Driven by changing consumer behaviours and the emergence of new segments, Asian banks are tripping over each other to expand offerings well beyond counter services, increasingly looking to new ways to commoditise traditional services.
This transformation is largely attributed to the advent of new technologies that has eroded the most basic of banks’ functions, which is to act as a distribution and transaction centre where customers went to get things done. Today that role has been replaced by telephones, the ATM machine, the internet and even mobile technology, forcing banks to reposition the purpose of a bank branch and to think of new ways to draw customers in through the doors.
Given the inherent culture of banks, delivering on this is going to be a tough feat, as they are used to leveraging technology, but very often they are doing so for their own sake rather than using it as an enabler. “The big question is: are banks really putting the customer at the heart of the customer experience?” says Grace Liu, Asia-Pacific lead for financial services at Nielsen.
The other challenge for banks is how to overcome their legacy culture, dominated by tight government regulation and a focus on a handful of services, rather than customer-centric innovation.
Two of the banks that have decidedly beaten the odds are Singapore-based OCBC Bank and Citibank.
OCBC decided to take a rather unusual path of turning their bank branches into hip retail outlets. To do this, they developed a fresh branch network brand called ‘Frank’, aimed at younger customers. This was initiated in response to on-the-ground research, which took a deep dive into the world of young bank customers and found that they saw banks as complex and stuffy, and didn’t sit with the experiences that they were after.
David McQuillen, head of group customer experience at OCBC, who spent months living in the pockets of Singaporeans aged 18 to 28 to under-stand their habits, said the idea faced considerable opposition when it was initially proposed. “We went shopping, eating, playing, drinking, with [these youngsters], and had conversations about life, relationships with money and banks. Our research showed that they were completely disconnected from banks,” he said.
The move was seen as controversial within the company largely because OCBC still sees itself as an old bank with a lot of legacy. “To do something like ‘Frank’ required a lot of internal courage and foresight. People said: ‘we’re a bank, not a retail store.’” McQuillen recalls.
With the eventual support of senior management, the concept was rolled out with the opening of two ‘Frank’ stores on university campuses, offering a vastly different banking experience.
“It’s the bank that doesn’t look like a bank,” says Mark Wee, head of Experience Union, the architectural firm in charge of the building project. “It feels like a young person’s store. You can choose from over 100 different bank card designs in the same way you choose sneakers.”
While OCBC concentrated on a niche offering, Citibank — whose market is still the mass affluent — took a different innovation route highlighting convenience and personalisation.
Francesco Lagutaine, head of marketing and customer experience at Citibank Asia-Pacific says his inspiration came from retail brands such as Gap and Louis Vuitton rather than other banks. He cites the sales reps in Apple stores — known as ‘geniuses’ — who have deep knowledge of the products and can solve problems, and complete sales on the spot, saying that Citibank has adapted the idea. Its sales staff are now able to issue new credit cards on the spot, so customers don’t have to fill out forms and wait for the mail. The move is reaping results in the markets where Citibank has introduced it, as customers in those markets are activating their cards much more quickly.
And that’s not all. The bank is building ‘smart branches’ around Asia that use technology to expand basic services, including interactive media walls, video-conferencing to put customers in touch with staff, and iPads to show product offerings. Citibank is also rolling out multi-floor ‘hyper-branches’, to cater for all market segments, with the aim of having at least one such offering in all major cities in the region’s markets.
But for all these efforts, banks still have some way to go in order to win back customer trust and forge alliances with them. Lilian Leong, managing director of Leo Burnett Hong Kong, draws a comparison with 1010, a premium mobile service brand owned by CSL. Its new store in Hong Kong’s Central offers pedicures, aromatherapy and even its own signature fragrance to customers paying just several hundred Hong Kong dollars a month.
“The real value of money is about the way it can help realise hopes and dreams and what [possibilities] money can offer. Consumers today need to feel that they are being rewarded for their custom. I don’t think that kind of reward is coming through on the banking side,” says Leong.
Other features in the 2011 Financial Report include:
Domestic banks have more local appeal
Insurance industry: bright prospects
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