Funky colours and video booths: Banks bet on 21st century angle

Move to digital enabling cost-conscious lenders try ‘workbench branches’

Workbench branch: “We’ve seen great ideas formed simply from guys sitting beside each other,” says Gavin Kelly of Bank of Ireland. Photograph: Dara Mac Dónaill

Workbench branch: “We’ve seen great ideas formed simply from guys sitting beside each other,” says Gavin Kelly of Bank of Ireland. Photograph: Dara Mac Dónaill

 

It’s midmorning in Bank of Ireland’s Grand Canal Square branch, in Dublin, and about a dozen local entrepreneurs are huddled over their laptops, beavering away at purpose-built workbench spaces.

Just a metre or two away a businesswoman is hosting a small event. The bank provides use of this space for free, along with tea, coffee, pastries and fast wifi, to sustain these “coworking” start-ups. You don’t even have to be a Bank of Ireland customer.

It’s part of the bank’s bid to support innovation in the local community. Advisers are on hand to handle customer queries, and machines take lodgments and provide cash withdrawals, but there no tellers and no over-the-counter transactions. Just 3 per cent of Bank of Ireland’s transactions last year involved a teller. This is 21st-century banking in action.

“We believe that, with this shift and change [in the way people bank] our presence in communities is now more important than ever,” Gavin Kelly, the organisation’s director of distribution channels, says. “But it means a very different presence, where we throw open our space for businesses. We’ve seen great ideas formed in this branch simply from guys sitting beside each other.”

Grand Canal Square is one of six workbench branches operated by Bank of Ireland.

“The first couple of months here were very quiet, because I think customers thought there was a catch, and wondered what was in it for the bank. The secret to its success has been hosting events. Last year we had 15,000 people attend events here, and 5,000 using the branch for nonbanking facilities. People then started to use it in a different way.”

Top-to-toe facelift

Across the city on Grafton Street Allied Irish Banks has thrown open the doors to customers in its flagship branch. Gone are the buzzers on the front and side doors that used to control access to the branch, which has been given a top-to-toe facelift. It now opens seven days a week, with staff available for 73 hours in total.

It’s all funky colours, private booths, tablets and mobile phones to check your account, and a video booth where you can speak privately about products to an agent at AIB’s facility in Naas, Co Kildare. Four teller spaces have been retained; on Monday afternoon seven people were queuing for over-the-counter transactions.

On the opposite wall a video screen rotates ads for local businesses. One for Magee of South Anne Street flashes up; the Co Donegal weaving and clothing company is benefiting from a number of weeks of free promotion in the branch. There’s a waiting list of companies looking to get airtime.

“It gives them an opportunity to be able to profile their business,” Robert Mulhall, AIB managing director of retail and commercial banking, says.

AIB’s transition to digital banking began on David Duffy’s watch as chief executive and has accelerated under his successor, Bernard Byrne. Mulhall describes it as a win-win for the bank, as it helped to lower the company’s costs at a time when the bank was restructuring while improving customer satisfaction.

In 2013 77,000 daily transactions took place in AIB branches across the State. Last year it was 100,000.

Online banking

But this tells only part of the story. Teller transactions declined by 36 per cent while self-service rose by 52 per cent. Six thousand calls have been transferred from branches to contact centres.

Fifty-three per cent of all key products are bought via online channels, and the bank has 650,000 active mobile-app users and 1.1 million online customers.

Some of these changes are driven by the bank’s nudging of customer behaviour in a certain direction, although large numbers have warmly embraced the technology revolution.

The result for the bank is 3,000 fewer staff between 2012 and 2016 and a €450 million improvement in costs.

And although some customers will no doubt be unhappy with the changes, AIB has continued to grow its market share, accounting for about 39 per cent of all new mortgages, for instance.

Mulhall is positive about the future of AIB bank branches but also accepts that the make-up of its network will continue to evolve

“I don’t have a crystal ball on how many branches will exist five years from now but we will constantly keep that under review. The footprint will change quite dramatically but it won’t all be about downsizing,” he said, noting its recent in-store banking pilot project with SuperValu at its Lucan shop.

“I don’t know what the future shape of the network will be, but what we do and how we look will be very different. We’re constantly experimenting and learning.”

