Let’s Redesign…Banking
Nonfiction is on a mission to design a future where humans can thrive. We’ve done this by designing small-scale products (like life-changing medical devices, environmentally-friendly baby bowls, and modular smart collars for pets) and large-scale systems (like education in Singapore and human habitats on the moon).
Guided by the United Nations 17 Sustainable Development Goals, Let’s Redesign… is a new series where we talk about the hated experiences we want to make amazing through design.
First up: brick and mortar bank branches.
Why banking?
It’s no secret that the personal banking experience has changed over the past few decades. Today, we can access our account information, make transfers, deposit checks, and do so much more online while we sit at home in our underwear.
But what does this mean for the over 78,000 brick and mortar bank branches in the US (and of course more around the world) nestled in commercial centers gathering dust?
The benefits of physical branches are not to be ignored. Services like issuing money orders, notarizing, and accessing safety deposit boxes still require in-person interactions — but probably not often, and probably not for very long.
As the world becomes more digitized, people still value human-to-human interactions, but don’t necessarily desire them in the same contexts as before. Low switching costs, low interest rates, and other market dynamics are pushing banks to differentiate in new areas: namely service design and customer experience.
How are bank branches staying relevant?
Many financial institutions have realized the increasing irrelevance of their old service models, and have pivoted drastically to draw people to their spaces. Singapore DBS and Capital One (USA) turned theirs into cafes. Similarly, Banco Galicia (Argentina) and BNZ (New Zealand) turned theirs into public lounge/working spaces. Many branches are simply just being closed.
These changes seem to be in line with what business leaders assume millennials want — capitalist-driven workism masked as a utopian, nomadic gig working lifestyle. Work all the time, but from anywhere! Now that we’ve lured you here with our free wi-fi and expensive lattes…can we take a moment to talk about your banking needs?
While these reimagined bank-branches-as-cafes are not bad per se, they’re — at best — only providing marginal value to a small group of people who could get that value elsewhere (like Starbucks, a local library, or a WeWork). At worst, they come across as a sad attempt at pandering to millennials. Why try to be something you’re not, or compete in a space that doesn’t make sense for your core mission?
Bank branches can still provide immense value.
Bank branches are physically embedded in communities, and banks themselves still hold brand authority; this means they provide access and expertise.
As more and more companies scale via creating faceless transactional apps, bank branches are still poised to build relationships through face-to-face interactions. In theory, branch managers and workers are expected to get to know customers as neighbors, and to reinforce a sense of trust that many still don’t have with digital apps. For luddites, this is a boon. For the tech-savvy, there is some comfort in knowing they can locate a human to help them if their app or a phone hotline fail. Great. But we’re seeing that the decreased number of in-bank transactions and increasing associated costs don’t justify keeping bank branches open.
Banks can do better. Banks should do the work to:
- understand who their community is
- determine what their needs are
- figure out how the value bank branches provide (access and expertise) can be harnessed to create actual, impactful value for those people.
A few classmates and I did this when I was in graduate school for a competition sponsored by CIBC. We realized that in just ten years, Canada’s population would include a) a lot of new immigrants needing jobs, and b) a lot of workers whose jobs are made obsolete by AI and automation.
Our recommendation was that CIBC expand its role from advising people on how they invest their money to how they earn it. It could turn its antiquated branch locations into job search and skill building centers, replacing tellers with career coaches and transforming queue areas into learning spaces.
The core idea is that by meeting the needs of job searchers, CIBC could engender trust, ensure customer loyalty, and create competitive advantages for tomorrow. This would require CIBC to fundamentally change its retail business model. Unsurprisingly, the judges — a panel of mostly pre-retirement white men — were not interested.
If only legacy institutions would be more quick and willing to abandon what used to work but is no longer working. An urgent need for jobs isn’t limited to new immigrants and coal miners. The unprecedented COVID-19 pandemic has exposed the precariousness of jobs in general, turning millions of seemingly “job secures” into “job seekers”. Perhaps if CIBC had been more amenable to our proposed business model, it would have been more prepared to meet the sudden needs of the majority of its customers in spring 2020.
The good news is that new, forward-thinking financial institutions like Ellevest get it. Having targeted women as a key market with specific needs, Ellevest offers solutions to help women earn and grow their money. With a basic membership, customers not only get an investment portfolio, but also access to career development resources like courses, digital content, and coaches. So far, this strategy seems to be working.
Why does this matter?
Underbanked, unemployed, and underemployed people face immense hardships that deepen digital divide, increase inequalities, decrease access to education, create mental health problems, and so much more. Banks — and design— have the power to build a better, more human future for all.
Let’s redesign banking.
At Nonfiction, we’re constantly urging clients to leave the past behind in order to build a better future. There is an immense opportunity to transform the in-person experience that bank branches provide. If you’re interested in exploring the possibilities, we’d love to talk to you.
