Insights on retail banking from the UK, Netherlands, Spain, Dubai and Australia

1. Global Perspectives in
Retail Banking.
Branch notes from the field
Produced by the
Deloitte Center for
Banking Solutions

2. Global Perspectives in Retail Banking
Branch Notes from the Field
Table of Contents
First Look at London — Surprises In-Store .......................................................................................
Self-Service Reigns in London ..........................................................................................................3
The Flowers and Trees of Amsterdam Branches ...............................................................................4
Madrid Day One: Many Branches, Few Hours .................................................................................. 5
Madrid Day Two: Trust and Transparency ......................................................................................... 6
Sweepstakes and Outside Sales in Dubai .........................................................................................7
Australia’s Unusual Branch Species ..................................................................................................8
Deloitte Center for Banking Solutions

3. Foreword
Many financial institutions, large and small, have renewed their focus on putting
the “retail” back in retail banking. They are examining the structural factors that
make retail banking work, including branch location, look and feel; the customer
experience; and the skills of the branch sales force. Some banks are even going so
far as to hire greeters and mobile sales specialists as staff professionals.
As part of our commitment to contribute to the body of knowledge about
retail banking, the Deloitte Center for Banking Solutions periodically conducts
international field research to see how banks worldwide differ in their retail
strategies.
In 2007, Scott Burgess, head of Deloitte Consulting LLP’s banking practice
and Chris Gill, a senior manager in the same practice, visited over 30 financial
institutions in Europe, the Middle East and Australia. Their observations,
contained in this report, were first published as a blog within the American
Banker website and chronicle some of the innovative retail banking practices that
can help differentiate the customer experience, draw more traffic to the branch,
and strengthen customer loyalty.
In the coming months, the Center will introduce a series of forward-thinking
articles aimed at “Reinventing Retail in Banking” and providing possible
solutions to the challenges vexing the industry. The first report in the three-part
series to be released this spring, entitled “Catalysts for Change: The Implications
of Generation Y Consumers for Banks,” addresses the unique values and specific
strategies for targeting Generation Y as a bank customer. For many institutions,
this will involve a fundamental rethinking of their channel, marketing, and
product strategies. Stay tuned for more, but for now we hope you find our latest
study insightful, thought-provoking and valuable.
Sincerely,
Don Ogilvie
Independent Chairman
Deloitte Center for Banking Solutions

4. Global Perspectives in Retail Banking
Branch Notes from the Field
First Look at London — Surprises In-Store
How are banks around the world maximizing the value of bank
branch networks, differentiating the customer experience,
strengthening customer loyalty, and offering distinctive value
propositions in their chosen markets?
A tour of banks and retailers in London, Amsterdam, Madrid,
Dubai, Melbourne, and Sydney offers visitors a look at a variety
of branching strategies.
In London, signs in the window of a branch of one of the
world’s largest retail banks tout product offers identical to those
consumers would find in Manhattan or Des Moines, such as
fee-free transactions and extended banking hours. However, do
these value propositions actually drive customer loyalty? Are they
the best offers to differentiate a branch in the U.K.?
London’s ATMs clearly offer a much-higher degree of
functionality than those found in the U.S., but a display read
“out of service” can quickly translate in consumers’ minds to “no
service” or “poor customer service.”
Even though London banks promote their extended hours,
branches are closed on Sunday. However, most retail stores are
open on Sunday and offer more than just merchandise. At one
U.K. grocer, instead of tabloids and chocolate bars at the check-
out stand, consumers will find brochures offering credit cards
from a grocer-affiliated bank. The credit cards charge no interest
and personal loan offers invite consumers to borrow £75,000 for
less than £150 per month – an interest rate of only 6.9%.
Banks have had a presence in U.S. grocery stores for years, but
not like this. Loan brochures from the grocer’s bank contain a
few surprises, including an optional three-month repayment
holiday, a credit “decision in minutes” and a “cheque in 4
hours.” Consumers can even get loan repayment insurance in
case of sickness or unemployment.
As in the U.S., the credit card brochure offers a “money-off
voucher” to enjoy in the store when consumers sign up, a teaser
rate in balance transfers, and a stylish card.
It is doubtful that consumers will find tabloids and chocolates for
sale in the lobby of U.K. banks when they reopen for business on
Monday.
Deloitte Center for Banking Solutions

