Branches in decline, the keys to understanding the new banking system
More than 20,000 bank branches have closed in Spain since 2008, according to data from the Bank of Spain. While a few years ago the popularity of a financial institution could be measured by the number of existing branches, today this figure no longer measures success and has become secondary. In fact, it is precisely those who are currently dominating the market that are distancing themselves from the branch as the central axis and opting for the digital services, focused on the customer and his or her needs, as the main channel for interacting with the public.
There is no single cause, but the consequences are clear: traditional offices as we know them are going away, never to return. Digitalisation processes have accelerated this paradigm shift, making it possible for customers to manage their finances more autonomously. We are facing a new banking era in which the relationship between the customer and his or her bank is being redefined. A change that can be transformed into an opportunity to help improve this relationship, for the benefit of both parties.
The new era of banking, online customers
Today, there is a growing willingness on the part of customers to buy online, a fact that has also been transferred to banking. However, as has already happened in other sectors, willingness is outweighing actual sales. Against this backdrop, banks have opted to prioritise advice as a strategy to maintain the flow of customers in branches and thus ensure that the sales pitch for their products is not lost through a screen, where the customer receives multiple stimuli. The risk of this practice is that it blurs the line between banking operations that can be carried out digitally and advice that must be given in person, so that the digital weight loses its strength and the full potential that technology offers in a very advantageous way, also on the advice side, is not exploited.
Banks face the challenge of meeting customer expectations and providing them with all the necessary tools to offer a full, agile and secure digital experience. It has been proven that those institutions that show empathy and care for the customer experience are much more likely to maintain customer loyalty. Therefore, prioritising the customer is no longer just a matter of principle, which is often blurred, but a matter of survival for institutions. Only those that manage to see this and take the gamble will have their place in the market assured. Therefore, it is a question of promoting personal advice that does not necessarily involve a face-to-face interaction at branches, but which does not distance the customer from a personalised service that allows them to be digitally connected with their bank.
Democratisation of information and how to build trust
The process of digitalisation of banking and financial products brings a new problem for today’s banking, but an opportunity for customers and digital banking: access to information. Buying a banking product means knowing and understanding it, and this implies an exhaustive control of the information that reaches the customer before making any decision. Agile digital banking is not compatible with excessively long contracts where not even the nomenclature is understood. Transparency and clarity of information will be a decisive factor in gaining the trust of customers.
Putting the customer at the centre of the business model will mean embracing the experience to make it more attractive. In the digital sphere, this will require analysing each of the actions the user has to make on their device and finding a way to make it simpler and more intuitive. A commitment to creating smart services and platforms that offer a sufficiently compelling value proposition for the user to operate in full. This attractive proposition also goes beyond digital operations and becomes pricing policy or the dynamics of attracting customers. In the digital market, current customers are just as important as potential customers, and the marketing and sales strategy will be key to materialise this idea through all the tools offered by digital processes to reach customers.
Another key point in the banking of the future will be the personalisation of the banking experience. Digitalisation allows access to data and its analysis through artificial intelligence, a reality that institutions can use to identify needs and offer personalised solutions. Knowing the customer is key, and the revolution involves doing so from their point of view, from outside the market, to determine their positioning vis-à-vis the institution and to generate a real reading of needs that brings the institution closer to the customer and not the other way around.
Technology for economic sustainability
The economic environment, with low or negative interest rates and a period of economic uncertainty, puts pressure on banks to free up structural and operational costs. Accelerating the digital transformation could be one way to achieve two objectives. The first is to reduce the cost of processes, which will be made more efficient through digitisation. The second is to secure a competitive market position vis-à-vis other institutions. Whoever succeeds in winning this “digital race” will undoubtedly shape the market in the coming years.
In addition, the creation of a connected enterprise architecture will help to move away from manual and paper-based processes into the cloud era. Databases, information, process automation, greater security, a series of advantages that, provided they are used correctly, will have two major beneficiaries. Customers, who will see their queries resolved more quickly, thanks to automated chats.
And on the other hand, workers will achieve significant time savings by eliminating cumbersome processes, freeing up time they can invest in quality actions towards their customers.
As we have already said, the customer is the centre, and this connectivity process is also linked to the customer experience, as it allows the right product to be offered in a personalised way, at the right time and through the right channel.
Digitalisation, a continuous learning process
The main conclusion is that the future of banking involves a digitalisation process that can bring many benefits for all those involved, customers, employees and the institution itself. Institutions can focus on placing the customer at the centre, providing all the necessary tools to give them decisive capacity, always in an individual and personalised way to the highest standard. Digital transformation is a daily learning process where consumer feedback is constantly needed to find the right path. Thanks to this feedback, small changes can add up to a significant transformation that can create impact. The big challenge is to maintain the person-to-person relationship in the digital age and not allow artificial intelligence to detract from quality human relationships. It is necessary to keep the experience real, both for customers and employees.