– Tony Farnfield, Partner at BearingPoint
Earlier this year TSB announced that most of its Scottish branches will only open for two or three days a week. This once again illustrates the changing face of retail banking across the UK. In making the decision, TSB has set out figures showing the fall in branch visits by customers, while there has been a sharp increase in the use of online and phone banking, and visits to alternative branches.
TSB is not alone, consumer group, Which has estimated that there are over 1000 bank and building societies that have closed down, or plan to close down, in 2018 and 2019.
There are a number of reasons why the retail bank footprint is changing. Part of the reason is that traditional bricks-and-mortar retail banks are currently facing a unique – but exciting – challenge. As digital-only challenger banks are rising in popularity, incumbent banks are having to invest heavily in digitalisation to remain competitive. However, is there an opportunity to optimise their bank branches to support their long-term strategy?
With the benefit of not having high real estate costs, digital-only banks can offer their customers competitive interest; however, the power of the branch should not be underestimated. Recent research has shown that the majority of UK banking customers still require regular face-to-face interactions, but the way in which consumers interact with their bank branches is changing. The challenge for traditional players is to ensure their bank branch footprint is optimised to meet these needs, whilst remaining profitable.
The impact of the challenger: The digital bank
Following the Financial Services Act in 2012, new online-only banks, such as Monzo, N26, and Starling, have entered the UK banking market. With their user-friendly and ‘gamified’ apps, these banks have appealed to the new digital-savvy generation. In addition, digital-only banks offer tempting exchange rates and travel options to jet-setting millennials. As a result, one in four people under the age of 37 now uses a digital bank2. With reducing market share, traditional banks are seeing pressures on their branch footprint – both in the services they offer, and the costs they are incurring –driving the need to reduce overheads whilst also remaining competitive against these nimble banks.
The opportunity: The traditional retail bank
As well as introducing new competitors, the wave of digitalisation means that customer expectations are changing, along with the way they use retail bank branches. Customers are now demanding ‘anytime, anyplace’ access to their balances and simple services via digital means, reducing the need for physical branch visits. However, for services which are more personal, such as advice, most customers will still prefer face-to-face engagement at a bank branch. In a market-leading move, Metro bank has responded to their changing customer demands and now keep their branches open later during the week and on weekends. So, how can traditional retail banks keep up?
The answer: Data
One size does not fit all. Changing customer needs means that the use of bank branches is also changing, but customer needs are not the same everywhere. In order to make the best strategic decisions, traditional banks must know their data, know their customer and, importantly, listen to their customer.
Knowing your data
Although banks have a deluge of data, many organisations don’t truly understand what data they have, what form it is in, and where it is located. Complex and poorly integrated legacy systems are a global, industry-agnostic problem in the current rapidly evolving digital age. Investing in a new, integrated and organised system will help to prepare retail banks – and companies more generally – for the future by ensuring high data quality and ease of utilisation. Without understanding the form of their data, banks are unable to identify any gaps or missing information relating to their customers and the use of their branches, inhibiting them from making truly data-centric decisions around their bank branch strategy.
Know your customer
Retail banks are already collecting large amounts of customer data; about their behaviours, their preferences and their needs. However, most banks are not fully utilising this wealth of information to improve their customers’ experiences. In other industries, such as retail, large companies such as Burberry utilise their customer data to offer instant in-store recommendations to certain customers, making for a more personalised experience. Starbucks uses data on their customers’ regular drinks purchases to speed up queue times in store and create a smoother customer interaction. For retail banks, understanding who their customers are and their consumer habits is imperative to developing an optimal bank branch strategy.
Listen to your customer
Once banks know their customers, it is then important to take action to ensure that they are offering their customers what they need. By utilising customer and location data, such as high-quality demographic data, banks can intelligently shape their bank branch strategy to truly reflect their current and future customers’ wants. For each individual branch, it is important to understand: what services are being used; are these services combined with digital channels; who is using the branch, and when? Having sight of this will allow banks to assess what their branch footprint looks like, and how to develop, or reduce, this footprint according to customer requirements. Russian retail giant X5 already use a sophisticated technique based upon location and demographic data to recommend new store locations and predict revenue3 and as a result, the forecasts produced using this approach have reportedly had an accuracy of over 90%, leading to both fast and future-proof decisions. By adopting a similarly customer – and data-driven approach – retail banks may well be able to future-proof the high-street banking branch.
