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Banks, But Not As We Know Them

Bank customers can expect significant, and even radical changes in the way branches operate, KPMG’s Banking and Finance Group Chairman Andrew Dinsdale says in the firm’s annual Financial Institutions Performance Survey which covers the 2001 calendar year.

Mr Dinsdale says banks are likely to make increasingly innovative use of their branches to differentiate themselves from their competition and to improve their relationships with their customers.

“The traditional bank branch that changed little throughout the 20th century is unlikely to be the model adopted in the future as banks move towards packaging their branches as ‘financial stores’.

“Banks no longer see their branch network in isolation but as part of a broader distribution strategy within which traditional and electronic channels are packaged to meet varying customer needs.”

Mr Dinsdale says more and more banks are recognising the need to adopt a “clicks and mortar” approach rather than either component in isolation.

“Branches are now changing their opening hours to incorporate evenings and weekends to suit the needs of their customers and radical changes are being tried, including cafes within the branch premises. The outlets from which Kiwibank is operating is an obvious example of the non-traditional branch,” he said.

Changing attitudes to branches are also having an impact on staff numbers employed by banks and, in the near future, on the number of branches. Since 1994, 654 branches have been closed, a decrease of 43 percent. But in the 2000 and 2001 year, closures slowed to two percent. With the advent of Kiwibank, the trend will almost certainly reverse.

For the first time in a number of years, staff numbers employed by banks has begun to increase, up 318 or 1.5 percent in the 2001 year. Of the five major banks, the ANZ Bank was the only one to record a staff decrease – down 271. National Bank recorded the largest increase – up 240.

In spite of this increase, the Survey reveals that internet banking is growing rapidly in popularity. More than 25 percent of banking customers have now signed up for internet banking, an increase of 15 percent on last year. ASB Bank, at 31 percent, has the highest penetration of its customer base.

ANZ Bank has the most registered users (182,000 internet banking customers at 31 December, 2001).

The survey also contains a note of warning to banks expecting to make rapid inroads into their competitor’s customer base. Results from Auckland University’s Marketing Department annual banking customer satisfaction research have been included in the Survey. The research suggests there are significant barriers to customer switching.

“Auckland University’s research indicates that regardless of how good banks are at creating positive word-of-mouth branding, market share changes will be slow. The fact that 16 percent of customers say they will switch every year and less than four percent actually do, means that banks who are trying to attract new customers must remain committed to their plans.”

Mr Dinsdale says there are “switching barriers” in the market, particularly the perception that switching is a “hassle”, which come into play when customers consider a change of bank.


Ends

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