What is workplace banking?
Workplace banking involves leveraging relationships with employers to offer tailored propositions to their staff. The model varies depending on the nature and size of the workplace, the requirements of the employer and the needs of the employees. Services range from a formal tie-in with payroll to the provision of optional financial services as part of a bespoke benefits package.
KPMG's experience with its clients in Australia suggests the workplace model offers significant advantages to all parties: the customer gets easy access to a tailored suite of financial services, while the employer can offer staff an enhanced benefits package. Financial services providers can reap numerous benefits too:
- Increased revenues through new customer acquisition and greater share of wallet (a leading European bank claims nearly 30% of new-to-bank customers now come through the workplace)
- Better quality customers based on their known employment status
- Enhanced customer retention and loyalty
- 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.
Getting it right
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 include a fully flexible and tailored approach, the ability to leverage existing corporate and business banking relationships, an emphasis on simplicity and convenience, adoption of a modular approach to contain complexity and cost, and the use of appropriate and robust management information systems.
Of course, workplace banking can go awry, and the difference between a successful and poor deployment can be subtle. Critical pitfalls include:
- “Soft launching” workplace banking branding without sufficient thought to addressing customer needs or without developing genuinely tailored offerings can disillusion the customers and their employers alike
- Not having sufficient back office support in place to respond to an influx of new sales
- Not having the right management information at site level to demonstrate profitability and success
- Trying to do too much too soon when developing the onsite banking relationship.
Workplace banking is not without its risks. Valued corporate relationships could be jeopardised if the arrangement fails to deliver promised benefits. Similarly, customer dissatisfaction can result if the arrangements do not reflect the needs and circumstances of particular workplaces. One size does not fit all.
However, if banks can develop scalable and effective propositions that deliver on their promises, the benefits in terms of high value customer acquisition and retention could to be significant.
By Peter Harmston, Manager in Australia