Although traditional retail banks are making moves to become more customer-centric, few are truly embracing data-driven decision making in terms of their branch footprint, and consequently reaping the benefits.
With leading retail banks and building societies closing, or planning to close, over a 1000 physical branches between 2018-2019 it is has never been more important to make well-informed strategic decisions.
By putting customer data and insights at the forefront of the decision-making process, retail banks will ensure that they are optimising their footprint in the most cost-effective and customer-centric way.
WHY 2020 IS THE RIGHT TIME FOR FS MODERNISATION
Chris McLaughlin is chief product and marketing officer at Nuxeo
Few would argue against the notion that the UK financial services (FS) industry is facing many challenges as both a new year and new decade begin. Uncertainty over Brexit, the potential threat from new competitors and Big Tech brands, and rising customer expectations are just some of the challenges facing the sector.
But for every challenge, there is also opportunity. Digital banking paves the way for greater service continuity, making it easier for banks to capture and analyse data (with consumers’ permission), reduced repetition of information collection, and delivering more of what customers want in terms of products and services.
By innovating with richer and more convenient online and mobile banking experiences, and by using technology to deliver smarter and more streamlined backend operations, traditional FS providers can roll out and execute services more cost-efficiently too.
But many FS firms have been restricted in their ability to innovate and realise such opportunities, due to the outdated and inefficient systems and applications to be found in many organisations. However, with many FS workers believing that the challenges the industry face could see their company lose customers in 2020, the time is ripe for FS firms to embrace modernisation.
The 2020 agenda according to UK FS workers
Nuxeo recently surveyed 501 UK FS workers that focused on the challenges, concerns, and opportunities facing the industry. The main 2020 FS industry challenges were Brexit uncertainty; cybersecurity threats and information or data breaches; physical branches closing down; the burden of increasing regulation; competition from Big Tech firms potentially moving into FS; and competition from new challenger banks.
Perhaps of most concern to the industry is the fact that 59% of FS workers in the study felt that these challenges left their organisation vulnerable to losing customers over the next 12 months. But there are signs that FS firms are adapting to the new market reality and embracing technologies such as artificial intelligence (AI) that can help them modernise and address such challenges.
Almost two-thirds of respondents claimed their organisations are committed to innovation, and more than half (58 per cent) believe that firms which use AI in creative ways make for more attractive employers. 68% of respondents say their organisation is already using AI for content search or is in discussion to do so, and 67% say the same for automating backend processes, suggesting that FS firms are alive to the value that can be achieved.
Transforming customer service delivery is also a key focus for AI ambitions, with more than one-third (34 per cent) of respondents saying their organisation is already trying out AI in this context. Chatbots, often used to improve the customer experience, are being used by one-quarter. Meanwhile, 41 per cent are already using AI-based capabilities for some form of data analysis, suggesting that FS providers are attuned to the need to target their activities more strategically.
Smarter management of data, content and information
One of the major threats to productivity is the inability for FS firms to connect and organise all the data they have at their disposal and there is a real need for smarter management of data, content and information. Compared to newer industry market entrants, established banks and FS providers have far richer data going back decades or longer. If institutions could tap into this considerable resource, it could be used to distil invaluable intelligence and insights into consumer trends, product performance, and relative account profitability.
Although organisations have all the underlying information stored within their legacy systems, it is typically very difficult for teams to access, combine and cross-analyse this data. This is because, too often, systems are unconnected, use incompatible data formats and feature considerable data duplication between applications.
In the Nuxeo research, FS providers confirm that, on average, they store information and content across nine different systems. And these systems tend to operate in silos: almost three-quarters of respondents say their organisation’s systems are not fully connected with each other.
System users who need to access information as a regular part of their jobs can be spending up to an hour a day (52 minutes) searching for what they need because it is not readily discoverable. Given that this equates to four hours 20 minutes each week per employee spent looking for information, the total time wasted across an organisation over a year is quite significant.
