Virgin, Tesco and Metro are all planning to open branch-based banking operations and the Post Office is planning, once again, to re-open its banking services. Why? The Financial Services Club Blog carries an interesting analysis but misses the point. There is serious money to be made by using new technology to slash the cost of “traditional” over-the-counter services – provided you have access to an existing branch network – especially one that is self-funding.
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In a previous blog I pointed out that the case for moving businesses on-line is largely based on valuing the customers time at zero, even after assuming their connections really do work at the claimed speed and they can get through to your call centre. A number of surveys appear to show that more transactions (whether on-line or via call centres) are abandoned than completed. Many of those who have a choice do not try again. I also quoted data indicating that the growth of on-line transactions peaked a couple of years ago: when 12% of the population bought on-line (as opposed to e-mail, social networking and browsing) more than once a month. It has since fallen back to 11.2%.
The reasons may include fears over security but appear to be more because of poor service – particularly when Internet access services clog after 6.00 p.m., as the kids go on-line and the voice in the call-centre, if you can get through, is clearly from the far side of the world.
Those who want their customers to transact on-line with them have to take the problems of quality of service very much more seriously – including helping solve the regulatory, fiscal and funding problems that deter communications companies and ISPs from investing to improve access – as opposed to “merely” cutting costs and sweating past investment.
They also have to make it clear that they will accept responsibility for security and not seek to lay this off onto customers, whether consumers or small firms. The recent NFA report on the cost of fraud to the UK does not include the cost of security or lost business but does indicate the business case for active participation in the e-Crime Reduction Partnership announced in the Digital Britain Report.
Unless and until they do, we will continue to see a situation where high-value customers browse on-line but buy off-line. We may also see the corner shop inherit the cash handling business that used to be the mainstay of branch banking – except when there is a Post Office or Supermarket in easy reach.
If so, how long before Barclays responds by reverting to its roots – when the saloon bar of the Crown became the bank branch on Market Day. Or will they go teetotal via Starbucks or down-market via MacDonalds or KFC? And will the village shop be able to act as agent for both the Post Office and Paypoint.