The shiny new branches operated by Bank of Ireland and AIB, the two biggest players in this market, tell only part of the story of branch banking.

Since 2008 more than 160 branches have been closed by various banks. In December 2014 about 1,000 people in the west Offaly town of Ferbane marched in protest at the planned closure of its last bank branch. A coffin bearing the words “West Offaly RIP” was carried by six locals who placed it on the doorstep of the Ulster Bank branch in the town, which has since closed. Branch closures are invariably described as another nail in the coffin of rural Ireland.

Secure-video technology

Both AIB and Bank of Ireland recently announced plans to close branches in Northern Ireland. Ulster Bank, a subsidiary of Royal Bank of Scotland, intends to close branches on both sides of the Border, including 22 of its 110 outlets in the Republic.

Ulster Bank’s chief executive, Gerry Mallon, says the changes were a response to “changing customer demand” and a consumer switch to its digital services. According to Mallon, 62 per cent of customer interactions last year were digital, with a 22 per cent increase in active users for its mobile app.

“Further leveraging RBS, we piloted new secure-video technology to allow our customers to discuss their mortgage needs from any location. Customers can now apply for products directly from the Ulster Bank app. This month we also launched Apple Pay for our customers,” he says.

Mallon has also committed to upgrading a number of Ulster Bank branches, to provide two additional mobile banks that will travel to rural areas, as well as expanding its relationship with An Post to include cash and cheque lodgments for personal and business customers. And it intends to appoint six new “community bankers” to support “vulnerable customers” and help others with the transition to digital banking.

Opposed to cuts

None of this cuts much ice with the Financial Services Union or Ulster Bank staff who oppose the cuts.

“We are not convinced that Ulster Bank has got the commitment from RBS to do this investment,” the union’s general secretary, Larry Broderick, says. He adds that the community bankers will go “nowhere near meeting the needs of customers” in the affected branches and suggests that the mobile banks were merely “a couple of clapped out” vehicles rather than the high-tech vans used in other markets.

In a submission to the Oireachtas finance committee in February the union called for a commitment from all financial institutions that, between them, they will ensure that at least one bank branch remains in each community.

Broderick accepts that the nature of branch banking will continue to evolve and believes that Irish banks might ultimately team up with international technology companies to provide financial services.

“There will be fewer people and more automation, and there will be a lot of change to the work of bank officials, with a move towards professional services,” he says. “That’s why we’re focusing on increasing the skill sets of our members and on further education.”

Over the past three years KBC Bank Ireland has pursued a digital-led strategy to grow its business here, targeting young adults in urban locations. Unlike its rivals, it wasn’t encumbered with a legacy branch network, instead growing its network organically to 15 hubs.

The key word is flexibility, with mortgage evenings and a team of advisers prepared to travel to people’s homes or workplaces to discuss their product needs.

Pat Watt, KBC’s director of distribution, says its digital strategy is possible because Irish people are so tech savvy. He believes its hubs will continue to play a pivotal role in servicing customers but that it will be more about providing advisory services. “They still remain important but only in the context of an integrated omnichannel model.”

Self-service banking

Over on Camden Street, a lively inner-city district of south Dublin, Bank of Ireland is breathing new life into its long-established branch. The ground floor has been transformed, with self-service banking. Upstairs the musty carpets, dated office furniture and last year’s Christmas tree are making way for two floors of modern office space for what the bank likes to call a Start Lab. It’s essentially an incubator for local businesses.

It will open in June, offering start-ups the opportunity to base themselves there for up to six months. The idea is that they will feed off each other with support and ideas, with the bank facilitating mentoring and hosting events for the companies.

The new tenants will have their own entrance, meaning they can work beyond branch opening hours. If the pilot is successful it’s a model that could be launched in other communities.

“The easy thing to do would have been to close down this branch,” Gavin Kelly says. “Instead we’re rethinking what we’re doing with it and transforming it.”

In other locations around the State, previously redundant space in branches is being opened up to community events. Bank of Ireland operates from 270 locations in the Republic. Is such a large network viable in the long term?

“My view is that as long as there are vibrant communities we’ll be there,” he said. “We’ll be looking at the Government strategy around rural Ireland. We’re well placed to help in driving that. We have the ideal footprint today.”

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