When was the last time you visited your local bank branch? Thanks to the ease of online and mobile banking, chances are it was some time ago. But the retail banking industry is beginning to change.
Retail banks are those that are on the high street: they offer savings accounts, loans, mortgages and credit cards to individuals and small businesses. From building a customer-focused culture to harnessing new technology to help the industry grow, the European Retail Banking Summit in December 2012 revealed how high street banks are adapting - which will affect both banks' customers and their employees.
Regulation and reform
In the aftermath of the financial crisis, bank bailouts, bonus scandals and the mis-selling of payment protection insurance (PPI), the biggest challenges for retail banks are to make their operations safer and win back the trust of the public.
To protect taxpayers' cash, the Financial Services Authority (FSA) will implement a ringfence around the retail banking operations of universal banks to separate them from the riskier investment banking divisions. But it also means there will be fewer money-raising and lending resources available to retail banks. Speaking at the Summit, chairman of the FSA Adair Turner said that retail banks must adjust their expectations. "Financial services should not grow faster than nominal GDP. If it does, it's unsustainable," he explained. In retail banking, as well as in investment banking, there will be a return to "boring banking" rather than "go-getting banking" he added.
The FSA also wants to increase competition in the market and make it easier for people to change banks, as they do electricity or mobile phone providers, to get the best services and deals. As a result, retail banks are focused on re-inventing their image and services to attract customers. But the Summit revealed that high street banks in the UK have different ideas about the best way to do so. The Co-operative Banking Group has adapted its bonus scheme for employees to reward them for attentive customer service rather than their sales performance. But Philip Davies, president of branding agency Siegel and Gale, advised those present to focus their efforts on providing an efficient service rather than trying to build unwanted relationships with customers.
Technology and innovation
New technology is one of the biggest drivers of change in retail banking, in both developed and emerging markets. Barclays' CEO of UK Retail and Business Banking Ashok Vaswani explained that in the UK and Europe, mobile phones will be used as digital wallets, laptops and tablets will replace bank branches as financial centres, and high street branches will be "like Apple stores" - marketing showrooms for the banks' products and services.
Meanwhile, in emerging market economies mobile technology is paving the way for a new retail banking sector and providing people with access to financial services without the need for physical infrastructure. In Kenya, for example, M-Pesa, or "mobile money", has over 17 million subscribers. It allows those without access to traditional banking to take out loans and start savings accounts from their mobile phones - which are around 5,000 times more prevalent than bank branches. Elsewhere, banks are experimenting with Facebook banking apps, bank cards that double up as urban travel cards and ATMs that identify customers by their handprint, rather than a traditional bank card (it also checks for a pulse, to prevent the use of severed hands).
Has the industry come far enough?
The retail banking industry is beginning to adapt to customer needs, but it still has a long way to go. Vice-chairman of asset management firm BlackRock, Philipp Hildebrand, said: "It's not clear to me that we have made real, substantial progress to deal with the failure of a bank", and that we're "not in a much better place than when Lehman Brothers collapsed". What's more, retail banking has been slow to cotton on to technology used by the software giants for several years. The industry is determined to re-brand itself as both cutting-edge and trustworthy, but whether that will gel with the general public, only time will tell.