A future beyond smiles - thoughts on the future of retail banking

When she finished her face lifted and she turned, smiling, to her husband. “All sorted,” she said. The two of them were clearly relieved to have that overlooked bill paid.

"Most of my old jobs in retail banking don’t exist anymore."
David Hisco, CEO ANZ New Zealand & Global Head of Retail

Like many old retail bankers it warmed my heart to see a banking experience ending with a smile. It also started me thinking about how the retail bankers of the future are going to generate smiling customers.

Thirty years from when I started, doing your banking is unrecognisable. There’s probably no retail experience in the world more transformed by digital technology than banking.

Yet if I think forward 30 years and wonder which institutions will offer the banking of the future, will it be a bank? Or Google?

The key won’t be technology, however fantastic. The retail 'bank' of the future will understand the emotional needs of its customers and deliver on those. The challenge for us as retail bankers is to think much bigger than 'service with a smile'.

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The aspiration of great retail bank of the future will be a role as a trusted life-enabler. A source of reassurance that you’re on the right path to achieve your goals through life’s different stages.

When I started at ANZ 30 years ago it was the analogue era and during my four years in retail branch land in suburban South Australia, I did all of the analogue jobs from batching clerk to teller, ledger examiner to Bills for Collection clerk.  I sound so ancient. I just started young. Really.

Most of my old jobs in retail banking don’t exist anymore. Transactional banking has become an anywhere anytime digital proposition. Branches still matter but they’re increasingly peripheral to most people’s everyday transactional banking experience and more about specialist value add services and discussions. 

More people do their banking each month with our goMoney smartphone app than go into a branch in New Zealand.

If the first phase of the digital era has liberated us from the drudgery of everyday banking transactions, I think the next phase will be even more exciting. It’s going to be a future of omni-channel access to services that are available when and where the customer needs them.

It will be a future of embedded banking that will place the means to complete the banking transaction right inside our lifestyles – allowing us to focus on what the transaction is about, not on the transaction itself.

But in retail banking in particular, some essential things won’t change. Thirty years ago the branch experience was important because the branch was the heart of the customer’s banking experience. If you wanted to do any kind of banking transaction, you came into your branch.

Most people came in at least once a week – to bank their pay, withdraw some spending money and chat with the familiar faces who had looked after them for years. The place was indeed energised by service with a smile, the oldest retail adage.

But if I think back honestly, for every smiling customer, there was at least an equal number of busy, flustered people trying to get in and out of the bank as fast as possible as they got through their long list of chores. The people in the bank might have been nice but banking was mostly a hassle for customers.

However since the electronic funds at point of sale, or EFTPOS, explosion of the 1990s put banking at every shop counter, the ease of transacting has been improving. Now mobile banking is embedding the bank even deeper in our lives – in our pockets and handbags via our smartphones.

It won’t be long until the thought of completing a banking transaction any other way will seem as foreign as riding a horse to work.

But these advances in the transaction side of the retail banking equation aren’t the reason I’m excited about the future. It’s the way retail banking can transform the emotional benefits we deliver our customers that convinces me I’m in the most exciting business in the world.

Retailing has two quite different dimensions: the transactional and the emotional. For a good number of our customers the transactional inconvenience of banking was causing all sorts of emotional pain. For others, a trip to the bank formed a part of their daily social routine and they enjoyed it.

Our challenge is to somehow burnish that 'social' element of banking, if not in person in the way we interact everyday with our customers. While continuing to improve the convenience of the transactional. The future of retail banking won’t be won by the bank that delivers the best apps. Like every other invention in banking before us, I think they will simply become a hygiene factor.

No matter how good the technology, banks have to stand for something more in our customers’ lives than just functional transactions. Otherwise banking will be nothing more than a commodity service where people make purchasing decisions based on price and very little else.

That’s fundamentally what the Johnny-come-latelies like Google offer. But banks also sell trust. And trust is a reputation we have developed over 100s of years, something that the Googles of this world have yet to convince us of, no matter how technologically impressive they are.

The key will be people feeling as though they control the financial dimensions of their lives. And let’s not mince words - your finances are one of the bedrocks of your happiness. Allowing the financial dimension of your life to drift out of control is the surest route to a life of anxiety and unhappiness.

To deliver on this potential we’ll need permission to take a more proactive role in our customers’ lives. We already know a lot about their life stage and financial situation. If we add to that an understanding of their values and life goals, we’ll be in a remarkable position to guide them along a path toward helping them achieve the life they want.

We’ll be able to help people begin preparing far earlier for their long term goals.

As a retail banker it’s a very exciting prospect. Other than your partner, your family and your friends, your bank could be your most trusted and essential life companion. And that’s a whole lot more than 'service with a smile'.