Steve Walters argues that the retail banking sector is undergoing an exciting era of transformational change, energised by innovation from recent banking start-ups. The challenge to the established banks is to up their game or lose market share to the new entrants
Recent years have seen new banks appear purporting to offer something different from the established players, whom many have fallen out of love with. Despite their smaller scale, they have hoovered up customers.
Much of their success comes from using technology to offer a more personalised service. They have exciting apps and interactive displays. They create nicely laid out environments where people feel conformable waiting, working and engaging.
This approach could transform the banking experience. Some bigger banks have been a little slower to recognise the opportunity technology presents to win and retain customers, but they still have chance.
The in branch experience
Technological innovation starts with the branch itself. The amount of data now available provides huge opportunities for improvement that have not yet been taken advantage of.
One technology Ricoh sees as important to future banking is facial recognition. We envision bank tellers wearing glasses with sensors, linked to the customer database.
When a customer approaches, the glasses recognise the customer and call up information. The teller can quickly answer there questions, as well as offering tailored advice, such as red flags about their spending or products that would better suit their financial situation. Video technology in branch can also cut queues and help provide better information.
We have had great success with this technology in countries like India, where many people have to travel hours to their nearest city to get an appointment with banks, doctors and lawyers.
But even in well-connected countries like the UK, a booth in the local branch with a video link can help banks deploy resources most effectively. Banks can’t provide all expertise personally in every branch, but they can provide a video link which allows access to that expertise. This means lower costs for them, and shorter waiting and better advice for customers.
Such technology also provides assurance for both sides. Interviews with financial advisors can be recorded, providing recourse for the customer if there is a problem and therefore greater confidence. But this also provides protection for the bank if a claim is subsequently made.
Digital signage is also transforming the banking experience. Rather than dull shelves of brochures, screens can display tailored information. Obviously this must never be too personal, but NFC phones could link to signs which could provide useful information, from products particularly suited to them to valuable insight such as changes in mortgage rates.
Young and agile companies, like Virgin Money and Metro, often lead the way. They are building branches that are a pleasure to spend time in, and investing in clever digital signage which communicates with customers. Virgin Money has invested hugely in new technology-enabled innovations – even employing a virtual Richard Branson to answer questions. Other sectors like retail are making exciting moves to which banking should look to for inspiration.
Outside the branch
This technology led, personalised approach doesn’t stop in the branch. The interconnected world offers the opportunity for banks to become a bigger and better part of people’s lives, improving reputations and giving the customer a greater sense of control.
Banks can take advantage of apps, NFC, data analytics and mobile technology to provide the right information to customers at the right time via their mobile devices. This could be a reminder when they walk past the branch, or real time updates on how interest rates affect their mortgage.
ATMs could also be used more effectively to engage customers. They could offer the withdrawer useful financial information, competitions, or the chance to donate to charity.
Better use of information
Key to all this is managing your data. User data, technology and business insights need to be combined to produce real customer value – what we call Deep Innovation.
This means storing data in a way that allows quick access, and designing systems that can quickly draw down the right information.
So when a customer approaches, facial recognition technology kicks in and pulls up the customer information from the database. This also prompts a verification, eg customer confirming their details. It will also use algorithms to recognise advice for that particular customer, for example whether they would be better off with a different account.
The old adage is that it costs three times as much to sell to new customers as existing ones – and banks act on this with tempting offers to get people to switch to them. But it’s just as easy to switch away, and banks should also work hard to keep customers who might leave.
A way forward
New banks have designed their offer in a way that is personal, stylish and innovative – specifically appealing to those who feel let down by the banking system.
How do they do this? They have good ideas but they also invite good ideas. Our customers who fit in this bracket are constantly inviting us to challenge them to give them ideas of how they can better communicate, streamline processes, and look better.
Nothing happens overnight, but real change is happening. This is an exciting time for retail banking. Those not looking at ways to innovate to provide a better service, should start doing so or they may quickly find the young upstarts are snapping at their heels.
Steve Walters is director of enterprise, Ricoh UK