The other day, when I went into my local bank branch to speak with my advisor, I was struck by the immensity of the transition which banking in Europe is going through right now. In an incredibly competitive environment, banks are facing tremendous pressure. They’re seeing historically low rates and declining profits, which is leading them to close branches and focus on reducing costs. To me, it feels like we’re in a race to the bottom with a war on price.
It also seems that this is creating a massive divide between banking customers who live in the larger cities and those who live in the smaller towns. In the cities, branch closures might not have had much of an impact—after all, the next branch is just a few blocks away. But for those who live in smaller towns, it’s affecting their access to services and disrupting their way of life.
Across Europe, and particularly in France, retail customers are used to having a personal relationship with a banker in their local branch, and they rely on that person to advise them on all aspects of their finances. When the branch closes, they lose that relationship. And they have to rebuild their trust either using an unfamiliar channel or by switching to a bank that has a local branch they can visit in person.
In our recent report, Growth: It Comes Down to Experience, one of the callouts that spoke to me was this: “A great experience is defined not by what you offer but by how well you enable your customers to achieve the outcomes most important to them.”
So, how do banks help their customers reach their financial goals while keeping costs in check? European banks are tackling this in a variety of ways.
1. Digital experiences
BBVA is a prime example of a bank that has been working on its digital experience for customers. Recognized by the Forrester Digital Experience Review as an overall digital experience leader for five years in a row, the bank recently launched a fully digital retail banking offering in Italy. Onur Genç, BBVA's CEO, says, “Our value proposition aims to bring together the product offering and strength of a traditional bank with the customer experience of a digital player. We want to bring the best of both worlds to Italy: a universal digital bank.”
Because the bank isn’t tied to physical branches, it’s able to offer customers remote and telephone services 24/7. Apart from always-on service, perks for customers include an online debit card account with no fees, free transfers, free cash withdrawals and mobile payments through Samsung Pay, Google Pay and Apple Pay, as well as several other financing services.
While this doesn’t provide the personal relationship that some people prefer, I think the sheer convenience of services like these will appeal to many European banking customers—and give those whose local branch has closed a viable option.
2. Innovative use of physical branches
For those banks that are reluctant to go fully digital, UK banks are showing a new path forward: shared physical branches. Doing this will enable them to maintain the local access that older and more vulnerable customers prefer. The banks have been piloting shared “hubs” since April 2021, and plan to continue these pilots for at least two years.
The start-up OneBanks is testing a similar concept. It offers hub kiosks that let customers deposit and withdraw cash, make payments and get help with setting up or using online banking. The company is using open banking to provide services from different banks, but with the added benefit of someone there to help you. Its mission is “to create a sense of community by having opportunities for everyday human interaction, in person, by people, for all your everyday banking needs.”
I love this idea for customers who have difficulty navigating the digital banking experience and would rather speak to someone face-to-face. I think it also points to the value of adopting open banking for enabling access to these simpler banking services and meeting customers’ regular daily banking requirements.
3. ATM pooling and a human-centered design
ATMs are another expense that European banks are seeking to minimize. In many cases, banks are pooling or sharing ATMs. Instead of owning the ATM fleet themselves, ownership lies with a single deployer. This is a well-established practice in Finland and Sweden, but as cash use declines across Europe, it’s becoming more widespread in other countries.
In Portugal, many banks are part of the Multibanco ATM system, which offers 11,000 machines nationwide. As well as withdrawing money and checking their balance, customers can use the machines in this network to pay taxes, pay bills for online and physical services and shopping, add credit to their mobile phones and buy tickets to shows. There’s also a phone app that lets them request cash as they near a machine, so they don’t have to touch buttons on the machine itself.
Another innovation is the human-centered design of the BancoSmart ATMs developed for the Italian market by UniCredit Bank and Experientia. The new touchscreen interface, which can run on various ATM hardware platforms, offers customers a personalized homepage with services displayed in their language and based on their banking profile. This makes using the ATMs much easier and faster. The design is also better for people with poor vision and meets the needs of people with all levels of literacy, including those who don’t speak Italian.
This last innovation I find particularly compelling, and I hope it’s one that more banks adopt.
4. Paid designated advisors
BNP Paribas is taking a different approach to stand out from its competitors—focusing on quality of service. To give customers a more personalized experience, it’s providing a paid banking advisor subscription. The bank offers two levels of service:
- The Affinity program (link to French site) targets the wealthiest customers (approximately 20%) and elderly people with assets who want to delegate the management of their accounts. For €12 a month, customers have access to a designated bank advisor trained to support them personally with their savings, transfers and real estate finances. Furthermore, the bank guarantees that customers can keep the same advisor in the long term.
- The Proximity no-fee program also offers customers access to an advisor, but with a less personal touch. Customers are assigned to a team of three advisors and there are no guarantees they can speak to the same advisor each time or maintain a long-term advisor relationship.
By offering a paid model, banks can reinvent the role of the advisor and make their customers’ lives easier. They’ll be able to offer a much higher level of service, helping guide investments and protecting wealth and assets, by providing comprehensive offerings including insurance products.
Beyond focusing solely on simplicity and efficiency to cut costs, designing and delivering higher quality service for a fee should be on the agenda for banks. The potential here is higher profits and happier customers—and more engaged employees.
So, there are options for European banks. I think we’ll see different choices by banks in different regions. But at the end of the day, the winners will be the ones able to consistently deliver high quality customer experiences every day while recognizing the diversity of customers’ expectations.
Tell me, which approach would you take?
To learn more, read the report Growth: It Comes Down to Experience