The rising cost of funds coupled with a saturated market place is forcing Australian banks to look beyond the high street in their drive to increase retail deposits and customer numbers.
Recognising that branches play an important role in customer acquisition and retention, shrewd bankers appreciate that they are not locked into a fixed model of branch banking. Alternatives are there to be explored and exploited. Workplace banking is one of the most interesting of those alternatives.
Workplace banking is a business model that effectively leverages relationships with employers to offer tailored retail banking propositions to their employees. The workplace banking model can vary depending on the nature and size of the workplace and the requirements of the employer.
Experience so far suggests the workplace model promises some serious benefits.
- Increased revenues through new customer acquisition and greater 'share of wallet' among existing customers. (A leading European bank claims that nearly 30 percent of new-to-bank customers acquired each month come through a workplace banking arrangement)
- Better quality customers based on their known employment status.
- Enhanced customer retention and loyalty together with opportunities to capture young workforce entrants.
- Opportunities to bundle products and services as part of employee remuneration and benefit packages.
- Lower overheads compared with traditional branches and the flexibility to quickly adjust distribution and service levels in response to changing circumstances.
Approached properly, employers can be amenable to workplace banking proposals that promise to enhance productivity, simplify payroll and benefit administration, and extend and enhance employee benefit packages. On the bank side, critical success factors in workplace banking include a fully flexible and tailored approach, the ability to leverage off existing corporate and business banking relationships, an emphasis on simplicity and convenience, adoption of a modular approach to reduce complexity and cost, and adoption appropriate and robust management information systems.
Of course, workplace banking can go awry. Our experience has shown that the difference between a successful and poor workplace banking deployment can be subtle. Valued corporate relationships could be put at risk if the arrangement fails to deliver promised benefits. Customer dissatisfaction can result if the workplace banking arrangements to not reflect the needs and circumstances of particular workplaces – one size fits all cannot work.
Workplace banking has been one of the topics taken up by KPMG's Retail Banking Centre of Excellence in Australia. The Centre of Excellence brings together KPMG's retail banking practitioners, providing them the opportunities to work with clients on selected issues covering channel optimisation, operational excellence, regulatory change, payments systems, strategy formation, customer experience and sales force effectiveness. The centre’s primary mission is to extend client insight and help improve the quality of client decision making.
Through numerous deployments, KPMG has built a unique body of experience in helping organisations develop effective workplace banking solutions from concept development through to execution. Please contact us if you would like to learn more about KPMG's research into workplace banking models.