By Jerry Young, the CEO of ieDigital, a portfolio company of Parabellum Investments which is led by Founder and CEO, Rami Cassis.
Until recently, the stereotypical view of banks generally might have been that they are remote, faceless organisations.
Largely long-gone are the high-street bank managers who knew many of their customers by name, replaced instead by a technology-focused banking sector, together with a huge growth in the populations of our towns and cities.
Today, instead of visiting our high-street bank manager, many of us will simply go online, or use a banking app, from the comfort of our own home at any time of the day or night. As a result, many financial institutions have arguably lost that personal touch.
Indeed, while banking has become functionally complete, it is too often emotionally detached. However, we are now seeing a reversal in this trend, and are seeing a move to banks wanting to seem less remote. They are actively using technology to ditch any cold, impersonal image that they might be accused of having, and instead, are figuratively reaching out to embrace their customers.
Let’s look at some of the main innovations we are seeing in the financial services landscape.
Also read: How to Successfully Scale Embedded Finance Offerings.
The rise of banking hubs
The UK’s Financial Conduct Authority has calculated that running a bank branch costs hundreds of thousands of pounds each year. However, with less people walking through the doors of a branch and more of us relying on technology, a trend that continues to escalate, it is not hard to see why many branches simply cannot compete with online and app-led banking methods.
Nonetheless, there is still a need for some degree of face-to-face functionality.
Around 40% of British people still visit their main bank branch at least once a year, with 9% visiting at least once a month. However, towns and cities across the UK have lost access to 5,469 branches since 2015, closing at a rate of 54 a month, with some 300 more already earmarked for closure in 2023. That means the ones left are more valuable than ever.
For older customers, people with complex queries, and those with limited access to digital channels, face-to-face interaction can be a lifeline when they are dealing with financial transactions or concerns.
How are banks addressing this, while the programme of branch closures continues?
Many of the UK’s 11,000 Post Office branches now have agreements with banks, allowing them to provide some core money-management services. Campaigners have also started opening shared banking hubs across the UK to preserve access to offline banking services, face-to-face support, and cash withdrawal.
Building societies are often more embedded in their communities than their banking counterparts—and amping up that physical presence can help make the most of that local advantage. Nearly three quarters of members agree that building societies are pillars of the community, significantly higher than the 52% of major bank customers that agree.
Going above and beyond customers’ transactional needs is vital, both to stand apart from competitors and give customers the level of support and experience they’re looking for when they arrive at a branch. Hosting digital skills classes, drop-in advice sessions, or even specific community events can create a hub where customers know they can seek support.
Blending technology with the personal touch
Younger people are demanding accessible digital banking services from their providers. They are increasingly turning to neobanks and fintech unicorns to conduct their banking, payments and investing.
Statistics show that the number of people in the UK using online banking services rose from 30% in 2007 to 76% in 2020, with just over one in four adults in the UK (27%) opening a digital-only bank account by 2021, indicating a threefold growth compared to the 9% share measured by January of 2019.
The emergence of ‘FinTok’, a community on popular app TikTok for sharing financial advice, in recent years has proved the value of the human touch.
Since blowing up during lockdowns in 2020, TikTok has moved away from just being an app for sharing trending dance videos. It is now also established as a source of education for younger generations, doubling as a video app and search engine. In particular, FinTok is a community of advice on personal finance, investment and crypto, or saving money in the cost-of-living crisis.
Metaverse innovation
Almost half of bankers believe that customers will use augmented reality or virtual reality as an alternative channel for transactions by 2030. Indeed, so sure are many in this view that some of the big names have already placed their long-term bets.
JPMorgan has become the first global bank to invest in a popular metaverse platform by opening a lounge in Decentraland – a virtual reality platform powered by the Ethereum blockchain that allows users to create, experience, and monetize content and applications.
More examples include HSBC buying a plot in the Sandbox, a gaming platform, and BNP Paribas launching a virtual reality app that allows customers to use virtual reality in their banking transactions, including account opening.
The key thing to understand here is that while this is wholly reliant on “impersonal” technology, the users who will most likely embrace this are those who have been brought up on technology. Indeed, I would argue that there will be those among them who have never physically set foot in a branch. For them, the metaverse will be the equivalent of popping into a high-street branch and meeting the branch manager.
Conclusion
The tables are starting to turn. There was a time when people viewed technology as a replacement for the human touch in banking. However, we are now seeing technology becoming an enabler for this personal touch.
Be it ‘FinTok’, the Metaverse or banking hubs, the relationship between the personal touch and technology is becoming much more symbiotic and one where the boundaries are becoming blurred.
