October 30, 2015
We were in San Francisco for a couple of weeks working with some talented folks to build something new and exciting. We will talk about that "thing" in another blog. I wrote this post to introduce you to something special that I discovered. I wrote this post to let the banking execs and banking customers all over the world know what banking might become in the days and years to come. I am talking about the Capital One 360 Café (in downtown San Francisco) and to begin talking about it, here is what one of the wall there says: Saving is as simple as a cup of coffee.
Before I go into the details of the cafe, let’s look at what’s wrong with banking today:
1. This is how a bank branch looks like: boring, boxed and only-if-I-need-to-really-go kind of a place.
2. Banks’ open/close days and timings also create issues for customers.
3. Bank branches are sometimes too far away for customers in downtown/posh areas.
4. No to mention the way bank employees try to sell you products and services.
Things that are competing (successfully) with a bank branch:
- Mobile - Enabling Technologies Banking: In the past one year, from Q3 2014 to Q3 2015, banks such as Bank of America and Chase have seen an increase from 34% to 37% in mobile banking customers (out of all banking customers).
- Online banks such as Moven or Simple:
We all agree that a large portion of banking will move to mobile; no doubt about that. But there are still some customers (and will always be) that would want to go to a bank branch. And then there are situations when you must go to a branch. If bank customers are offered a good experience, it can go a long way to secure trust and loyalty. I wouldn’t mind discovering new product(s) such as a credit card that gives me a 20% off on every Uber ride at such an inspiring place.
What’s happening as a result of the issues with bank branches:
Banks are trying to reduce their operating expenses by closing their branches because doing so also means cutting down the number of employees.
Is it happening to all retail locations? Probably not. People still go to cafés. Especially the inspiring ones such as Starbucks. In fact, the footfall in Starbucks increased by around 13% in Q3 2015; the footfall in coffee chains in general increased by more than 15%. With popular features like Wi-Fi and tables to work, coffee shops have been the best hangout spot for today’s youth.
So what the banking industry might not be doing is to look outside carefully and learn from it. For many people, visiting a bank branch has always been a boring, avoid-if-possible and frustrating process. Now, imagine if you are in the downtown area of your city or taking a break from your office to sit in a café and get a coffee, use free Wi-Fi and while walking out ask a service representative from your bank all the questions that you had about a transaction. Doesn't it sound amazing? Indeed, it does.
Back in 2000, ING Direct USA set out to build a different kind of bank, focused on helping customers save time and money. They did this by offering simple financial products, giving savers fee-free checking and savings that their customers can access from their personal computer. The bank quickly grew to become the largest direct banks in the country. In 2012, it was acquired by Capital One, and in 2013, they transitioned the ING Direct Brand to Capital One 360, which was fuelled by the same commitment of saving customers time and money.
Capital One 360 aim was to provide comfortable banking services to its customers, hence, they thought of opening a café within the bank. The bank has opened eight Capital One 360 Cafés across the country. The café is a retail destination where customers can experience the same banking services as the Capital One 360 online bank, along with associates who are available to answer banking questions and demonstrate digital and financial tools, all while enjoying a hand-crafted latte. The bank has partnered with Peet’s Coffee & Tea (which shared the Dutch origin with ING of the past). They’re a premium specialty coffee and tea company dedicated to hand-roasting the highest quality coffee and providing customers with delicious handcrafted beverages. Since the first one opened in New York City in 2001, Capital One 360 Cafés have been serving Peet’s espresso and drip coffee for more than a decade.
The café in San Francisco is in the heart of the business district, just off Union Square. It's a space where customers can have free Wi-Fi and can chat over a cup of Peet’s coffee. The free Wi-Fi provided has a high speed and is a perfect place for someone looking for a quick working space. The café at SFO is a three-storey, free workspace building and is approximately 4-8 times bigger than a normal Starbucks outlet. Customers can access the banking services (ATM, learn about new products, and enroll) and can learn about new digital tools and account features. Along with it, the customers get access to a fee-free ATM where care of everyday transactions like withdrawing and depositing cash and checks can be done.
Why I liked this format so much?
1. The best thing about this format is that the bank does not force its products on the visitors actively. It does so without being a pest. The bank has implemented a passive marketing/sales strategy, making its customers and visitors comfortable. Bank representatives are always available in case a visitor needs some help with the banking services. The café offers a convenient and simple platform to its customers to discuss banking issues with the executives, discovering new products or comparing them, making the discussion a "pull" rather than a "push".
2. There is a display screen showing current news, facts and occasionally some cool products and services Capital One Bank offers. In case a visitor is interested in availing any offer, they can do so with the help of the banking executives present at the café.
3. Capital One Customers get a 50% off on Peet’s Beverages with a Capital One card (not all beverages and not all food items). The scheme is a marketing strategy from the bank in order to attract the visitors.
4. They also know that a lot of people visiting these cafés (entrepreneurs, app developers, designers, BD and sales folks) take Uber, so they even market the Capital One card that offers a 20% off on each Uber ride. What is amazing is that Capital One has built this place in such a way that it attracts a lot of people that are beginning to shape up their career. Catching them young as a customer would mean better lifecycle value for the bank per customer.
About Capital One 360 Cafes:
Capital One 360 is a division of Capital One, N.A. Capital One 360 Cafés are located in Chicago, Los Angeles, New York City, Philadelphia, San Francisco, Honolulu, St. Cloud, Minn. and Wilmington, Del.