5. Global Perspectives in Retail Banking
Branch Notes from the Field
Self-Service Reigns in London
London offers consumers a broad range of retail banking consists of two stations for retail customers and one for business
experiences. customers. What is striking about this branch is not only the
dominant self-service orientation, but also the lack of sales
The Deloitte LLP team started off on its around-the-world tour messaging in the high-traffic lobby of the branch. The sales area
of bank branches in London with a blast from the past – a stop itself is tucked away in the back of the facility and seems deserted
at an old style private bank that has been serving wealthy clients at times.
since the late 1600’s. Upon entering the building, they meet the
facilities manager, who tells them about the history of the bank The retail experience changes radically when consumers visit
and gives them a book documenting the official history of the any of London’s leading retail chains. One such store has a large
institution. The branch itself is like something out of a Charles flat-panel monitor 10 feet inside the entrance that displays the
Dickens novel, with an imposing teller area adorned with marble, amount of time it takes to get through the check-out line. There
mahogany and lined with gold trim in addition to well groomed are sensors located in the ceiling that monitor the number of
bank staff huddled over their computers in an area not accessible customers in the store and adjust the estimated wait time in
to customers. It feels more like a library than a bank branch. response to changes in customer traffic. Once the wait time
reaches 80 seconds, the store opens another check-out station.
Wouldn’t this concept be great for branches with long teller lines?
If customers saw it would take 15 minutes to make a deposit with
a teller, perhaps they would consider using the ATM.
A short taxi ride away, London also has bank branches firmly
rooted in the 1st century, designed to minimize human contact
and to get customers to use lower-cost channels.
At one 600-square-foot teller-less branch of one of the large
building societies (similar to a savings bank), a bank representative
greets all customers, answers their questions and shows them
how to use the two advanced multi-function ATMs in the lobby.
Customers feed their checks into the ATM, see an image of the
check on the screen, and then get a copy of the check image
printed on their receipt. However, customers wanting to open a
new account have to wait in a cramped space in the back of the
branch before meeting with the sole new account representative.
Taking this self-service concept much further is a newly renovated
branch operated by one of the top three banks in the U.K. It has
15 self-service devices inside and outside the branch: on one
wall are several cash-dispensing ATMs, two devices for scanning
check deposits, and two devices for scanning cash deposits. On
the opposite wall of the branch are two stations linked to the
bank’s call center, two Internet stations allowing online banking
transactions, and two touch-screen kiosks enabling customers to
pay bills and transfer funds. A bank staff member roams the lobby
of the branch, welcoming customers and showing them how to
use the self-service equipment.
During the busy lunch period, it is not unusual to see twice as
many people use the self-service devices as opposed to those
that are conducting transactions in the small teller area, which
Deloitte Center for Banking Solutions 3

6. Global Perspectives in Retail Banking
Branch Notes from the Field
The Flowers and Trees of Amsterdam
Branches
The Deloitte LLP team started their Amsterdam tour in the central business customers to stand in the teller queue in the early
city area walking around looking for branches to visit. What a mornings and late afternoons.
challenge that turned out to be! The team had read about how
the Dutch were active users of self-service channels, but still The most unusual aspect of this branch is the sensory experience
expected to see branches on every block like what was observed it creates for customers. The scent of fresh flowers permeates the
in London and large U.S. cities. It is even hard to find an ATM. first floor, thanks to several olfactory machines located discreetly
in the corners of the self-service area. And while some branches
The Dutch have taken a different approach towards retail pipe in music, this one has the sound of birds chirping in the
banking, integrating bank branches into their retail postal elevator, which is wallpapered to reflect a pastoral scene.
locations. Such branches consist of a small counter at the back
of the building where people can get information on financial The second and third floors of the branch are dedicated to sales,
products and services and open new accounts. Surrounding with the top floor restricted to private banking and business
the branch space are a number of merchandising displays with customers.
brochures on financial products. The only place where customers In addition to the unique physical approach that this bank
can perform transactions was at the ATM near the branch. takes in its branches, it is the first in the Netherlands to offer its
customers mobile banking services, including funds transfers
between accounts. Through a relationship with a cellular
provider, the bank offers a calling plan with no minimum
contract length and customers can choose from a wide range of
phone models, several of which are on display in the branch. It
will be interesting to see how many customers sign up for service
through the bank.
Much more interesting is a new branch recently opened by bank
that has a reputation for being one of the more innovative banks
in the Netherlands. Upon entering the building, consumers are
welcomed by one of several greeters stationed in the lobby to
answer questions and direct traffic.
The lobby also has a towering artificial tree with signs dangling
from its branches promoting the bank’s loan specials. The tree is
part of the bank’s spring promotion, called “Grow with Green.”
The bank plans to change out the displays throughout the year.
The lobby has a large self-service area that is in active use.
One of the devices in self-service area is an ATM with a bulk
note acceptor for cash deposits. When asked if a customer could
deposit a check at the ATM, the greeter replies that “Checks
are old-fashioned. Only people in the U.S. and the U.K. still use
checks.”
The self-service area also has a rolled-coin dispensing unit
designed for small business customers. What a great way to
service the needs of local merchants in a cost-effective manner.
These high functioning ATMs eliminate the need for small
4 Deloitte Center for Banking Solutions

