Beacons in Banking: Going Phygital for Higher Branch Footfall and Better Experience
Beacons are the touchpoint of digital technologies and physical branches. Learn how they can deliver a truly ‘phygital’ banking experience and increase branch footfall significantly.
- Bringing Digital Smarts to Personal Banking
- The Rise of ‘Phygital’ Banking
- Banks Gain Relevance with Beacon Applications
- Why Now Is the Time to Adopt Beacons in Banking
- Bank Customers Choose Mobile-First, not Mobile-Only
- How to Leverage Beacons in Bank Branches?
- Beacons in Banking: Are They Worth a Try?
- Is Your Bank Making the Most of Beacons?
There have been discussions about the demise of branch banking for at least a decade now. Every year, industry pundits are heralding an imminent end of traditional banking. However, while bank branches continue to consolidate, and in 2018 we saw the pace of net closures accelerating for the largest banks, traditional brick-and-mortar banking is not going anywhere yet. On the contrary, branches are investigating progressive technologies such as beacon-based proximity marketing to discover new opportunities for connecting with customers in-store.
As a JJL research report on branch banking in 2019 confirms, although the number of bank branches in the U.S. slightly diminished last year, the sum of branch deposits actually increased by almost 4%. Around the world, branch banking doesn’t lose its appeal: Deloitte shows that branches are still customers’ preferred channel to apply for a mortgage, a wealth management or checking account, and credit cards.
Bringing Digital Smarts to Personal Banking
It's no secret that bank customers are getting increasingly seduced by the convenience and immediacy of digital banking. The shift toward digital, mobile in particular, has gained prominence, especially in the last two years. Recently, the number of U.S. digital banking users has surpassed 160 million according to Statista. However, this trend doesn’t imply that branches are losing relevance. As PwC’s 2018 Digital Banking Consumer Survey reveals:
- 59% of consumers prefer to apply for a loan or a deposit account in a physical branch
- 65% think it’s important to have a local branch
- 25% wouldn’t open an account with a bank that didn’t have at least one local branch
These numbers indicate that banks that are looking for sustained growth shouldn’t abandon physical branches altogether but rather reshape their strategies more toward blending digital experiences with physical ones by turning their focus to ‘phygital.’
The Rise of ‘Phygital’ Banking
‘Phygital’ (a rather grotesque compound of ‘physical’ and ‘digital’) is a marketing term that refers to the merging of digital technologies with physical experiences that brings together the best of both online and brick-and-mortar stores, responding to a modern customer’s evolving expectations.
Companies implementing phygital approaches are looking to bridge the divide, give customers the best of both worlds, and enhance their in-store experience by leveraging speed and convenience offered by advanced digital technologies. In this context, physical bank branches can become ‘phygital’ if they embrace enterprise mobile app development to create positive, integrated experiences for their customers.
One technology that can prove instrumental in developing a truly phygital strategy in banking is beacons. These have the potential to lure customers—millennials in particular—back into branches and reinvigorate their engagement with banks.
Banks Gain Relevance with Beacon Applications
Beacons are tiny transmitters that connect to Bluetooth-enabled devices such as smartphones, IoT equipment, or tablets in their proximity to push notifications and send personalized updates that can positively affect customers’ in-store experiences.
Retail in particular makes heavy use of beacons to track customers within the range, monitor their pathways, collect intelligence on their engagement (how long they stay in the store, which products attract their attention, etc.), and send targeted messages to create greater engagement and boost sales.
The global beacon technology market stood at $1.17 billion in 2018 and is projected to reach $16.75 billion by 2024, a CAGR of over 61% year by yearTechSci Research
Similar to beacons in retail, beacons in banks can be the key to reversing the negative trend in walk-in banking. It’s even mooted that the number of various applications of beacons in banks can surpass the number of use cases in retail. This makes the investment in beacons an essential aspect of in-branch banking strategies.
Why Now Is the Time to Adopt Beacons in Banking
Given that the millennial population is the most tech-savvy ever and the one least likely to spend time in brick-and-mortar banking facilities, fintech innovations like beacons and mobile apps offer perhaps the most persuasive path to increasing traffic in bank branches.
Banking customers are used to having mobile banking apps on their smartphones, because they make their lives easier, especially when it comes to simple banking operations—like checking account balances and making money transfers. The increasing use of those applications actually creates an opportunity for banks to integrate beacon connectivity into banking apps and enhance customer experiences in both online and offline settings.
However, Bluetooth low energy (BLE) beacons have more than consumer appeal to offer to banks, since they provide the ability to capture data as well as transmit it. In addition to boosting marketing capabilities and improving customer experience, banks can also leverage beacon technology to refine business intelligence and gauge branch performance.
Bank Customers Choose Mobile-First, not Mobile-Only
Interestingly enough, modern bank consumers don’t seem to favor ‘mobile-only’ banking. Instead, they increasingly support the ‘mobile-first’ approach. The number of mobile banking users is steadily growing, and in some instances, such as money transfers or balance inquiries, the use of mobile already markedly exceeds that of online banking. As beacons and mobile apps are inseparable, the increasing shift of bank customers to smartphones marks a new opportunity for location-based marketing.
Many leading banks (including Citibank, US Bank, and Barclays) have already turned their heads to beacons. Industry leaders are betting on beacons and coming up with new use cases to boost in-store customer engagement and explore new revenue streams.
