RBR Branch Transformation conference: FStech reports

The 2016 RBR Branch Transformation conference was the research firm’s sixth and largest such event to date, with in excess of 500 banking delegates from more than 50 nations descending on London’s Park Plaza Riverbank hotel on 6 and 7 December. The two-day event included a packed speaker programme, including globally renowned industry leaders. FStech’s Anthony Strzalek attended the conference and gives his summary of the opening day.

Ray Ehscheid, SVP for design services at Bank of America kicked off proceedings with his presentation titled ‘How to transform your branch network’. He began by speaking of the need to “radically reshape branches”, explaining that the way to do this from a bank’s perspective is to “compete for mindshare not attention”. He spoke of the need for banks to have a role within the community and to connect with people not just from a money perspective.

As SVP of design services, Ehscheid has implemented changes to the bank branches’ physical space including installing removable furniture, allowing office and waiting spaces to be adaptable. He also highlighted the need to combine in-branch technology with quality customer engagement.

Following his presentation, Ehscheid received a question from the floor: “What will the branch of the future look like in 10 years’ time?” “They’ve already changed” he replied. “You need adaptability and your physical space needs to provide a framework for new technology. The holy grail as it were would be to eventually move all transactions from cash to automation.”

Following Ehscheid was Marcus Pequeno, a former Santander executive. His presentation, ‘What do customers really want from their branch experience?’ focused, interestingly, on the failure of market research to “identify subconscious thought”.

He highlighted figures which showed that 80 per cent of new services fail within six months when they go through focus groups. As such, despite high investment from financial services firms in market research, the majority of projects which relied on such data often failed.

Pequeno noted that peer pressure and people conforming to bias were all part of human nature and that, as a result, banks need to focus on customers’ subconscious thoughts and not just on what they say. Like Ehscheid before him, Pequeno also spoke of the need to integrate and have a strong presence within the community and highlighted a number of initiatives he was part of including sponsoring customer Wi-Fi in coffee shops and offering discounts in drink and food outlets with a banking card, as well as providing entrepreneurship contests and personal finance classes. He also talked of an app – which ultimately came about as the result of one of the customer contests – that uses smart notifications to let customers know when branch wait times were low.

Pequeno concluded his presentation with a short video of Kevin Richardson, a man more commonly referred to as the ‘Lion Whisperer’. The video ended with a poignant quote from Richardson who, when asked how he was able to understand the lion’s behaviour, responded: “Why should I struggle to understand a lion’s behaviour when I can simply become one.” A notion which, as Pequeno pointed out, should be applied to banks in regard to their customers.

Pequeno was followed by Jason Bates, co-founder of digital financial startups Monzo, Starling Bank and most recently 11:FS. The only man at the conference dressed in jeans, a T-shirt and a hoodie, Bates provided a markedly different outlook, in that he felt the future of banking was an entirely digital-only affair.

This provided a stark contrast to the views expressed by Mike Bielamowicz, a director of Glory Global Solutions, in his ‘Transformation for customers’ presentation which followed, in which he argued that 77 per cent of new bank accounts were opened in branches, thus showing that the physical presence of a branch was still very much a necessity. However, Bates said that with the more traditional banks we’ve seen “digitised banking not digital banking”. Questioned on the lack of face-to-face contact involved, Bates responded that contrary to belief “digital at its best is human” and that “digital banking provides 24/7 services for the mass market”.

The morning’s final session was a panel discussion where Ray Ehscheid and Jason Bates were joined by Preni Naidoo, executive head of self-service banking at South Africa’s Nedbank and Roman Truhlár, chief retail banking officer of Czech startup Air Bank.

Once again, the discussion soon turned to a digital versus physical debate. Ray outlined his belief that there was still a need for bricks and mortar but that the more traditional outfits “could learn from digital”. Echoing this, Naidoo said that it was not “a case of either or” adding that “50 per cent of our customers use branches at least once a month”. He also touched upon the use of branches for more complicated financial services.

However Bates disagreed. He said that opening accounts and other more complicated services could be done digitally. “The problem”, he noted “is that those processes have not historically been done well”. He also brought up the lack of trust in more traditional banks, saying that there were two levels of trust at play. He explained that while most people trust a traditional bank to keep their money safe and that they would get it back, they often did not trust them in other respects including “screwing them over on rates”. Truhlár agreed with this point, adding that trust was earnt “through delivery of service”.

Delegates returned to their seats in the afternoon for further presentations and insights including those from Shaun Rowley, director of national expansion at Capital One, who spoke about the new Capital One Cafés across the pond. The idea of the Capital One Cafés, Rowley explained, was to “focus on relationships rather than products” and to provide “a more relaxing space” for customers to talk about their finances with ‘Capital One Ambassadors’.

Taking to the stage once again, following his appearance on the panel, Roman Truhlár talked about his Czech startup, Air Bank – a digitally focused firm but, unlike Monzo and Starling Bank, one with a small number of branches as well. Truhlár and Air Bank have taken a new and quite radical approach to banking by “replacing don’ts with dos”. He explained that this meant, for example, encouraging dog owners to come in to the branches with their pets as well as allowing people to eat and drink. Truhlár also announced that he preferred “if our branch assistants are from outside the banking industry”. Numerous other ways that Air Bank differed from the more traditional model were touched upon, including by providing just one product in each category – for example one credit card, one insurance product, etc.

The need to be different, Truhlár explained, was because “other banks can always mimic our technology but never our customer experience”. This combined digital and branch approach was vitally important, he stressed, with 84 per cent of all new Air Bank customers coming via branches.

What was clear from the opening day of this year’s RBR Branch Transformation conference was that while some like Bates were sceptical about the need for branches in a future banking environment, advocates of a branch network at least agreed that the need to be more adaptable, adopt new technologies, develop new strategies and have a stronger connection with customers was of vital importance.

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