Banks & Branches: What Happened to Online?

So the Abbey has announced that it's to open 100 new branches.

See article here.

This is interesting as the announcement comes only a few months after announcing that they will shed up to 2000 jobs in an efficiency drive I'm interested to know the motivation behind opening branches. Whatever it is, it must be compelling as the cost involved in this activity must be astronomical never mind the increase in overheads.

My speculation is that it's been decided that branches are needed in order to reduce customer churn and increase the customer base. This is the interesting bit. It's interesting because this is old fashioned marketing. Good old face-to-face wins the day.

You know the scenario, you walk in, smoke coming out of your ears, demand to have your account closed immediately and are met with smooth talking & understanding member of staff. 20 minutes later you walk out having kept your account and also signed up for a credit card and high notice deposit account.

Is there a hidden message here? I think there is. The message is that they have not been successful reducing customer churn and gaining new customers through online means. I'm not sure if they've even tried. If they have, it's a shame that it didn't work. If they haven't then it's exactly what they should be doing. You can keep the Finance Director happy by spending far less than you would on new branches and also avoid a huge increase in overheads. Furthermore, and more importantly (at least is should be) they'll keep their customers happy.

If customers have an online community so that they can connect with their bank, so that they can communicate with their bank then they've just achieved the best win-win they ever could. You see here we have direct interaction with the consumer, they feel valued, they feel that someone is listening, more to the point you - the service provider, the bank - can communicate desired responses. These enable you to keep abreast of customer demands and desires and in doing so you'll build advocates. Once you've done this you can dispense with your marketing director, he's not needed anymore - you're advocates will do his job for you.

If you're reading this and you work for the Abbey, I know what you're thinking - "What about the internal overhead of responding to customer queries, questions, suggestions within this community". This is a good question, let's think about this. How many distinct questions do you think there can be. Really, how many. You're a bank with a finite (and small) product offering. So that's the first thing there won't be that many distinct questions but for the questions that do exist, think about it, you'll answer them once and hundreds or thousands will get the answer, the same answer - oh, at last, a consistent message you'll hear your customers say.

So know you're building a nice repository of information, suggestions and advice all of which is reusable. If you have a decent search facility built in, questions should reduce as your customers will find the answers to their queries themselves. Make sense. So now, the customer is doing the work that you used to do, that sounds good - reduced headcount, the FD will be happy again.

Last point (in order to keep the blog short-ish more than anything else), think about this community. Think about your clients openly expressing "I wish I didn't have to do such and such when I setup a new direct debit" or "why does it take 5 days to sort out this" and lastly "why do the bank keep sending my cheque book to my previous address". You've got free market research. Free = FD is happy again, Market Research = Marketing Director is happy. Ooops, I forgot, he's already gone. OK,

Head of Products will be happy.

The future is online, the future is mobile. Few of us have the time, inclination or desire to visit a bank on the high street. The group that does have this time are reducing in number all of the time. Once we get to Global Banking, this group will be minuscule.

My background and experience is mainly project management within diverse environments such as large corporate financial institutions, medium-sized technology consultancies and smaller start-ups. Having held positions including Operations Director (COO) and Head of Process Management, I recently left corporate life…the entrepreneurial side of my character is prevailing.

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