Few can deny that in the last three decades, the retail industry has been arguably the most susceptible to change as a result of the technological revolution.
Gone are the days when most of us did our shopping in the local village or town groceries and stores. The ubiquitous bank branches usually located in the most prestigious areas of city centres are also being affected by these behavioural changes brought about by digital technology.
Malta usually follows with some delay social patterns that evolve in Western Europe. But eventually, we catch up as, despite our insularity, we embrace changes that make life easier for most of us.
The cashless society was a somewhat alien concept to many of us as we seem to have an intense love affair with carrying bundles of cash. And like most societies that venerate tradition, we were never all that friendly with tax collectors.
But our habits are changing. The advent of supermarkets and department stores has already wiped out hundreds of small businesses in our towns and villages. Our obsession with private transport has made it possible for most to travel to the nearest shopping centres to procure the goods and services we need for our daily use.
The next wave of significant change in our spending habits will involve the way we interact with our bank manager. We only need to look at what is happening in the UK to understand the changing dynamics of retail banking. Late last year RBS announced the closure of a quarter of UK branches in what they called a ‘cost-cutting drive’ while encouraging more customers to use digital services.
Ulster Bank, a major Irish bank owned by RBS, tried to allay fears expressed by its conservative customers by insisting that it won’t shut up more branches in Ireland. It had already shocked many by stating earlier in 2017 that it would close 22 branches. In 2017 alone British banks closed down about 1,000 branches, a record according to an analysis by Reuters.
Customers in the UK and mainland Europe are bracing themselves for the next phase in the changing dynamics of retail banking – the exit of ATMs from shopping centres
Even more worrying for many customers is the growing practice of reducing the number of ATMs primarily in shopping centres. Improvements in payment technology have now made it easier for the cashless society to become a palpable reality. Customers in the UK and mainland Europe are bracing themselves for the next phase in the changing dynamics of retail banking – the exit of ATMs from shopping centres.
Retailers are fast embracing the digital era to track big data that will enable them to identify consumer needs and wants in real time.
Colliers International, a consumer research company, has found that ATM withdrawals have been steadily on the decline for nearly a decade, falling by 28 per cent in both the number of ATM withdrawals and total amount withdrawn from January 2009 to July 2017. A CommBank Retail Therapy Study also found that in the UK, 75 per cent of respondents said they used credit or debit cards as their primary payment method when shopping and dining in stores and 50 per cent said they would avoid a business if they have to queue for payment.
In Australia changes in payment habits are even more dramatic as retailers in shopping centres embrace more modern means of payment rather than upgrade their ATM investments.
For banks, these changes mean they first need to upgrade their core banking systems and then hook on the new fin-tech systems that enable consumers to satisfy their banking needs through their smartphones and computers.
Many large banks are still dependent on legacy computer systems that have been patched to save on the substantial human and financial cost of upgrading them.
Having been involved in a few significant IT upgrades in financial services, I can vouch for the pain that changing an IT system brings to an organisation’s employees.
Buying the hardware and software is an expensive exercise for banks, but getting people to accept new ways of working where processes are radically changed is an even bigger trauma.
Some politicians and consumer organisations are understandably worried about the effects that these radical changes will have on those who find it difficult to adapt to the new banking technologies.
It is a sad reality that these changes are affecting the older generations and low-income families negatively.
Taking brick-and-mortar services away from vulnerable sections of society will increase social inequality at a time when society is already becoming more unequal.
johncassarwhite@yahoo.com