7. Global Perspectives in Retail Banking
Branch Notes from the Field
Madrid Day One: Many Branches, Few
Hours
There is no shortage of retail bank branches in Madrid. In the
San Francisco de Sales neighborhood, for example, there are nine
branches in a half block radius alone.
The Spaniards love their bank branches. In fact, branch density
in Madrid is more than four times greater than it is in Chicago
and New York. However, consumers better conduct their banking
early in the day; after a late Spanish lunch, people would be
hard-pressed to find a branch open.
Madrid’s branches are typically fairly small, averaging no more
than 1,500 square feet, with only one or two teller windows
in addition to three or four sales desks. The average branch in
Madrid only has four full-time employees, which certainly helps
keep branch costs down.
Getting into the branch can be challenging. Some branches have
what is called a secured entry vestibule, otherwise known as a
“man trap,” that prevents people from entering the branch with
weapons. One of the Deloitte LLP consultants actually had a
hard time getting into one branch in particular. After repeatedly
taking things out of his pockets, he is finally able to get inside
only after discovering that his eyeglasses are setting off the metal
detector.
When Spanish consumers use their credit cards, they can receive
a text message with the transaction details on their cell phone
within a minute of making the payment. Apparently, a number
of banks offer this service to alert customers about ATM or
debit/credit transactions over a certain amount. Wouldn’t that be
a nice service to have at home.
Deloitte Center for Banking Solutions 5

8. Global Perspectives in Retail Banking
Branch Notes from the Field
Madrid Day Two: Trust and Transparency
In Spain, it’s not unusual to hear people talk about not trusting these activities and is given freedom to experiment with different
their financial institutions. In fact, some Spaniards trust their local types of sessions. Customers are still getting accustomed to this
supermarket more than they do their bank. new type of branch. The design is so unique compared to other
branches in Madrid that some customers who enter the building
Some of Spain’s savings banks are addressing this lack of trust ask, “Is this a bank?”
by creating customer ”charters” outlining the bank’s customer
service commitments. One bank in particular, whose motto is “If This branch also has some other features not widely seen
you’re not happy, we’re not happy,” has issued a commitment elsewhere. The computers in the branch are equipped with
with 17 different points, each of which entails a financial webcams that enable customers to have face-to-face discussions
penalty if the bank fails to meet the commitment. For example, with mortgage or investment specialists operating out of a
commitment #9 states the bank will respond to formally centralized location. The bank is even considering using the
submitted customer complaints within two business days. For technology to communicate with customers in their home
each day of delay, the bank would reimburse the customer five or office and eliminate the need to come into the branch. In
euros, up to a maximum of 50 euros. addition, branch sales representatives don’t have their own
desks, but instead use one of the conference rooms in the
The bank issues an annual report on compliance with its branch when they need to meet with customers. Even the
customer commitments and its action plan to improve customer branch manager doesn’t have an office, although she has a small
service against each of the 17 commitments. Last year, the bank private workspace.
paid out 1. million euros to more than 5,600 customers for
failing to meet specific commitments. This bank is also notable for donating more than 40% of its
pretax profits to charitable causes in the communities it serves.
Another savings bank is taking an even more radical approach Equally noteworthy is the fact that the bank allows its retail and
to increasing customer trust. This bank intends to share with small business customers to decide how the profits they generate
its customers the profitability of each client’s relationship to get distributed to specific charitable organizations (“You choose,
the bank in an effort to increase transparency and strengthen you decide” is the bank’s motto). Using a touchscreen flat panel
customer trust. It will be interesting to see how their customers display in the branch linked to the Internet, customers can get
react when they receive this information, particularly those information on more than 1,600 different charitable projects
customers who generate the most profits to the institution. related to education, health, culture and other causes. They can
This particular institution also is distinctive in the market also see how many customers contributed to each project and
with respect to its new branch design. The bank is looking to the value of their contributions.
reposition its branches as ”canchas,” which, loosely translated,
means ”playground,” or a place where customers can relax,
surf the Internet, read the local newspaper, and enjoy a cup
of coffee. Under this new model, the branch becomes a more
social part of the local community. The lobby of the branch is an
open space that can be used by customers for presentations or
meetings. For example, one business customer, a photography
store, held a seminar on digital cameras, while a nearby salon
conducted a session for women on better use of cosmetics.
More than 400 different activities have already been staged in
the bank’s branches across Spain. Each branch has a budget for
6 Deloitte Center for Banking Solutions

