High street retailers have had to work especially hard to replicate the speed and efficiency of the online experience in their bricks and mortar outlets. High street banks are no exception, as they too have had to adapt, innovate and evolve to meet customer’s growing needs and expectations in the digital age.
Virgin Money recently announced that it had opened its sixth concept lounge on the Haymarket in London’s West End, as it seeks to differentiate itself from rival banks and increase footfall to its 75 local branches nationwide. So what you ask? Well, the new style "lounge" is designed in the style of a Virgin Atlantic aircraft cabin, featuring reclining airline seats, overhead lockers and authentic aircraft floor lighting to guide safe passage around the space. The strategy for these lounges has not been to sell traditional banking products or services, but to offer Virgin Money members a place to relax or work before undertaking their own banking needs in one of its growing number of branches.
Virgin Money customers can relax by a virtual fish tank, complete with a virtual Sir Richard Branson, while their kids can play in the Virgin Atlantic cockpit simulator playroom.
Customer touch-points include access to iPads, free Wi-Fi, daily papers and complimentary refreshments. What’s the catch? Perhaps the answer lies in the virtual fish tank.
By all accounts, public reaction to the lounges has been positive; however acquiring positive feedback comes at a price. It’s reported each outlet cost in the region of £750,000 to set up and absorbs about half of that in annual running costs. Virgin Money plan to open two further lounges each year at a cost of £3 million, to expand the concept. As a result, the bank has recorded a 200 per cent uplift in sales at branches located near one of its lounges and they seem confident the concept will increase advocacy, while driving down the cost of marketing to attract new customers.
As CEO of OgilvyOne UK, my agency has gained valuable insight and access to the way global brands work, and this cross-selling of the brand is an interesting step change within banking’s highly regulated sector. However, what may work for one bank won’t necessarily work for another. Virgin Money can use the opportunity to further enhance its overall brand equity whilst helping to shape how its customers engage across its multiple touch-points.
The average high street bank views web based companies such as Google and Amazon as one of the biggest threats to its business, yet banks also report rising levels of innovation within their own firms. The Innovation in Retail Banking study examined 150 banks around the world, and asked them to report perceived threats to their business on a scale of one to seven. On average, search engines/web portals such as Google were the most feared, with an average score of 4.5 out of seven. However, the study suggests that most banks are working to become more innovative.
Industry specialists have been speculating about the threat of a Google bank for years, but research in this area has shown the threat to be somewhat exaggerated.
Customers are more conservative than their banks like to think, and whilst they are happy to see the likes of these online giants extend their product offering, there has been resistance to the idea that this could include banking. Customers’ primary concern is that their savings and investments are in a safe place, and this is where high street banks have a perceived advantage.
The banking old guard should be looking over their shoulders given the increased presence and popularity of challenger banks on the high street such as Virgin Money and Metro Bank.
From an end-to-end customer experience, branding and design perspective, teenagers and young adults may veer towards Branson’s challenger bank over the established high street stalwarts, Barclays, NatWest, HSBC and Lloyds, due to providing an immersive and experiential offering. Niche banking is not a new phenomenon; however showcasing another group brand such as Virgin Atlantic to its regular banking customers is an interesting move.
As more people choose to bank online or through a smartphone app, high street banks must continue to offer their customers a consistent, seamless and enhanced retail experience. Regrettably there is no substitute to paying in money or meeting a personal banker; however new technology and a dose of creative license across multiple touch-points will ultimately pay dividends, whilst preserving the banks rightful place on our high streets.
Customer touch-points in any high street bank vary, but they should be led by attentive and efficient customer service and reducing dwell time in queues. It’s the opposite in Virgin’s case as the bank seeks to increase dwell time in their new lounges by focusing on relaxation and experience. Virgin Money has demonstrated that immersive functionality within its retail presence should not be regarded as a gimmick, but as part of its core strategy.
The fusion of two flagship Virgin brand propositions may not be to everyone’s taste, but Virgin Money should be applauded for bucking the trend, whilst producing an interactive approach to consumer retail.
Sam Williams-Thomas is the chief executive of OgilvyOne UK