As opposed to abandoning bank branches, mBank has decided to completely reconfigure their physical delivery network by using the latest digital technology that is aligned with their award-winning online and mobile banking offerings.
While most banks and credit unions continue to debate how to design the ‘branch of the future,’ Poland’s mBank has committed to invest in a complete reorganization of their branch delivery network. Begun in 2014 and scheduled to be complete in 2018, mBank’s physical delivery network will include both smaller Light Branches as well as integrated, larger Advisory Centres.
The objective of this massive undertaking (over 70M PLN or $19M USD) is to optimize the entire sales network, while meeting the needs of an expanding base of digital consumers. Beyond projected cost savings of 50M PLN annually, the new network of offices will leverage the newest technology to improve consumer engagement and sales.
The strategy behind mBank’s Light Branch is based on a few overarching principles. First, rather than trying to reconfigure current, mostly oversized branches, the much smaller Light Branch is being relocated to higher consumer traffic hubs, such as shopping malls.
The focus of these Light Branches will be on acquisition, communication, experience and simple service, according to Jacek Iljin, Director, mBank. According to mBank, over 40 light branches will be operating throughout the country by 2018, supporting new account opening, on the spot issuance of payment cards, quick cash loans as well as cash handling.
In contrast, mBank’s regional Advisory Centres will be located in office buildings in all of the major cities mBank operates. The focus of these larger facilities will be on advisory, cross-sell and business banking support. According to Iljin, the future plan is to have the approximately 80 Advisory Centres adopt several new technologies as well, such as remote digital support and other channel convergence strategies.
Supplementing this new distribution strategy are 60 mKiosks located in malls. Private and corporate customers are able to use these manned kiosks to open an account, get a loan, get a credit or debit card, or open a savings, investment or insurance product.
A Personalized Digital Experience in a Branch Setting
The mBank Light Branch facility is new, not only because of its size, but also because of its applied technologies. Looking more like a high-end fashion boutique or Apple store than a bank, customers are attracted to the new mBank Light Branch by the latest in digital technology. This includes an ultra-modern interactive screen at the entrance to the branch with movement responsive kinect functionality.
The screen is designed to grab the attention and entice passers-by to visit the facility. When a shopper approaches the screen, a large exclamation point appears along with discount offers available in the branch.
Once inside the branch, a video wall consisting of three 50-inch touchscreens allows customers to browse products, services and offers simply by touching the device. One of many unique aspects of the touchscreens is the use of video cameras installed above the screens to assist in the adaptation of content.
Through age and gender identification and user interaction with the touchscreen, mDiscounts are made available to customers, allowing for highly customized geolocational rebates in partnership with local mall merchants. These screens, and the availability of personalized merchant discounts, are a key component encouraging repeat visits by customers.
Eventually, these cameras could be used to facilitate biometric identification of customers as they enter the branch, allowing for even an greater degree of personalized offers.
In partnership with the interactive technology and design firm, i3D, all devices and interactive content is connected into a single local network, allowing for the centralized management of promotional materials, content, graphics and text. The system also allows for gathering information on quantity, manner and time of interactions between devices. The entire system is modular and fully scalable, allowing for constant and planned development.
While the Light Branch is designed for basic banking transactions, customers can also get information about more involved products, such as investment services or mortgages. For these interactions, there are video terminals in private rooms that provide videoconferencing capabilities with the centralized advisory center or a specialist in another branch.
Customer service stands are located throughout the branch, giving customers access to smaller video devices and tablet computers. Using the digital platform that already supports mBank’s online and mobile banking offerings, customers can open accounts, apply for payment cards or apply for a loan in a self-service environment. These stands also include personal digital device charging stations camouflaged in a small artificial grass oasis.
The facility even has a special area for children, where the customers of the future are able to participate in a knowledge exchange or simply color pictures.
There is no doubt that the new mBank Light Branch is one of the more unique designs globally. In fact, the integration of digital and physical banking distribution components by i3D and mBank were recognized as a ‘Best in Show‘ winner at Finovate Europe 2015.
“Through the use of mobile technologies, proper ergonomics and functional division of space, it was possible to build human interaction,” stated Catherine Domosławska, architect ARS Retail & Shopfitting. “We wanted to deliver a project that on the one hand was ultra-modern and open, but on the other emphasized the reputation of the banking institution. From the point of view of design and aesthetics, the concept goes beyond the mBank standard.”