9. Global Perspectives in Retail Banking
Branch Notes from the Field
Sweepstakes and Outside Sales in Dubai
Dubai is a land under construction. Just about every major celebrates your femininity,”) that offers women a free coupon
intersection has a new skyscraper being built. In fact, six book providing discounts at local retailers as well as lectures,
buildings with more than 100 stories (one twice the height of the events and educational seminars. This same institution also
Empire State Building) are currently in either the construction or has a package called “New to the UAE,” which is targeted
planning stages. at foreign nationals arriving in Dubai. This package includes
various products, including checking accounts, personal loans
Dubai’s banks are about as busy as the city’s construction and insurance. With the increase in U.S. immigration, it seems
sites. On any given business day, one large branch has at least obvious that U.S. banks could benefit from offering a similar
5 employees and an equal number of customers. What is package.
particularly interesting is how the bank manages customer
expectations with respect to the wait time to see a teller or a With respect to sales and marketing, two things in Dubai really
personal banker. Upon entering the branch, customers obtain a stand out. The United Arab Emirates society is very promotion-
token from a dispensing device located near the entrance that oriented and sweepstakes contests are commonplace. At least
assigns them a spot in line. Customers are then free to sit in two of the large banks have ongoing sweepstakes offering
the large waiting area, which has 30 or 40 chairs, to wait their the chance to win up to 5 million dirhams (about $1.4 million)
turn. An LCD monitor hanging from the ceiling displays each for customers opening savings accounts with as little as 1,000
customer’s place in the queue. Interestingly, the bank’s premium dirhams (approximately $75). Customers can get additional
customers are bumped up in the queue ahead of mass-market entries by depositing larger amounts into their new accounts.
customers. These sweepstakes, which are offered either monthly or
quarterly, depending on the bank, apparently have been very
This branch is more the exception than the norm. Some of effective in attracting new deposits. Banks in Dubai should
the larger banks are focusing on optimizing their distribution consider themselves fortunate that the regulators allow these
networks and tailoring their branches to different segments or types of contests, since they are not allowed in the U.S.
types of locations. On one end of the spectrum, some have built
more automated branches, such as mini-branches located in The other interesting characteristic of retail banking in Dubai is
shopping malls, which are smaller in size than U.S. supermarket the importance of outside sales forces. In one bank, only 10%
branches. Others are building locations with space dedicated of new accounts are generated from walk-in branch traffic. The
to their affluent or small business customers. One bank in remaining 90% comes from the efforts of outside sales reps
particular has several branches with lounges and conference who either focus on specific product categories, such as credit
rooms that their premier or small business customers can reserve cards and car loans, or target human resource managers at local
for meetings. On the other end of the spectrum, one of the companies to obtain the banking business of employees (similar
large banks is planning to build a “financial mall” location to “bank-at-work” programs that some U.S. banks offer).
where different lines of business (e.g., retail banking, brokerage,
mortgage loans, car loans, etc.) will have their own storefronts in
the same building, similar in concept to how retailers owned by
the same company have stores in the same mall.
Dubai’s banks also seem to have a greater focus on customer
segmentation than banks elsewhere. In particular, several have
increased their focus on women due to the wealth that has
been inherited by many female customers. One bank has a
product package (with the tagline, “A style of banking that
Deloitte Center for Banking Solutions 7

