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Rapid set up


Being branchless has two key advantages, according to Rebecca Duckworth, Director, Digital Channels and Electronic Payments, EMEA, at Fiserv. The first is being able to attract tech savvy consumers by offering an agile and compelling digital customer proposition. “It’s their banking, on their time, the way they want it,” she comments. “Second, the cost of human capital is rising and the branchless environment can provide significant cost savings.”


In addition, digital challengers think about data differently in comparison to the incumbents, says Mead. “They think about how can they use data to help serve customers better, rather than just to cross sell.”


Adding to this, new entrants are agile, usually basing systems on pay as you go scalable cloud models. Therefore, set up can be rapid. “They get their licence and funding, they start making investments in the technology stack and then decide if they need branches later,” says Allen. “Some have chosen to take a bolt together strategy using off the shelf technology and standardising it – and others say they will go mobile first. This is where the digital experience comes into play. When a digital bank has an app allowing someone to open an account in 60 seconds, this good experience shapes the brand’s future value.”


Atom Bank’s app is available on Apple’s IoS and will be added to Google’s Android shortly. “As a customer of Atom you get all day, every day support and you can access us any way apart from a branch,” Twiddy says.


Another new digital entrant, SME-focused CivilisedBank, saw an opportunity in the UK market to create a personal approach without having a branch network. The bank, which was put together with very little infrastructure, allows customers to transact in real-time, says Chris Jolly, chairman at CivilisedBank.


While the startup does not have branches, its local bankers based around the country visit customers directly. “This means you have that personal relationship,” says Jolly. “That’s the difference between


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us and the app based branchless models. The SMEs are poorly served at the moment: We knew SMEs wanted that personal touch and they’ve lost it; they don’t necessarily know their manager.”


Meanwhile, Berlin-based startup Number 26 launched in January 2015. The mobile first company, offering an Android and IoS app and online interface has so far added 160,000 customers. Maximilian Tayenthal, the firm’s founder and CFO, says this makes Number 26 one of the fastest growing banks in Germany.


But there are still major challenges for completely branchless banks. Some argue that without the opportunity for face-to-face interaction, they lack the personalised touch. In addition, the new players are going up against well-established organisations with extensive branch networks. For startups, the most difficult thing is attracting new customers, says Mead. “Big banks have large established customer bases and the startups are competing against this – as well as the branches. So why would you move to a digital-only bank when you can have one with access to branches? This brings an element of trust; at least you have somewhere to go.”


Jolly admits it can take time to move end users to digital banks. “When we speak to SMEs, people are very enthusiastic, but we don’t underestimate the fact there are complexities in moving the banking: it does take time.” With this in mind, CivilisedBank offers business current accounts. This is because, according to Jolly: “A current account is a building bloc for the relationship. If you don’t have that, it’s just transactional banking essentially.”


Yet at the same time, branches are an expensive real estate for the larger banks to maintain. Mead thinks the future of branches is one around advice as well as giving access to customers. He cites the example of Nationwide’s ‘remote advisor’ functionality – where the bank offers customers a separate private office containing a high resolution screen connected straight to an advisor. “There is a customer advantage to that. They get more readily available advice.”


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