Overview of retail banking

1. Presentation synopsis of enclosed talk given by Clive Woodger, Chairman of SCG London at Retail Business Summit organised by BBCG in
Moscow, September 2012.
Retail Banking – Anywhere … Anytime?
The following presentation was given at the BBCG Retail Summit Moscow on 14 September. The aim was to provide an overview of current
retail banking trends and issues and what that means for branch design strategy and design.
1. The Title of the Presentation – Anywhere … Anytime? is a reminder of what customers worldwide would like and in many cases are
already enjoying.
2. The Agenda indicates the overview approach in covering global trends and challenges with some international examples of latest
concepts and a recent Russian example completed by SCG London, Moscommertsbank. A reference to latest digital challenges and app
design is followed by a comment on the importance of developing a positive staff culture. This is ultimately the best
differentiation a service brand can achieve and an example of our work for HSBC on their worldwide offices environments is included.
3. SCG Clients
SCG London works extensively in the retail sector and some international and Russian clients indicated. This gives us a particular in
sight into creating the customer friendly environments that banks are trying to achieve.
4. SCG Clients
Some financial sector clients of SCG London are represented.
5. Global Picture
The reputation and image of banks is at all time low in many countries. The investment ‘casino’ banks are seen to be the cause of the
worldwide financial crisis and their retail arms are now viewed as the key to changing their image and long term business success.
The internet is fundamentally changing the way customers interact with their bank and the different functions a physical bank branch
should now provide.However, the internet has not changed the growth of branches in many countries. While rationalising
locations and bank formats the need for branches is still recognised.

2. 6. Retail Banking Challenges.
Bank margins are under pressure with a drop in incomes, low interest rates, rising costs of locations, people and computer systems.
Banks with internal different computer systems face technology issues and those like Santander with a common platform across
ten countries can leverage their advantage.
Apps create three times the number of engagements between the customer and bank. Stiffer legislation, demands for greater capital
reserves and slashed fees are forcing market consolidation. The UK has a problem in changing the historical principle of free banking
and now the banks needing to charge for every possible activity or default.
7&8. Retail Banking Challenges – Who Needs Banks?
Customer can now find other ways to pay bills and access money – note Paypal’s 100 million customers, Zopa, Wonga, Yandex offer
alternatives.
9. Customer Needs and Inspirations.
The primary need of bank customers is the assurance their money and interests will be looked after. There is a strong psychological
comfort in a physical bank. It is where you feel your money is kept and protected. Recapturing the old idea of your local bank as a place
to socialise and interact with staff who know you is a tough challenge but achieving that sense of connection is an important
emotional and rational factor in how you feel about your bank. The function of branches is changing to focus on customer relations less
transactions which can be automated. Their physical design and presence makes them highly efficient billboards despite the expense.
Smart banking that meets the 24/7 anywhere requirements is now increasing customer interactions and meeting the needs of a
generation brought up with computers and mobiles. Retailers, travel companies, hotels, theatres the tax man have now ‘trained’ their
customers to organise, book and pay online.
Self-service like the retail sector puts the customer in more control and releases staff to focus on customer needs.
10. Customer Experience – Touchpoints
The interconnected touchpoints with a bank through human, branch and digital contacts and interactions should ideally be aligned
effectively to achieve the desired customer perception. However, each of those experiences can enhance or ruin the relationship.
Call centres remote from the branch and customer country can be seen as a barrier and not a service. The branch design and
layout should encourage friendly and relaxed staff and customer interaction. Ultimately the experience whether in the branch, on the
mobile or on the website needs to meet the criteria listed – was it personal and service orientated? was it a convenient and efficient
process? did it give you a sense this was good value in terms of experience and cost? and could be it seen as a pleasure? These criteria
will create the differentiation with the competitors. Sadly dealing with banks is still seen as a distress purchase, a necessary evil!

3. 11. Branch Design – Reinvention
Branches now need to meet changing functions given the internet, mobiles and ATMs have removed the need for typical transactional
activities. Some banks deliberately do not talk about having branches preferring to see them as ‘stores’ and service destinations.
The concept of ‘coffee and iPads’ is the new thinking for progressive bank venues. With less transactions, the aim is to develop
more personal contact and services which can lead to more income from customers
12&13. Branch Design – Smart Banking Citibank
Images from Citibank branches in Malaysia, Japan, Hong Kong and New York show the ‘Apple store’ approach to creating a
contemporary high tech, customer centre experience and environment.
14. Brand Design – BNP Paribas Flagship ‘Concept Store’
The images of this business club/hotel reception concept appear to have taken the view that the customer wants an exclusive VIP
experi ence that from the Bank’s viewpoint will encourage strong business relationships.
15. Branch Design ING Direct Café
An extreme version of a coffee and iPads experience – a café in San Francisco just providing advice.
16. Branch Design – Metro Bank London
As a new bank purely focused on London this bank is determined to be a retailer in the way it talks to customers. Metro Bank staff
recruitment policy is to deliberately identify people from the leisure and retail sectors – not banking!
17. Retailers Becoming Banks – Tesco, Sainsbury’s, Coop
Tesco and Sainsbury as major UK retailers have provided banking services using their customer database advantages. It is about trust
ultimately and such retailers can leverage their knowledge of their customers needs and profiles to offer the appropriate services.
The Coop has just acquired 600 banks from Lloyds Bank in the UK and can use their ethical credibility to further develop their banking
services.
18. Retailers Becoming Banks – Magazine Luiza
This Brazilian electronics retailer uses its 600 shops as a customer service point for small loans as well as encouraging frequent customer
contact.

