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Connexus : Issue 41
...if you say to a Y-gen customer ‘I’m sorry, but you are going to have to come down to the branch to sign a piece of paper’, that’s the fastest way to destroy a relationship. believes there will still be room for members to offer tailored payment products and services. “ While mutuals may well consider innovations specific to the needs of their own membership, such as the recent Community CPS mobile app, the capacity to customise centralised solutions in partnership with industry service providers is also feasible – albeit at additional cost,” he says. Brett King notes that community banks and credit unions have shown they can team up to offer market-leading ser vices. “ The RediATM network is a great example of that in Australia. I think you are going to continue to see that.” Branch threat The big challenge for financial institutions will be rethinking their distribution model as they move away from a branch-first model, says King. He expects branch number s to decline dramatically in the next three to five years and for most people to manage their day-to -day banking using a mobile. First Direct in the UK and UBank in Australia have demonstrated the power of online banking models to woo depositors, he says. Some older customers may still want branches as a “safety blanket”, but, as Generation Y increasingly dominates the retail customer base, the focus must be on the inter net and mobile banking solutions. “The risk in the next eight years is that if you don’t under stand or respect their behaviour or the fact that they are digital first, and if you say to a Y-gen customer ‘I’m sor r y, but you are going to have to come down to the branch to sign a piece of paper ’, that’s the fastest way to destr oy a relationship.” At Indue, Garcia ack nowledges that change is in the wind but is less convinced that branches will perish so quickly. He notes that in the 1980s and 1990s banks started to view branches as “evil” and dismantled them. “Here we are 10-odd years since those decisions were made and there’s a full-circle turnaround and people are realising that branches are an important point of distribution.” That’s a welcome viewpoint for mutuals, which have built their businesses around the concept of friendly face-to-face service. Garcia says that, while the role of branches is evolving, credit unions have to be wary of closing them down. “For credit unions as a sector, it is what has made them different. It’s one of the tenets of their offering that differentiates them from the major banks,” he says. Tony Schesser concedes that branches may come under pressure to evolve in the mobile era. “I see branches shifting from a transactional to a sales and service focus, with more traditional banking ser v ices mov ing online.” He says a further consideration is potential changes to fees and charges as payment systems evolve. Future opportunities As the payments market beds down, mutuals will have to be smart. “We need to change and move where the public is going,” says CUA’s Gee. “Maintaining our relevance applies to both bricks and mortar as well as online channels.” At APCA, Hamilton says it should not be forgotten that smaller fi nancial institutions have a chance to lift their presence, cour tesy of the pay ments revolution. “One aspect of a lot of the changes is that they are kind of democratising,” Hamilton says. ” They give the oppor tunity for the smaller players to compete in areas where, perhaps for scale or complexity reasons, they might have found it too hard in the past,” he says. For King, it all comes down to modern banking consumers who are embracing a switch to utility of banking. “ Banking is no longer a place you go,” King says. “It’s simply something you do.” Cameron Cooper is a freelance writer. NEWS 18 Connexus