10. Global Perspectives in Branch Banking
Branch Notes from All Over
Australia’s Unusual Branch Species
Australia is famous for its abundance of animals found nowhere
else in the world, including the kangaroo, koala, platypus, emu,
and wombat. It also is home to some unique concepts in branch
banking.
In Sydney, for example, brightly colored Volkswagen Beetles
sport the logo of a major bank. The vehicles are driven by mobile
sales specialists, who visit consumers in their homes to pitch
mortgages, car loans and other personal secured loans. Several
banks do this, each featuring a distinctive color scheme on its
traveling billboard. It’s their way of competing against direct
marketers of financial services that are making inroads in the
Australian market.
Another novel approach is the “Bank@Post” program. More
than 70 financial institutions have collaborated with Australia
Post, the national postal system, to provide their customers
with transaction services. Bank clients can conduct personal
or business financial transactions, including deposits and
withdrawals, account balance inquiries and credit card payments, The Road Ahead
at all 800 system-operated facilities. Bank@Post also is available
at Australia Post’s 3,000-plus agent locations across the country
The purpose of this study was to present new ideas and to
in retail outlets, such as pharmacies, dry cleaners, news agents,
stimulate thought concerning possible options for responding to
and even pubs. Many of these agents serve small towns or rural
the powerful market forces that are assailing financial institutions
areas that lack other banking options.
today. This is the first in a series of research pieces that we will
While five major banks dominate the Australian banking scene, be producing over the next few months that analyze in more
the story is very different in the vast reaches of the sparsely detail the changing role of branch banking and the initiatives
populated interior. Branch rationalization and consolidation over that banks are utilizing to bring this about. We will also be
the years have left many small towns with no banking facilities. visiting other countries to add to our case studies of innovative
approaches banks are utilizing to target customers more
One Australian bank’s “community bank” model focuses on effectively.
providing branch access in underserved communities. The
bank works with communities seeking local banking services As evidenced by the multitude of examples we found, banks are
to establish a branch operation, overseen by a board of becoming more in-tune with their customers and increasingly
directors with members from the community. The bank allows creative in how they go about meeting their needs. While the
the “community bank” to use its name and identity system, effectiveness of some of these techniques has yet to be proven,
and provides the back office infrastructure and establishes the collective implications of them are profound. Financial
appropriate credit standards. In turn, the community runs the institutions, particularly in the U.S., must transform their branch
front office, including staffing, sales and marketing. Profits networks. This means going beyond incremental improvements
are divided equally by the parties, and the “community bank” to develop a unique, differentiating and compelling value
typically reinvests its share in projects that benefit the entire proposition. This will take time, investment, and most of all,
community. a willingness to set aside preconceived notions of what a
traditional bank can and cannot do for its customers. The branch
A more traditional approach to franchising is used by another networks that develop a truly customer-centric orientation by
major bank to extend its branch network into new markets. reinventing retail in banking will likely be the ones that ring up
Rather than incur the expense of building a branch from scratch, the most revenue in the long term.
the bank works with franchisees who invest their own capital
to establish and operate a branch. The bank charges a franchise
fee for the use of its brand and back-office support, and the
franchisee retains any profits generated by the branch.
These franchising arrangements appear to be working well for
the Australian banks, but regulatory constraints may limit the
usefulness of this concept in the U.S.
Deloitte Center for Banking Solutions 8

11. Global Perspectives in Branch Banking
Branch Notes from All Over
Authors Deloitte Center for Banking
Solutions
Scott Burgess
Principal
Don Ogilvie
Deloitte Consulting LLP
Independent Chairman
+1 703 51 3459
Deloitte Center for Banking Solutions
scottburgess@deloitte.com
dogilvie@deloitte.com
Chris Gill Laura Breslaw
Senior Manager Executive Director
Deloitte Consulting LLP Deloitte Center for Banking Solutions
+1 704 887 1855 Two World Financial Center
cgill@deloitte.com New York, NY 1081
+1 1 436 504
lbreslaw@deloitte.com
David Cox
Director of Research
Deloitte Services LP About the Center
+1 1 436 5805
dcox@deloitte.com
The Deloitte Center for Banking Solutions provides insight and
strategies to solve complex issues that affect the competitiveness
of banks operating in the United States. These issues are often
Industry Leadership not resolved in day-to-day commercial transactions. They require
multi-dimensional solutions from a combination of business
disciplines to provide actionable strategies that will dramatically
Jim Reichbach
alter business performance. The Center focuses on three core
Vice Chairman themes: public policy, operational excellence, and growth.
U.S. Financial Services
Deloitte Touche USA LLP
+1 1 436 5730 To learn more about the Deloitte Center for Banking Solutions,
jreichbach@deloitte.com its projects and events, please visit www.deloitte.com/us/
bankingsolutions. To receive publications produced by the Center,
click on “Complimentary Subscriptions.”
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Center for Banking Solutions
About the Center
The Deloitte Center for Banking Solutions provides insight and strategies to solve complex issues that affect the competitiveness of
banks operating in the United States. These issues are often not resolved in day-to-day commercial transactions. They require multi-
dimensional solutions from a combination of business disciplines to provide actionable strategies that will dramatically alter business
performance. The Center focuses on three core themes: public policy, operational excellence, and growth.
To learn more about the Deloitte Center for Banking Solutions, its projects and events, please visit www.deloitte.com/us/banking
solutions. Member of
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