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The power of digital: Is your brand doomed without a plan?

Let’s face it, the rapid and exponential growth of technology is transforming the world as we know it. Customers’ expectations are shifting as they become increasingly connected. It’s changing the way they shop, transact, consume products and want brands to interact with them. 

This change in consumer behaviour has had a knock-on effect for the high street. A recent survey by PwC highlighted that in 2018, an average of 14 shops are closing every day as UK high streets face their toughest trading climate in five years.

This trend is supported by Amazon whose profits hit a record $2.53bn (£1.9bn) in the three months to the end of June – about 12 times more than it made during the same period last year – and sales rose by 39% to $52.89bn.

Banks are also starting to wake up to the issue. The top five high street banks are now heavily investing in the development of new digital products and services to actively compete against rival FinTech companies and meet the growing demand of the digitally savvy customer.

Disrupters – such as Chinese payment systems Alipay, WeChat Pay and UnionPay – entering the European market have further highlighted the need for banks to invest and evolve. Banks need to adapt to contend with these market disruptions whilst also embracing new monetary changes, such as the revised Payment Services Directive (PSD2), to ensure they remain relevant to new customers.

For more traditional customers who prefer to bank on the high street, this digital trend will become increasingly unsettling. But the question is – what are they using branches for? At Consumer Intelligence, we conducted some research to understand how many people still use high street branches and if so, why. The results were interesting.

Of the 750 people we surveyed, over 45% had been into a branch within the last month. Whilst this high percentage could feel reassuring for high street branches, when you delve into the reasons why people are using them, it becomes clear that this model of banking isn’t sustainable long-term. 

The three key reasons why people go to banks is to perform outdated or historical type transactions: encashing cheques, paying in cash and withdrawing money. However, nowadays these transactions can all be handled simply and easily using technology. New apps allow cheques to be captured and encashed digitally via your phone, whilst conventional cash deposits and bank note withdrawals can be achieved simply via service kiosks and ATMs. As for coins, it’s unlikely that banks will retain branches simply to support this type of currency. 

So, if banks were too pull back from the high-street, where would people turn for the personal face-to-face service?

The Post Office remains focused on the high street, and through its ongoing branch modernisation, continued government investment and its business strategy to focus on new financial products and services, it could remain competitive and active of the high-street for many years to come. However, with everything pointing to less people coming to and purchasing on the high street, we’ll have less people buying less product, ultimately resulting in the failure of some businesses. 

The travel industry has experienced a similar scenario. With the introduction of simple-to-use online functionality providing customers with the freedom and capability to choose and create their travel plans, the traditional way of booking a holiday was eliminated within a five-year period. However, travel agents adapted and changed to meet the changing needs of its customers and have consequently continued to enjoy success via online and instore services.

It’s not all doom and gloom for the travel money industry. People are travelling more than ever, and recent research from the Association of British Travel Agents (ABTA) estimates people will go on holiday’s abroad 1.7 times per annum on average. People’s appetite to travel further and for longer continues to grow, and more and more routes and travel destinations become available each year. 

The need for travel money will remain but how people access and buy their travel money will change – it’s inevitable and only organisations willing to plan and develop digital products and services which meet customers demands will succeed. You don’t have to be ‘bleeding edge’ but you do need to have a digital strategy and you do need to listen to what the customer wants.

Andrew Buller

Key Account Director, Consumer Intelligence

Andrew Buller has over 20 years’ experience within the financial services sector and has worked predominantly within the FX, wholesale bank notes and prepaid industries.

In previous roles, Andrew has managed key relationships with many of the leading financial institutions including Commerzbank, Credit Suisse, American Express, RBS and Travelex.