By doing so, they are propelling the evolution of branch banking as a place where customers can seek help with complex, fine-grained services and obtain personalized, high-touch service. Among other things, this evolution entails installing interactive teller machines and self-service pods and taking advantage of beacons in order to increase customer comfort and services accessibility.
As the graph above illustrates, 50% of banking executives quote removing friction from the customer journey as one of the top important trends in retail banking right now. Beacon technology presents a unique opportunity to deliver on that expectation by providing the capabilities to anticipate customer behavior, extend personalized offers and services, and amplify in-bank interactions.
But how exactly will BLE proximity beacons help banks restore the relevance of physical branches? Below are a few examples that illustrate this point.
How to Leverage Beacons in Bank Branches?
From meet-and-greet to beacon-enabled ATMs, beacons can be deployed in a variety of ways in retail banking, serving various purposes.
Drawing Existing Customers to Store
New-generation BLE beacons can detect customers’ presence at a distance of at least 50 meters, presenting banks with an opportunity to prompt visits to a branch by pushing relevant reminders to the customers’ phones.
Imagine a customer who keeps postponing a branch visit for weeks on end. There’s never a good time to do it. One day, as she is walking around a mall, she gets into a beacon range and receives a short reminder to pop into a branch when she has a chance. That prods the customer to pay a visit to the bank, and finally tick an outstanding banking task off her busy to-do list. She leaves the branch relieved and relaxed and remembers the positive experience with the bank.
Attracting New Customers with Discounts and Offers
Beacons not only help existing customers solve their problems. They are also an effective tool for customer acquisition. By leveraging proximity marketing with beacons, branches can plan in-store events and discounts, and lure passers-by inside through notifications.
Amplifying the In-Store Experience
Beacons can also prove invaluable when it comes to enhancing the overall branch customer experience. They act on a host of detailed customer data points, presenting tellers and banking assistants with the intelligence they need to provide personalized services.
Beacons transfer data in both directions, so when a customer walks into a branch, the integrated beacon and CRM software can ensure that the banking personnel knows who this customer is, welcomes his or her with a warm, personalized message, and nurtures further interest with special offers.
By collecting inputs on the visit purpose and expected services, beacons can also better manage customer expectations and help allocate the right clerk. What’s more, a personal banker can receive notification that the next client is approaching the branch, to politely end the current meeting and start the next one right on time.
61% of bankers say a customer-centric business model is “very important.” Only 17% are “very prepared” for it.PwC
Fostering Customer Education
Another way for banks to benefit from beacons is by advising branch customers of wait times for given services and encouraging them to set up an appointment for a specific time.
While it’s rather unlikely that the technology will eliminate banking lines altogether, it can still help to make waiting in line a more engaging and beneficial experience for customers. Banks can fill in customers’ idle waiting time with digital marketing content, relevant articles, or videos, all of which can be pushed to customers' phones while they wait for service. The content can include materials related to online and mobile banking security or discounts and offers.
Powering ATMs with Beacons
Proximity marketing around ATMs is another emerging use case involving beacons. While the efficiency of traditional ATM wraps and on-screen promotions is relatively low, by sending curated ads and push notifications to ATM users, banks can nudge customers to withdraw more cash, purchase bank products (like credit cards), and sign up for mobile banking. All of that can be achieved by installing beacons at ATMs and launching campaigns displayed on ATM screens based on a customer’s specification.
With ATM-based beacons, banks not only gain the opportunity to reach out to their customers outside of the branch. Banks can also enhance customer experience and improve loyalty ranks by sending mobile messages giving directions to the nearest ATM with the shortest queue, or offering rewards for frequent withdrawals, for example.
- 40% of U.S. adults use ATMs 8-10 times a month
- Over 10 billion transactions are performed at ATMs in the U.S. every year
- The average ATM is used 300 times per monthNationalCash
Gauging Branch Performance with Beacons
The scenarios discussed above relate to beacons as customer-experience enhancers. However, as mentioned earlier, proximity beacons can also channel intelligence data about bank customers and operational performance of branches.
For example, by pairing beacons with analytics, banks can measure customers’ behavioral patterns in greater detail, gaining insights into such aspects as:
- Time spent in a branch
- The frequency of each customer’s visits
- Best- and worst-performing services (with a breakdown into services selected by each and every customer)
- Average waiting times
Further intelligence can be gathered by pushing surveys and questionnaires to customers with beacons. By analyzing these data points and feedback collected through BLE transmitters, branch management teams can come up with action plans to increase the number of branch visits, enhance teller productivity, drive greater sales, and remove or modify underperforming products and services.
Beacons in Banking: Are They Worth a Try?
Many banking professionals attribute a certain branch’s value to the face-to-face interaction between the banker and the customer, and view automation and digitization as an immediate threat to brick-and-mortar banks. This claim is only partially valid. Indeed, digital transformation is disrupting banking today; however, its impact on branches doesn’t have to be detrimental.
Beacon-powered mobile banking is meant to augment customer services and extend, not eradicate, the human touch through digital channels. The unique business intelligence capabilities that these technologies contribute will help bankers identify and realize improvement opportunities, offering immense value for banks.
Is Your Bank Making the Most of Beacons?
Although banks continue to invest in improving their digital capabilities, beacons among them, the applicability of proximity-based devices still seems relatively narrow.
However, the increasing use of mobile among consumers and the rising prominence of the millennial shoppers indicate that beacons are likely to have a role to play in the transformation of branch banking. They have the potential to evolve and streamline customer experience by making communication in branches much more relevant, personal, and immediate.
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