The Bankwatch

Tracking the consumer evolution of financial services

Branch redesign – saviour or anchor?

The always insightful Paul Penrose picks up on a terrific theme here that should as they say have legs.  Out of crisis normally comes innovation usually driven by forced choice than desire.  Banks are being squeezed in many ways, and one major one is resorting to reliance on regular retail and commercial banking as their core business (imagine that!)

The bank branch – weakest link or saving grace? | Finextra – Paul Penrose

Sean Park’s Sixth Paradigm blog refers to a recent editorial piece in the FT bemoaning the poor standards of customer service in high street bank branches.

Sean is currently setting up an investment venture called Nauiokas Park to invest in start-ups with the potential to bring innovative, disruptive approaches to bear on traditional business lines.

With that in mind Paul points out Sean Park and his investment venture focussed on innovative disruption in traditional business lines. 

The catalyst was this dour piece in the FT that while it may not all apply to every bank, no bank cannot see some part of itself here. 

Some classic quotes from this:

  • Public services at their best now outperform the banks – so government ownership could actually improve bank performance.
  • Banks use the internet as little as possible to avoid fraud; instead they use the post, in which letters are lost or stolen, and the telephone, which is overloaded and often fails to give results after interminable waiting times.
  • Banks claim to have cut costs by taking operations out of their branches into customer services, but the level of service has been cut even more. Banks are like hospitals. The more you cut nursing staff to save money, the less service you can give patients.
  • Banks have made it almost impossible to use branches. With great difficulty I discovered the name and telephone number of my branch manager, only to find that a letter I wrote to her had been intercepted by "customer services", who passed it to her a couple of weeks after deciding that they could not deal with it – nor could she, incidentally
  • The new British model of state-run banking might save banking jobs as well as banks themselves if it gave new scope to branches. Another possible model is one in which current accounts get a decent interest reward and banks are allowed to charge for services. "Free banking" has turned out to be ruinously expensive for many customers.

Anyhow, Sean goes on apparently to be setting up “a place where ideas and capital meet;  a space at the intersection of financial services, markets and technology.”

Relevance to Bankwatch:

The door is wide open for innovative design and shifts in financial services.  Clearly there are gaps in the current service model, some banks more than others, but all banks nonetheless.  Working harder at the current model sounds like Einstein’s definition of insanity. [Insanity: doing the same thing over and over again and expecting different results. Albert Einstein]

What of the design of the branch and the branch customer service model.  This puts me in mind of a piece done by Online Banking Report, 2 1/2 years ago entitled  “The Demise of the Branch” which took the view that the value in the branch is being eroded, and the long view suggests that alternative strategies are required if banks do not wish to be left in a few years time with a costly anchor around their balance sheets.

Written by Colin Henderson

November 11, 2008 at 00:22

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