Meanwhile in The Netherlands the idea of making financial services products more physical was taken up. With one Dutch bank when a customer took out a loan they would leave the branch with a smart looking box. Quite what was in the box and what the customer would do with this 'physical' loan is still a mystery. Needless to say this experiment was quietly dropped.
Another concept that has been introduced into HSBC branches is HSBC Radio. Again this is a concept brought in from retail. Fashion shops such as Top Shop have for some time had their own radio stations both to improve and extend the shopping experience as well as increasing basket size. However the reality is that retail banking customers do not want to spend any longer than they possibly can in a branch. While they are queuing to pay in cheques running adverts for loans and mortgages is no more likely to create an impluse purchase than the January sales.
A concept brought from the white goods retail sector of heavily discounting the cost of appliances such as televisions, fridges and washing machines and then making up for the discount by selling highly profitable extended warranties was brought to the retail banking sector at the height of the credit boom in the form of low interest personal loans, credit cards and mortgages along with PPI (Payment Protection Insurance). In many cases the interest rate of personal loans was below cost (due to the high wholesale loan interest rates driven up by the excess demand over supply) making it essential for the banks to sell PPI in order to make a profit.
Finally introducing the retail compensation model of low basic salaries with commission based on sales targets including large incentives to beat targets into the retail banking sector has been key to the misselling of products to customers.
There is no doubt that the way branches looked and operated needed to change. Certainly a lot of the branches today are far more attractive and appealing places than they were before the injection of retail experienced executives into the banks.
However it would appear that the retail experiment is largely over. When Chase took over Washington Mutual it took a conscious decision to refit the Occasio stores and make them look more like traditional branches.Underpinning Chase's decision was the reality of who the users of branches are today. With the exponential increase in the use of smart phones and other ways of connecting with the internet the vast majority of personal customers do not visit branches on a regular basis. Most personal customers will not either remortgage or take out a new mortgage more than once very three years (and increasingly longer than that), therefore their need to visit a branch (and even here increasingly mortgages are taken out online) is almost never. The users of branches today tend to be small businesses and private banking customers. The open style of branches with the bank private radio playing does not work for either of those segments of customers. Those customers want, and need, a difference experience.
The last 10-15 years has seen the injection of retailing ideas into retail banking. It has had some benefits for customers, but also has had some serious downsides. What we are now seeing is a recognition that banking has always been about servicing, and focusing on the total customer experience across all possible points of contacts is the most important way to retain customers and build loyalty. It is also clear that there are industries other than retailing that excel at delivering a great customer experience that banking should learn the lessons from.