When asked about the new mBank Light Branch design, Ideo alumni and Anthemis Edge design advisor James Moed said, “The M-bank Light Branch is the first of what I hope to see more of: Digital Native Retail. Rather than slimming down (or tech-ing up) a traditional branch, they’ve built just enough human touch to complement their digital experience.”
He added, “Today, there are many folks who aren’t so much afraid of technology, as they are afraid of themselves getting it wrong – especially when it comes to money. M-bank’s newest wave of customers probably need a bit more hand holding around going 100% digital than their early adopters and this design helps build digital confidence. The big interactive displays invite people to play, while the consultation space indicates that expert help is on hand.”
The Premature Proclamation of the Death of Branches
According to Jacek Iljin, the ‘death of the bank branch’ is an industry catch phrase. “It may be true that in relation to specific target groups, certain functions of the branch are ‘dead.’ or that the current location of many branches are not optimal. However, being the head of sales at mBank, I cannot ignore the reality that physical branches are still the major channel of customer acquisition and cross-selling that fuels revenue growth.”
mBank’s branch and digital touch points can work independently or support each other in an overarching customer journey. “The customer can learn about a product on our web-site, apply over the internet and finalize the transaction in the branch or (digitally) through a courier … seamlessly. We offer the customer the options and choices, being more available in terms of the touch points and communication channels,” states Iljin.
Iljin does not see the branch channel as part of a ‘digital strategy,’ but rather, part of a multichannel strategy. “We want to invest in any channel that provides the customer with short or long term value and is unique when it is justified by the P&L.”
From mBank’s perspective, the value of branches are:
- Short term value of branch:
- Cash operations
- Servicing customers who are not ready to be served in new digital scenarios (i.e. loans for “traditional customers”)
- Long term value of branch:
- Communication ( brand, products) in physical environment,
- Providing a unique experience ( all senses)
- Touch Point Range – we are addressing the customer time/focus when he/she does not use internet or smartphone
- Ability to build Trust
- Socializing – For face-to-face sales and servicing, and more importantly, decision delegation or delivering expert knowledge, experience and trust through an advisor.
Maybe most importantly, early results from the new Light Branch at mBank are very encouraging. Based on numbers released after 6 months since opening:
- 90% of visitors like the new Light Branch approach
- The significantly smaller branches are performing at 3x traditional offices in sales
- First Light Branch is responsible for 60% of orders from customers in area
- Light Branch traffic is extraordinary, with 200 visitors a day (prompted by the retail partnerships in the mall)
- Smaller space and longer hours (opened late in evenings and on weekends like the mall) has yielded significant real estate savings and greater efficiency
JP Nicols, co-founder of the Bank Innovators Council and president and COO of the Innovation Cafe, agrees that the bank branch is not dead. According to Nicols, “I’m as big a proponent of digitizing all parts of banking as anyone, and we can talk about branch traffic trends and digital natives all we want, but there is still a significant proportion of the population who actually prefer going to the branch to discuss certain things. And while that number may be declining … and it isn’t going to zero any time soon.
Nicols added, “Too many people make all kinds of misguided comparisons to Apple about all kinds of things, but they are the right retail strategy to look to in this case. They are a great example of how to connect physical and digital businesses in a very powerful way.”
When asked for recommendations to bankers looking to restructure their current delivery network, Jacek Iljin offered the following insights:
- When modernizing the branch format, do not try to replicate the experience people can have at home or duplicate your other digital channel experiences.
- Keep in mind the long term value of branches as a channel, because the regulatory and technical barriers of digital channels will eventually fall. Ask the right questions, including what is reason consumers come to the branch and what do they really want to experience there?
- Make all interactions really simple. Provide assistance humanly or digitally. The branch is an open, public space. People will not engage in scenarios which can possibly make a fool of them.
- Create a pilot, measure, test and evolve (at the Light Branch, we measured the traffic in 10 different areas of the branch, monitored interactions with the digital content, evaluated dispositions and counted transaction. We also did surveys.)
The mBank Light Branch Experience
Despite the lack of English translation, the video below shows all of the unique interactive components of the new mBank Light Branch design – from the oversized kinect-enabled screen outside the branch, to the interactive wall of touchscreen monitors that provide an incentive for ongoing visits to the branch.