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Death and rebirth on the high street: the banking transition

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The British high streets are about to change. Where are all the retail bank branches?

Banking is undergoing a transition which has shaken up the British high street.

The architecture of British high street banks is a fixture of our urban landscape. Details such as Roman columns have been used for centuries to signify stability and order. We are used to seeing the big retail banks such as HSBC, Santander, Lloyds TSB, Barclays and NatWest sporting one or two of these, but as major changes transform the retail banking sector, their presence, and their status as civic institutions, is diminishing.

Most of the coverage of these events has been focused on the negative effects on the high street caused by reduced footfall, store owners’ inability to cash-up locally, or the societal impact on jobs rural life and the elderly having to travel further.

Among that doom however, consider what the banks’ strategy is for replacing the product sales that high street branches used to generate. They still want to provide services and most of the products don’t need any sort of physical location due to automation. Perhaps they can focus on their corporate banking interests (there have been rumblings in the industry that mass consumer retail banking was never their most profitable stream anyway) and simply white label their consumer financial services through other brands.

For years now, financial services such as loans, mortgages and foreign exchange have not been the preserve of banks. Services are now sold by proxy through the Post Office (also closing branches), supermarket brands such as Tesco Bank, Sainsbury’s Loans and products by the Co-op for example (although Co-op did the reverse – a bank that became a supermarket). Supermarkets are perhaps an anomaly given that, by definition, they can get away with selling almost anything. But there is an open question: how far down the retail food chain does the capacity to resell financial services products extend?

There has been a rise of related financial services product tie-ins with retailers in the wider sector via product or service joint ventures such as:

• Co-branded retail products such as the Debenhams Mastercard

• Direct debit financial service agreements, eg having a Next Account

• Buying home furnishings on credit (Bensons for Beds, Sofas, etc.)

Retail brand strategy in the future may well involve analysis of suitability for complementary income streams such as this. Profiling of customers needs to take into account every sphere of influence that brands can leverage in order to create the maximum value for companies and their customers.

With consumer trust in banks at an all-time low, particularly among younger consumers, perhaps it’s time for brands from parallel sectors with higher levels of trust and attention to use this mistrust to their advantage and diversify their customer proposition. The banks transition to using other brands on the high street as a channel instead of maintaining their own presence yields opportunities for retailers who can make financial services complementary to their offering.

As a retail brand, could you sell mortgages, insurance or loans? And if you can, should you? What would the impact on your brand be and do you understand what that brands value is and how to shape its destiny?

At BWP, a strategically led brand and marketing agency with a specialist in retail, we have a deep understanding of retail brands and an appreciation that retail is a broad church where each brand is a very different animal.

However, as Darwin said: “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”

Rob McCardle is innovation director at BWP Group.

This article was originally published in The Drum Network Does Financial Services supplement in March 2017.

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