Beacons in Banking: Going Phygital for Higher Branch Footfall and Better Experience

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.

‘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.

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.

From meet-and-greet to beacon-enabled ATMs, beacons can be deployed in a variety of ways in retail banking, serving various purposes.

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 BLE device's range and receives a short reminder on their beacon-enabled app 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.

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.

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.

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.

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.

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:

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.

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.