4. 19. Branch Design – Bankinter
This technology-led Spanish bank has a very contemporary branch image. Their virtual kids bank is a great way of encouraging the
next generation of customers to think of their bank as a part of their life.
20. Bradesco, Brazil – Touchpoints
The ATMs of this bank are technically advanced to react to a customers touch but they also have a floating branch service on the
Amazon!
21. Digital Banking
The migration of bank services to mobile and internet from the branch is a major factor in rethinking the functions of a branch and the
people and services that need to be provided.
22. Digital Banking – App Appeal
This review of some banking apps is an interesting reminder of how to optimise your brand image on a small screen. As a key touch
point for many, the mobile interface becomes increasingly important component in contributing to the customer’s perception of the
bank.
23. Russian Overview
Russian still has too many banks – 978 as of January 2012 and the new requirements for increased capital reserves will see further
rationalising and together with the challenges that mergers and acquisitions create in maintaining customer and staff loyalty.
The Russian market still has a very low card and internet usage as the charts indicate - 45% not owning a credit card and 87% not using
online banking.
24&25. Brand and Branch Development – Moscommertsbank
We developed new branch concepts which reflected the new positioning incorporating contemporary customer services and a positive
friendly environment. Modular branch concepts that could be flexibly implemented to create effective zones and intuitive customer
circulation have been created to allow for different location, size, market and building criteria.

5. 26&27. VIP Banks – Russian Standard ‘Imperia’ – Premium Retail
Having worked with Russian Standard developing their branch and communications SCG London were asked to develop their VIP
Imperia bank. Like the premium vodka profile this was to create an exclusive club experience. Every touchpoint such as the
literature, reception experience lounge areas had to be of the highest standard to ensure the consistent perception of high quality.
28. Ocean Bank – Delivering the Promise?
We developed the brand identity and internet communication for this digital bank, a first in Russia five years ago. The aim was to
create a relaxing image using the name as the theming to get away from traditional bank imagery. Unfortunately judging by the
negative internet comments about their service they have not been delivering the promise of a better customer experience!
The importance of ensuring a website experience and process lives up to every claim made by a service brand such as a bank is
critical.
29. Retail Bank Marketing – Differentiation Challenge
Banks typically have very similar values … trust … honesty … etc. The best is ‘doing what you say you do’ and being ready to say
sorry personally for example. Banks are traditionally poor at addressing customer complaints but a real differentiator is the personal
experience of the customer and bank staff. Do your people make the difference? If not what can you do about it?
30. Technology Challenges – Knowing Your Customer
The cartoon shows a classic issue – the computer saying one thing ignoring the customer reality. The challenge is crunching data and
translating information into usable support and help for staff dealing directly with customers. This is the future of the effective
customer service.
Amazon and Tesco lead the way in using their personal knowledge of their customer to best advantage for both the customer and
retailer. There is a balancing act, however, between helping customers and the danger of privacy intrusion. Do you really want your
bank to advise you cannot really afford the next purchase?

6. 31. Bank Staff Culture
Corporations have increasingly recognised the benefit of inspired, engaged and motivated staff. Our work with HSBC was to create
workplace environments across their 78000 offices worldwide which reflected the Banks values and attributes. They understand
different cultures and mindsets needed to have different solutions but with a common approach that reflected the Bank’s ethos. Some
examples of the work are included. The key point is the importance of addressing back-of-house issues as well as customer facing
communication and environments. Ideally every brand strategy should reflect this holistic approach – satisfying target consumers
and attracting and retaining the best people – your inner customers.
This presentation has touched on a range of issues from strategy to design when addressing the development of successful financial brands. I
hope this will encourage all parties to see brand development as a top management challenge as it ideally requires all departments to work ef-
fectively together to understand their role in contributing to a successful positive experience for their target external and internal audiences.
Clive Woodger
September 2012

7. Retail Banking
Anywhere ... Any time?

8. Agenda
Retail banking
• Global picture
• Challenges
• Competion
• Customer needs/ experience
• Branch design - renventions, trends
• Digital
• Culture

9. SCG London Clients include - Retail

10. SCG Clients - Financial

11. Global Picture
• Reputation and Image
Post crisis the credibility of banks is still at an all time low
- ‘casino’ investment bank perception ... high returns/big risks
- retail banking seen as key driver to regain customer trust and revenue
• The Internet
Banks adapting to change with technology-enabled customers changing
branch functions
• Branches
Still more banks on main streets globally than 10 years ago
US +22% since 2000
Europe steady increase - Spain has too many 43,000!

