_Retail Banks: the new co-working providers?
Building long-term relationships with customers allows retail banks to build valuable customer data sets, which can then be used to provide more personalised and innovative solutions throughout the customer’s lifecycle.
Whilst acknowledging that a lot of this can be achieved via technology and data analytics, as referenced in our previous blog ‘Customer relationship management in the new retail banking world’, retail banks must not overlook the power of the physical connection.
As a result, there is a growing requirement to have a physical space to facilitate this physical connection. It is our assertion that retail banks have an opportunity to either repurpose surplus office or branch space into co-working community-led spaces or form innovative partnerships with existing co-working providers to do so.
Banks that provide co-working space to promising small businesses and entrepreneurs either free of charge or at reduced prices have an opportunity to generate new clients and build client loyalty, thus enabling them to offer a range of business banking, private banking and wealth management solutions.
Some of the leading retail banks have already recognised the opportunity. Barclays has been turning redundant branches into co-working spaces called Eagle Labs.
Typical amenities include private offices and meeting rooms, the latest technology such as 3D printers and augmented reality, unlimited refreshments and access to networking events. Their most recent launch was a site in Notting Hill and specifically targeted companies active in LegalTech.
Separately, RBS has partnered with RocketSpace to carve out part of its Regents House London office into a co-working space targeted specifically at high-growth tech start-ups. Further afield, in the U.S Citizens Bank has transformed a vacated office into a 12,000 sq ft entrepreneurial centre called Vault 405.
While much activity has been targeted at business users, the model also applies to individual retail banking customers. By setting up spaces that encourage individuals to “hang out” retail banks can market services, solutions and new technologies to customers while creating an important ‘third space’ in the new world of work.
An example is CYBG’s B-studio in High Street Kensington which runs events for customers that include a running club and craft making. Customers come into the studio for these events so at the same time they can experience CYBG’s latest digital tools.
In addition to repurposing existing space, retail banks are in a great position to partner with co-working providers. A recent Mercer survey found that employees spend on average 10 hours per week worrying about their finances during working hours.
If a retail bank partnered to either deliver a co-working space or provide banking services and advice within existing co-working space it could prove to be a powerful business development tool. In Toronto RBC teamed up with WeWork to create a collaborative space where WeWork members and RBC clients can meet with RBC professionals to gain knowledge and insights.
As co-working further develops and we see market differentiation through powerful branding, there could well be a role for the retail banks in providing a service which actually supports their own growth and builds client loyalty.
Our UK retail banking sector series explores this changing dynamic and its real estate implications in greater detail.