It's a Bank Moh, but not as we know it
I’ve just got back from an amazing week in London. You would think, as I live in the shopping centre of the world that visiting London and strolling around the shops there would be like taking a trip back in time, but it wasn’t.
I was there to learn about the ‘Future of Banking’. In fact, I am not sure I can even call it Banking any more. Why? Because I learned that the era of the Bank Branch is dead, long live experience, long live a different kind of relationship between the people that look after your money and you.
On the whole, Banks here in the Middle East are in for a shock. The world has changed, Bank Branches are no longer about transactions, the old fashioned stuffy environments where men and women sit behind a screen, officially running transactions with the kind of formality one would expect in a Victorian school-house.
We have been saying this for years, but the message has been falling on deaf ears. Now it isn’t. Banks in the US and Europe are loosing money, finding it tough to compete with online offerings as customers are turning to convenience and technology to help manage their increasingly international lives. Mobile Banking is killing the need for a Branch, we don’t need them anymore... or do we?
Banks in these struggling markets are waking up to the power of the information they have at their fingertips. After all, they know everything about us... what we like to spend on, our debt, our credit, our habits and much more - we call this big data. It helps companies, not just Banks, understand patterns and trends and then form strategies for their businesses on the back of these. And the people, we the customers are, with our switch to digital convenience, inadvertently helping the smart corporate engine evolve its offer to us.
Why does this represent such a dramatic change in the Banking industry. It’s really quite simple... Banks have an opportunity to harness technology to build experiences that bind customers to them, to build trust with their customers through a real understanding of what matters to them specifically. Whilst we as customers have a wonderful opportunity to benefit from a truly personal relationship with the brands we like. Not a mass market segmented relationship surrounded by marketing speak, jargon and hard sell, but a meaningful two way relationship that is a win-win for all.
So what does this mean in practical terms? It’s easy to understand what it doesn’t mean - here’s an example:
My Bank publish a book of vouchers every year (who does this in a modern world?), that give me discounts in local businesses in UAE. I have to go to my Branch - a 30 minute drive from my home, collect it, thumb through it, rip out the relevant voucher, remember to take it with me to the outlet and then pay - with my Mastercard to get 50% off. A great customer experience, no way.
This is how the example above should happen... my Bank knows, because I take my son skiing most weekends, that I will once again be heading to the mall on my Saturday morning. They know that when I am there, I have breakfast and normally spend about $30 on this. A smart Bank would have relationships with retailers in the mall that I go to - one of the biggest in the Middle East. They would know I am there every Saturday and they would offer me an incentive to choose Costa, over Starbucks or whoever else is offering a coffee and cake breakfast in the region of the ski slope. They would offer me some form of benefit when I take my son to the slope - who knows what this might be, possibly a second ticket for next week at a discount. These vouchers would be sent to my smart-phone just in time for me to take advantage of them on a Saturday morning.
Although trivial, can you see what is happening here? My Bank are offering me a service, they are enhancing my lifestyle by making things easier for me, more convenient, and in doing so, they are building a stronger bond between the two of us, a personal relationship that I would find difficult to leave and one where I use more of their services.
I started this article by saying that Bank Branches are a thing of the past - can you see why? Banks have the information they need to tailor experiences to suit their clients more precisely. ‘Branches’ (or environments) in locations where customers gather are the future - and the Banks know where these are from the data they gather on all of us. ‘Branches’ that offer experiences that are about lifestyle, trust and benefit are the future... and guess to is stepping up to the mark in this regard in the UK? None other than Richard Branson, the septuagenarian rebel who so often shifts the paradigm in the markets he enters. This man is smart. He realised that Bank ‘Branches’ need to be different. So what did he do? He listened to his customers and created Virgin Money Lounges. These are not Banks, they are peaceful havens, ‘secret’ places away from the noise where customers of Virgin Money can go to be pampered. Even the name is different. How many Banks do you know that call their spaces Lounges? Take the Lounge in central London. It’s in Piccadilly, a noisy, busy place, where one battles just to stay on the side-walk and not be forced into the road. Hidden amongst the beautiful buildings is a Virgin Lounge, enter this haven and you are greeted by a smiling, beautiful hostess who is more than happy to help you with a cup of coffee, a newspaper and a comfortable place to shelter from the chaos outside. Nothing is sold here, there is information on products from the Virgin Group, there is no pressure to buy. It is a brilliant piece of design that is there because customers matter to Richard Branson. The bond between customer and brand is strong, and getting stronger because Virgin have made an effort to understand what customers want and given it to them in a place where they need it... and guess what... the Virgin Lounge is having a profound impact on business. Customers are using more Virgin products, they are introducing their friends to Virgin and they are cementing their trust in Virgin as their friend and partner - not a service provider.
Why aren’t more Banks thinking this way, especially here in the Middle East. In a market where, at the last count, there were 56 Banks serving a population of 7m people, there are very few who are actually considering the benefits of thinking differently. I want to see Banks thinking more about experience, more about their customers and more about making their outdated Branches into places that people want to visit by changing the nature of their relationship with their customers. We should be leading the way here, not lagging behind.