The Customer Effect

Why a virtual bank is making bank branches part of its US launch

  • A Ireland-based virtual bank will launch in the U.S. this fall, and its customer relationship-building strategy will be based on the growth of physical branches.
  • Iam Bank is rebranding the traditional branch as the 'customer experience center' where customers will be able to take part in personal finance workshops and other networking events.
close

Email a Friend

Why a virtual bank is making bank branches part of its US launch

Iam Bank, a startup virtual bank based in Ireland that has offices in the U.K., is set to launch in the U.S. this fall — and it’s going to do it via a physical bank branch.

The bank, which is now in the process of buying a Chicago-based bank it declined to name, said it will set up its first branch, known as a “customer experience center” in Milwaukee in the fall.

“We’ve done a lot of research and it all comes down to trust and credibility,” said Simona Stankovska, head of communications for Iam Bank. “For us, the research shows that people have a massive distrust of purely digital offerings. They need to have a human touch, they need to be able to communicate with someone.”

Despite expectations about the death of the branch (for example, a report last month from commercial real estate firm JLL projected that the number of branches across the U.S. will shrink 20 percent in five years), recent surveys support Iam Bank’s view that consumers — especially millennial ones — will continue to demand a human touch to banking. An Accenture survey last year found that 87 percent of customers, including 86 percent of millennials, feel that they will continue to use branches because they trust or sense that they get more value from letting a human deal with their finances.

Iam bank is led by CEO Lee Travers, a financial technology veteran. The company has plans to expand across the U.S. and the U.K., and said it will offer a digital-first banking experience though online and mobile banking, with the help of its virtual assistant, iamEmma. iamEmma will use machine-learning algorithms to provide insights into a customer’s spending habits and offer advice. But when customers feel they need human interaction, they will be able to step into a customer experience center.

“Through the app, you can access your bank account and the onboarding process will be very simple and you’ll be able to speak to customer representatives though FaceTime,” said Stankovska. “But the member experience centers are going to be a backup — if you’ve lost your phone, or just want to speak to a human.”

Through acquisitions, explained Stankovska, the bank will be offering customers an Apple-store type experience where they will be able to speak to real people about any banking issues and take part in personal finance workshops and networking events, including mom-and-baby groups.

Industry watchers note that the branch of the future will be more about building relationships than providing services, a trend Iam Bank is looking to capitalize on and that’s inspiring incumbents like Bank of America to launch employee-less branch pilots.

“Branches are becoming centers that provide personalized financial advice, build relationships, solve problems and, perhaps paradoxically, help customers make the transition to digital,” wrote Richard Fleming and Joe Fielding, in a recent research note from Bain.

While Iam Bank has an ambitious mission, analysts say the startup venture may face some growing pains establishing a foothold in the U.S. market where “challenger banks” have struggled to catch on. “A branch location is an admirable goal, but that’s a significant capital expense to take on, especially if you’re acquiring a branch network in need of a redesign,” said Celent analyst Stephen Greer.

 

0 comments on “Why a virtual bank is making bank branches part of its US launch”

The Customer Effect

‘Like sneaker culture’: Are gimmicky debit cards overplayed or a smart business decision?

  • Revolut’s glow-in-the-dark debit card is the latest in a series of flashy debit cards to hit the market.
  • Experts say it’s a smart, cost-effective strategy that builds customers, brand equity and culture.
Shehzil Zahid | April 13, 2021
The Customer Effect

E-signatures are still spreading in the financial industry, but not really maturing

  • The pandemic has accelerated the adoption of e-signatures in the financial industry.
  • But while use is spreading, e-signature tech hasn’t changed so much since it first started.
Rivka Abramson | March 31, 2021
The Customer Effect

‘Indian Country has been plagued by systemic red-lining’: Indigenous communities are the most unbanked in the U.S.

  • Indigenous people in the U.S. and Canada continue to face institutional discrimination in their banking experiences.
  • Indigenous-owned banks and enterprises are paving a path for economic autonomy and prosperity for their communities.
Rimal Farrukh | February 09, 2021
The Customer Effect

‘They blamed me’: Banks aren’t doing enough to service those suffering from mental health issues

  • Mental health related services remain largely under-represented in fintech and banking spaces.
  • Empathy training for customer service experiences and accessible apps can help support people with mental health problems manage their money.
Rimal Farrukh | January 26, 2021
Member Exclusive, The Customer Effect

Citizens Bank’s Beth Johnson: ‘Personal interaction remains important to customers’

  • What bank clients expect from their institutions is changing, according a new Bank Experience Survey.
  • Citizens Bank CXO Beth Johnson joins us to discuss the findings of the research and how it's impacting banking today and in the future.
Zachary Miller | August 11, 2020
More Articles