The Death of The Retail Bank

Plant growing in sand

A few weeks ago, I grudgingly walked into a bank on a Saturday morning to close an account. The process I had taken to open this account had lasted less than 5 minutes. Quick, easy and done without getting out of bed. The process to close said account was ultimately becoming a struggle. After being held via telephone banking for 30 minutes for a 2-minute conversation and a call-centre agent who repeatedly explained I had no choice but to visit a branch, I relented. I’m sure this is familiar territory to us ‘millennials’ because the last time I had stepped foot into a physical bank branch was over a year ago.

The story goes. I work full-time. Banks open after I clock into work and close before I clock out of work. My bank branches near work and home closed a few years ago because of low foot traffic. So my only option was finding a branch opened on a Saturday and booking an appointment. The only available appointment was 3 weeks later, so here I was.

For now, the brick and mortar model of retail banks serve a purpose, but it is time that retail banks realise that the bricks that construct the banking experience are now commodities. Many banks are not adapting to changes in consumer behaviour. Building new branches designed to mimic a sci-fi future with fancy gadgets no longer cut it. Banks that do not adapt quickly to this new wave will lose customers. The ultimate digital channel, the smartphone is becoming the foundation of the banking experience and new businesses are springing up to steal a good chunk of the pie with the term ‘FinTech’ at the tip of their dessert spoons. You’ve probably heard it before but not many people know what it means and it’s provocative and it’s disrupting several sectors.

FinTech, Financial Technology, is the phrase that is changing how consumers and businesses handle money transfers, payments, lending, fundraising and loans. It is simply technological advances and innovation in the financial sector. Here are 5 ways businesses are changing the status quo:

1. Saving Accounts

Apps like MoneyBox, Oinky, and PiggyPot are piggybanks in millennial form. They connect to your bank accounts, automate savings and are FCA regulated so you know they are for real. Some have the ability to track your spending each month and adjust what to save, depending on your spending habits. You also have the choice to transfer the savings to one of your major bank savings accounts or invest into an ISA. A seamless process with you in control.

2. Current accounts

I recently signed up to Monzo, seduced by the idea of “a bank of the future” and mainly due to laziness. I use the budgeting app, Money Lover, to manage my finances manually and wanted an app automatically connected to my bank account that would categorise my spending instantly. Yes, there are many options on the market but none that come with the package of a current account that doesn’t require third party authorisation. Monzo seemed to fit the bill and so far so good. The sign-up process was quick with my Monzo card arriving less than a week after registration. Currently, in beta mode, the Monzo card is a pre-paid card. However, I receive instant notifications when I spend and an immediate classification. This so far has allowed me to manage my spending as I can track where my money really goes and set spending targets without much effort. It also serves as a great travel accessory with transaction fees that can beat that of your current bank account. Similar banks include Starling Bank and Revolut.

3. Independent financial advisors

You no longer have to book an appointment with the Bank Manager or attempt to decipher The Financial Times in order to obtain complex advice and recommendations on mortgages and equity release, tax planning, and investments. A quick google search can provide financial advisors that are both licensed and unlicensed and organisations, such as ourselves Refined Currency, that educate you on how to make your money work for you. The best financial managers will not only sell you products and services but ensure your money serves you in the best way possible.

4. Peer-to-peer lending

When attempting to procure a loan, consumers tend to stick to their current banks or supermarket banks that usually comprise of high-interest rates and early repayment charges. There are other options and organisations such as Funding Circle, Zopa and RateSetter seem to have the answers. These organisations are essentially a method of crowd-lending that cuts out the middle man. Depending on whether you’re a saver or a borrower, you can choose to invest and earn up to 7.2% back OR as a borrower, receive a lower % APR on your loan in comparison to other lenders. As always investing is at a risk. You may get back less than what you originally invested and as a borrower, ensure you have a repayment plan that will not force you into bad debt. This is a new industry, albeit regulated by the FCA so do your research and proceed with caution.

5. Mobile and alternative payments

Picture this. I’m the owner of a new coffee shop and would like to set up a merchant account and a card reader. I could either spend weeks signing contracts and too much money paying service fees or choose an app like Square. All Square needs is a bank account and a smartphone and I would be ready to start accepting card payments. Square provides digital and printed receipts; accounts for cash payments; sales reporting and analytics; consumer feedback; inventory management and more. Simple and easy. PayPal is another leader in online payments with the ability to hone in on transactional revenue with buyer and seller protection.

The 2007 recession was the beginning of the end and resulted in the loss of confidence from consumers in the global financial system. In the true fashion of every type of industry, one must evolve and remain innovative in order to stay relevant. We are proving that even though we know no longer require banks, we still utilise the necessary mechanisms and back-end programs. If my retail bank isn’t willing to be flexible to my consumer needs or prioritise offering great service, someone else will.


This post was written by Joy

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