Embarking on a managed journey of modernisation
13 per cent of respondents in Nuxeo’s study believe their organisation’s inability to adopt AI quickly enough is one of the main challenges facing UK FS in 2020, so it’s something that will need to be addressed sooner rather than later.
But a managed modernisation journey, incorporating wider use of AI, which can help address many of the issues that are so concerning to those that work in FS, is already underway for many. Such modernisation can deliver quick wins, without incurring new risk or detracting from other critical work that needs to be done in 2020 and should be embraced wholeheartedly as the FS industry embarks on the new decade.
WHY MAKING MONEY ON YOUR MOBILE IS EASIER THAN YOU MIGHT THINK
Aaron Brooks, Co-Founder of Vamp
For Millennials and Generation Z, becoming a social media influencer is an increasingly desired career. According to a recent study, 86% of millennials want to use their social platforms to post sponsored content. It comes as no surprise. Getting paid to produce content about the products you love, why wouldn’t you?
It’s more than just a pipe dream too. While marketing used to revolve around big brands, employing big agencies to create ads, technological advancements have created a user generated content boom. Thanks to smartphones, most of us now have a 12 megapixel camera in our pockets. Brands have capitalised on this, launching campaigns that harvest user generated content, asking their customers to share their brand experiences through pictures, videos and reviews.
Social networks have normalised the sharing of content, which has helped propel this movement further. ASOS’ UGC hashtag #AsSeenOnMe has over a million entries on Instagram. Then of course there’s Apple’s incredible ‘Shot on an iPhone’ billboards, which use their user’s images to promote their phones.
Influencer marketing takes this a step further. These social creators produce high-end content and have engaged followings – both a valuable commodities for brands. 93% of marketers now using influencer marketing. So if you’re looking to make your mark as a content creator, there are plenty of opportunities. Don’t be put off if your Instagram following isn’t in the high thousands either. Micro influencers, with their small but highly engaged audiences, have become popular among marketers and this trend will continue to grow in 2020.
Of course, brands want high-quality content to represent their brand, but if you’re keen to kick start your creator career and start making money, a smart phone and a creative eye is a good place to start. If you want to take it further, then follow these three tips for success.
Hone your personal brand
Rather than trying to be fashion, art, foodie and travel all in one neat package, find a niche and create a consistent message. The same goes for photography styles. If you want to be the flatlay expert, I’d recommend sticking to that at least 80% of the time.
Finding your niche and making it your hallmark will let people know what they can expect from you. It’ll make you more likely to maintain follower loyalty and help you to stand out from the crowd. Make sure it’s of genuine interest to you. You’ll need enough enthusiasm to post consistently in order to build your authority in that area.
Cultivate an engaged following
While a high follower count was once the most prized possession of the influencer community, times have changed. These days if you want the attention of big name brands, not only do you need a beautiful feed, but a highly engaged following. That means people who follow you, spend time with your content and engage with it.
Actively engaging with your existing audience and contributing to the larger Instagram community will help you build relationships on Instagram. This means replying with genuine
comments and pro-actively engaging by offering your own comments on other accounts.
While it might be tempting to take shortcuts by buying fake engagement or followers, it will only sabotage your efforts. Software has become increasingly effective at spotting fakes so chances are, you’ll be found out and blacklisted.
Maximise influencer marketing platforms
Once you’ve honed your personal brand and cultivated an engaged following, you can begin making money on your mobile. Rather than waiting for these opportunities to find you, you can take a proactive approach and join an influencer marketing platform.
These technology services connect brands with content creators. Depending on the platform, it may have a database of thousands of pre-vetted influencers who have opted-in to receive content collaboration briefs from brands. You’ll get opportunities delivered direct to your mobile and will be able to choose whether you opt in or not. This gives you the freedom and flexibility to work with brands that truly resonate with you and balance the work around other commitments.
With brands constantly searching for people who boast content creation skills, there are plenty of career opportunities in the influencer space. For those looking to make money in this space, all you will need is a smart phone, passion and creativity to begin carving a career as an influencer.
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