12. Retail Banking Challenges
Profitability - margins squeezed - income drop, low interest rates
- banks need to reduce costs and restore profit
- branches are expensive - location, manning staff represent
40-60% operating costs, the rest is computer systems
Technology - encouraging customers to increase online activity creates
more transactions
- apps create 3 times more ‘engagements’/interactions
- need for same system platforms everywhere - Santander
has the same in 10 countries
Legislation - tighter control/regulations
- slashed fees
- banks must hold more capital
Big European banks lose money on 50% of customer accounts
‘Free Banking’ = opaque charges in UK

13. Retail Banking Challenges - Competition - Who needs banks?
PayPal - ‘the worlds biggest bank’
100 million account holders
Other players...
...

14. Retail Banking Challenges - Competition - Who needs banks?
Yandex Money

15. Customer Needs and Aspirations - New mindsets/behaviours?
Assurance
money is special
- trust in a bank without physical presence?
- location perception - where you think your money is ... being looked after
- a branch nearby...
- interacting with humans...
Banks are still expanding branch networks -
‘branches expensive but highly effiicient billboards’
‘Smart’ Banking
- anywhere , anytime 24/7 ‘technology savvy’
apps in US enabling customers to photo cheques to deposit
Self Service Culture
- ATM’s accepted norm
- ‘Online comfort’ - people of all generations doing more complicated things
online - tax returns, airline tickets...

16. Customer Experience - Touchpoints
Human
- Call centre Differentiation
Criteria
Face to ‘personal’
Face...
Video Phone ‘service’
‘convenience’
Branch Digital ‘efficiency’
Phone
- ATM
- Counter
- Website
- app...
‘value’
- Interview ‘pleasure?’
Social.. pit stop
VIP Club
... consistent ... coordinated ... satisfying

17. Branch Design - ‘Reinvention’
Changing-Functions ... Staff activities ... Image
Banks become ‘smart’ ... retailers ... cafes ... clubs ... lounges
No more ‘branches’ ... ‘coffee and iPads’
more proximity more interactions more personal contact
less transactions more services

18. Branch Design - ‘Smart Banking’ ... ‘Apple Store’ citibank
Kuala Lumpur, Malaysia Japan
Union Square, New York Union Square, New York

19. Branch Design - ‘Smart Banking’ ... ‘Apple Store’ citibank
Japan Japan
Mong Kok, Hong Kong Union Square, New York

20. Branch Design - BNP Paribas’s
Lounge ... club ... meeting place flagship concept store

21. Branch Design - ING Direct Café
Cafe! no transactions ... just advice

22. Branch Design - Retailer Ethos Metro Bank
London

23. Retailers becoming banks -
UK - Tesco, Sainsbury’s, The
Co-operative

24. Retailers becoming banks - Magazine Luiza - Brazil
electronics retailer
600 shops - fast growing provider
of small loans

25. Branch Design - Technology led
Bankinter - fifth largest Spanish bank
virtual kids bank

26. Bradesco - Brazil
Touchpoints
Sophisticated ATM service banking
... floating branch...

27. Digital Banking ... App appeal
Migration of branch to mobile and internet
RSB Online RSB Online RSB Online RSB Online RSB Online
RSB Online RSB Online RSB Online RSB Online RSB Online

28. Digital Banking ... App appeal
Touchpoint design challenge
Russian Standard Bank | Benchmarking
Overview of existing digital banking app identities Effective icon design: What works and why...
1 1 Simple, bold, iconic
2 High contrast
2 3 Effective use of bright background colour
to lift icon
4 Effective use of dark background to
3
highlight logo
5 Simplified logo with recognisable connection
to main brand identity
4 6 “Bucking the trend” - using flat, non-reflective
icon to create differentiation
7 “Bucking the trend” - using abstract fragmented
5 contrasting colour to create differentiation
6
7

29. Russian Overview
Market consolidation - 978 January 2012
Reducing number of banks - 158 banks lost in the last 5 years
Low Internet usage
Low card usage

30. Brand development - from business to universal
Moscommertsbank: Moscow

31. Branch design - from business to universal
Moscommertsbank: Moscow

32. VIP Banks - Russian Standard ‘Imperia’ - ‘Premium’ Retail

33. VIP Banks - Russian Standard ‘Imperia’ - ‘Premium’ Retail

34. Digital Banking - First in Russia - delivering the promise?

35. Retail Bank Marketing - Differentiation Challenge
Generic Values
... Trust ... Stability ... Service ... Customer Centric ... Honesty ... Convenience...
Similar offers and products!
So what really makes you first choice?
customer experience - bank behaviour
Do your people make the difference?

36. Technology Challenge - crunching data ... knowing your customer
• High cost of fighting card fraud
• Data helps to sell products to customers
• Leveraging spending patterns
(eg. Tesco, Amazon)
• Balancing act -
helping customers v. privacy intrusion

37. Bank Staff Culture - inspire, engage, motivate —
HSBC workplaces worldwide —
87 countries 78, 000 offices

38. Bank Staff Culture - inspire, engage, motivate —
HSBC workplaces worldwide

39. Bank Staff Culture - inspire, engage, motivate —
HSBC workplaces worldwide

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