Retail banks have spent years catching up with the wave of technological advances that shook the industry with the impact of startup fintech companies. Now that the dust is settling and most large banks are well on their way to providing seamless digital banking solutions, what will differentiate one bank from another? How will retail banks deal with branches once we can all do our banking from our cell phones? Today we’re talking with Chris Stamper–who’s spent over 30 years in the retail banking industry–about the future of retail banks.
Transcript
Melinda: Retail banks have spent years catching up with the wave of technological advances that shook the industry with the impact of startup fintech companies. Now that the dust is settling and most large banks are well on their way to providing seamless digital banking solutions, what will differentiate one bank from another? How will retail banks deal with branches once we can all do our banking from our cell phones? Today we’re talking with Chris Stamper–who’s spent over 30 years in the retail banking industry–about the future of retail banks.
Thank you for being here!
Chris: Thank you for having me.
Melinda: Maybe you could start us off by telling us how you got into the world of banking and what your role has historically been?
Chris: It’s funny, no one typically wakes up in the morning and says, “Oh, all I want to do is be a banker,” but I started as a part-time teller in university and I thought it was a great job because you were done at 8:00 pm, it was good hours and it was a fun job, and you get into it and you start to help people. I think that was the underlying theme, which was giving advice and helping people, and it became something I was interested in.
For me, the marketing part of it was always the most interesting part. So, I transitioned from a retail banker into a marketing capacity. I spent a number of years in marketing, and then from there, a whole bunch of different jobs in the bank. I ran a big product area, I ran call centers, went back to retail, and then most recently five or six years running the Canadian marketing business.
Melinda: Wow. You’ve had your hands in almost everything.
Chris: Yes. It’s the exciting part about a bank, you can do lots of things and keep your email address the same.
Melinda: As banks have integrated digital banking into their customer journey, what have the pros and cons been from your perspective?
Chris: Well, I think first and foremost from a pro standpoint would be convenience and just simply being where the consumer wants to be. If you think about the evolution of any purchase decision that you make, today you don’t go to a physical location to start that purchase decision. You start that on the web and most likely from your mobile phone because that’s where almost 80 percent of searches are done. So, trying to be where the consumer is, I think, is critically important, and that’s all about that convenience factor, and I think as a bank trying to be present in that and complementary. In my experience, digital isn’t a substitute for physical branches. It’s a complement to physical branches.
In Canada, in particular, the more channels you open up, the more transactions Canadians have done historically. You had the branch only and then you introduced the ATM, in aggregate, transactions went up. You introduced the phone, in aggregate, transactions went up. You introduced digital, in aggregate, transactions go up. So, I see them as supportive of one another, not a replacement for one another.
Melinda: And what about, have there been any negatives from your perspective either on the consumer or the bank side?
Chris: I think the one concern, and you continue to hear it is just privacy and security, which is, “Is my data safe? Is the accessibility safe? How will I know I’m protected?” And I think that continues to be something that people are concerned about. No different than when you first went to the ATM, you were worried about someone taking your PIN or standing over your shoulder. It’s no different than digitally, somebody looking over your shoulder or stealing your information. The good news is, it’s more secure than on the phone or more secure than in a branch physically, and it’s just helping people get over that emotional hurdle.
Melinda: You mentioned convenience, but I’m wondering if you think we’ve reached maximum convenience. If it’s the key consumer value, if everybody’s offering that, how will one bank differentiate itself?
Chris: I actually don’t think we’ve reached maximum convenience.
Melinda: You think it could be more convenient?
Chris: I think it can be more convenient. I think about if you were going to apply for a mortgage today, at some point in time you need to go to a branch. You need to sign a document, or you need to provide ID or some sort of documentation has to happen. So, there will be a time where you can Skype or video call or do that all electronically. I don’t think we’re yet at maximum convenience. I think there’s probably one more hurdle to go.
That being said, I think the opportunity to differentiate yourself is all-around presence for me. So, how do you actually be where the consumer wants you to be and they want to be themselves. That may be the phone for the next generation of people. It may be video calling, it may be a messenger chat and maybe all of those sorts of things, but I think just that ability to interact and connect with the customer in a way that they actually want to interact and connect is what banks need to do to start to differentiate themselves.
Melinda: In the future, do you imagine that there might be another value to the consumer that could trump convenience? If you’re looking, say 10, 15 years down the road, everybody’s got digital banking, everybody’s got it on their phone, you can get a mortgage through your phone or whatever, what would that next consumer value be?
Chris: Well, and I think there’s two actually consumer values that trump convenience. And I actually think they’re here today and I think the opportunity is to see who can do it better or who can do it best. And the first one for me would be trust, and the second one would be advice.
