Developing a retail and banking synergy

September 2, 2013

Banking and retail organisations are competing with similar products and services today, where retailers are becoming bankers and banks are adopting retail strategies. Kęstutis Gardžiulis discusses one way banks can beat this challenge.

The banking sector is undergoing a historic shift and it will never be the same again. As Brett King says in his book Bank 3.0: “Banking is no longer somewhere you go, but something you do.” While we hope that the darkest days are behind us, uncertainty has just accelerated and everything will change only more rapidly. But most importantly, stagnation and stability are long gone in the industry and won’t be coming back.

The revolution against banking is taking place at a breathtaking speed. Banks are closing branches and online banking now represents the majority of transactions. At the same time, new businesses that offer customers innovative solutions, such as mobile payment initiatives and mobile wallets, are challenging the status quo and grabbing a piece of the traditional banks’ market share.

Banks are now desperately looking at who and what can help them reimagine the industry for the new reality. It’s time to identify how and when customers bank, learn what kind of thinking drives their choices and try to do a better job at engaging new customers while retaining the ones they already have.

One solution banks should focus on is collaboration with the retail industry. On the way to work at the local coffee shop, you can now not only get a cup of coffee (that you don’t have to pay for because you have enough loyalty points through the retailer’s mobile app), but also pay for a sandwich using the mobile payment app or digital wallet. What’s more, you can pay your utility bill at the same time. Everything goes on one receipt and you only have to pay once. Paying for a sandwich with a mobile payment app is one thing, but paying your gas bill in a coffee shop – it’s practically an affront to banks!

Retailers and financial institutions need to move the relationship from confrontational to collaborative. For example, consider how a store may be used as a bank’s branch if a client needs advice on simple financial products, or perhaps joint mobile payment schemes that allow direct access to bank accounts. It’s easy and customers will be happy if they can stay with their bank, keep their money wherever they want, and still use a retailer’s mobile payment or loyalty application without unnecessary money transfers and confusion. Value-added services for both bank and retailer mean a happy customer at every touch point, and the benefits for banks and retailers are endless – just think of the big data that can be mined through this collaboration as well.

Remember, clients do not want to think about banking as being something special. Banking services should adapt to our daily lives and daily business. So banks need to be transparent and appear only when customers need them. Let demanding clients feel happy
at every single touch point where they require banking and don’t make them think about how they should use banking.

Kęstutis Gardžiulis is CEO and co-founder at Etronika