks with previously secure customer bases; gone are the days where families passed accounts down across generations, 1 million people switched bank accounts in 2014. For banks to be able to see a future for themselves, to maintain their mass dominance in a now extremely competitive market, they have to focus their development on their user base.
Do your customers want a better online experience? Do they even use mobile banking? What sets you aside from your competitors and why do they have their accounts with you?
Without wanting to shamelessly self-publicise, this is exactly what open innovation is about. Find your important clients. Why are they with you? Find customers that have switched to rivals. Why did they leave?
The mistrust placed in banks since the financial crash is unarguably deserved, and if I asked the average person on the street what they think of bankers, I can almost guarantee it’s not something I can repeat on a blog post. But for banks in the modern age, this is something that has to change. Listen to your users, and let your customers have the convenience and functionality that they desire, and they’ll never have a reason to leave.