Convenience is important, but if it’s bad advice, it doesn’t matter how convenient it is, it’s not relevant. And if it’s not from a provider you trust or you have an affinity or a relationship to, then that’s also not relevant. I think the three work hand at hand, which is, “Am I aligned to the organization and do I see value in the organization I want to do it?” And people do want to align themselves with organizations that are a fit for them, particularly the new generation, the Millennial generations, Gen Z’s are all around the purpose and the fit, and does the organization do the things that they think are important in their lives.
Not just does it actually help me solve the physical problem that I am having to do today, which is, “Hey, I need to buy something. Do you have a card that will let me do that? Hey, I need to transfer money to my friend. How do I get that seamless transfer back and forth?” I think that’s all relevant, but if you’re not aligned with the organization, then you’ll walk in, you will do something else. So, I think that trust becomes very important.
And then second to that would be advice, from my perspective, which is, okay, are you getting credible, meaningful, relevant, and timely advice and information? And when we talk to customers and we ask them questions, what they say is, “You know what? You have all my data as a bank. You probably have more information and know more about what I do than I probably pay attention to myself. So, if you’re giving me relevant, meaningful, credible advice, I’m actually open to that.” And so how do you be the provider that can do that better than anybody else in a timely manner where people want to be or how they’re purchasing or interacting.
Melinda: How are banks doing on trust? And we’ll get to advice in a minute, but there has been so much focus on move moving to digital banking and there’s some smaller banks that are still really struggling to make that happen, while the big banks are sort of on their way. Has trust kind of fallen off the radar a little or did it take a back seat? Do you think it’s suddenly taking more importance in people’s minds?
Chris: No, I think it’s always been there. I think there’s an underlying theme of, what trust do you have in the financial institution? And if you think about Canada and the financial crisis in 2009/2010, the banks did quite well from a trust barometer perspective through the financial crisis because we were a stabilizing institution at the time. In the U.S. it would have been less trustworthy from a bank standpoint. I think in Canada, specifically, we’ve got a base of trust. In the U.S. I would say not as trusted from a financial institution perspective.
So, I think it’s there. I think the news in where you see a data breach or a compromise or an integrity issue surrounding the use of data or what’s happened to data, and there isn’t a week that goes by that you don’t hear about some organization who’s been hit with either data mismanagement, data misuse, or some sort of breach or hack. I think that’s the concern that customers have is, “Well, okay, well what happens to me if that happens to the institution that I’m dealing with?” And so, I think trust is always an underlying theme and I think it will continue to be. I do think, as moments go (like any wave) there are higher points of time where you’re worried about trust and lower points of time where you’re worried about trust. But for me, I think, it’s a foundational thing.
Melinda: Let’s talk about advice then. We did some research here about the idea of building bank ecosystems based on the type of advice that people might need. For example, having a bank ecosystem that’s all about families and the type of advice and support that they might need, one for small businesses. Do you think banks are ready to sort of go beyond banking and really put advice right in front?
Chris: Well, it’s an interesting concept when you think about it. Would you go to your bank for advice on what car to buy next? I think it gets to that trust factor. And then I think within the trust factor, as we’ve talked about, it’s objectivity and how do you get that level of perceived objectivity to give credible advice. Are you pushing your products? Are you pushing the idea of what will help the individual be successful in their goals? I think that perceived objectivity would be critical to be able to offer advice in a separate category or a different category.
I think you could see a future where that would happen, provided you get the core foundational offerings down well. Are you a credible financial services advice provider? And then does that give you the latitude to start to apply in other parts of a person’s life, whether it’s retirement investments, purchase decisions, cottages, good asset or not, art, good asset or not, jewelry, good asset… You could start to broaden yourself out from other asset classes that may be aligned to saving for your future, but not necessarily directly offered by the financial institution themselves.
Melinda: Right. So arguably the retail network is a big differentiator for banks from online-only banks. So, if that’s true and at the same time everybody’s banking on their phone and banking from their computer, then how can banks better use those physical assets to their advantage?
Chris: Yeah, and I do see parallels in between the financial services industry and other industries. If you take mattresses, for example, something you need every day, not something you think about every day, but everybody uses. If Casper, who is a Canadian startup in the mattress space, only online, sold online, bought online, tried online, well, what did they just do? They just opened a physical location in a local mall because there is that need for tactile matters and the ability to interact and engage and see and test and learn and feel.
Tesla, you know what, they’ve got different locations. So as an example, they are also in mall retail locations versus your traditional car dealership location that you would think of. Nespresso, they’ve got boutiques. You don’t typically think about buying your coffee in the mall. You don’t. You think about buying your coffee in the grocery store. Where is their distribution place? Their distribution place is in the mall.
So, thinking differently about where you want to be and how you interact, that whole presence idea of where is the consumer going to be and how do you do that, I think, is important. For banks themselves, there’s lots of ways to use it. Is it accessible and convenient?
There are other things that you could do, other partnerships that you could think about to bring your space, your hours, engaging with another provider that may actually be able to benefit. If you look at the grocery space today, Loblaws and PC have partnered with GO Transit so you can order virtually on your phone and pick your groceries up in a locker at the GO Station.
So those stations sit there 24-hours a day hardly ever used well, what’s another way to make it a better experience for the consumer? It’s a great experience. You hop off the train, you don’t have to go anywhere. You have your groceries before you get in your car. You don’t have to get in your car, get out of your car and get your groceries. Your groceries are already there. So, I think looking for ways to leverage the space that you have in ways that will be meaningful and beneficial to the consumer is the best way for success, from my perspective.
Melinda: If you were going to give us five things, it doesn’t have to be five, however many you think are important, what can banks can do now to ensure that they don’t lose the branch and really use it to the maximum benefit that they can?
Chris: My counsel to anybody listening would be to say, I think branches are a foundational asset to the organization. And I actually am hard-pressed to see in the next 20 years where branches won’t exist. I think they are foundational. Now, will we have as many? Maybe not. Will they be different? Certainly guaranteed. But I think that that physical presence continues to be critical. It’ll just be different. I think accessibility and convenience is probably the first and foremost thing. Are you where your consumers want to be, and are you available when they need you to be available?
The advice we’ve talked about, how do you continue to offer that critical element of advice, which helps people achieve from a banking perspective their financial goals or their dreams or their aspirations? The third thing for me would be value add, which would be, what are the additional aspects you can add that would make a differentiator for the experience?
So, if you are in a downtown urban location, do you have the subway times in your branch to make it easy as people walk in and walk out, they know exactly when the next subway is or they’re nearby. If you are in a rural location, do you have a partnership with a local seed organization or something that’s important from a farming perspective? How do you do things to understand and represent the locations that you’re in that are akin to what your consumer is looking for? And then the fourth thing for me would be partnerships. Are there other people and players that you think you could partner with that would give a differentiated experience for your customers to make them want to come back and to make them deal with you more often?
Melinda: Well you’re talking about number three; I think, it was really sort of personalizing it or curating for each community. How do you do that when you’re a big national bank? How do you get so granular that you can offer this to people who are in downtown, at the Eaton Center, and something very different to people who are in Northern Ontario who have a completely different set of needs? How do you do that?
Chris: I think it is understanding your market and I think it’s one of the things that you guys do well as an organization, which is: understand the uniqueness of the market. I think there will always be foundational stuff that applies as a base across all of your locations. And I think there are things that consumers will come to expect that, if I come in, I’m going to be able to get coin, I’m going to get cash, I could get a bank draft, and I could open a new account or get a mortgage. You know what, you’re going to do that in every location. But then, how do you leverage the uniqueness of digital electronic merchandising to make it more meaningful and more relevant in each of the specific locations?
So, I think you can tailor and target your messages that way and I don’t think it has to be expensive. I think through electronic and digital means you can curate a lot of content and serve content to the relevant audiences in each of the respective markets.
Melinda: Excellent. Well, thank you so much for being here.
Chris: Yeah. Thank you.
Melinda: I hope our listeners enjoyed this conversation.
Chris: Me too, have a great day.
Melinda: Trust is a key factor Chris talked a lot about, about gaining and objectivity if you’re offering advice, about being vigilant about privacy and security and about meeting the consumer where they want you to be. And although banks in Canada have done okay on trust, as cybersecurity becomes a greater concern for consumers, it’s extremely important to continue to earn their trust. In U.S., the banks may have a higher hill to climb. If trust trumps convenience, making sure your institution is trustworthy and communicates that trustworthiness throughout the customer journey, that should be at the top of your agenda. And then if everyone else has the same goal, differentiating the branch experience through strategic partnerships and being more locally relevant, that becomes even more important.
About
Chris Stamper is a dynamic executive with deep experience and understanding of multiple business disciplines including product ownership and development, corporate strategy, marketing management, retail distribution and sales management. He is a strategic thinker with the ability to quickly understand a business and drive results and outcomes.
Think Retail is a podcast where top designers, strategists, thought leaders and business people discuss what’s coming next. For more information, email info@sld.com.
