HybridSpaceMaking:rethinkingthebankbranchexperienceforthedigitalage

Abstract

Asdigitaltechnologydisruptsfinancialservicesglobally,howshouldbanksgoaboutplanningthenextgenerationofbankbranches?Intheageofonlinebanking,whatarethenewhybridstrategiesthatwilldrawcustomersin,improveworkingconditionsforemployees,connectwithlocalcommunitiesandoptimisethepropertyportfolio?ThispaperdescribesaresearchprojectconductedbytheUniCreditbankinggroupinpartnershipwithUnwiredandtheRoyalCollegeofArttoexplorethehybridbankbranchnetworkofthefuture.Thestudydevelopsthreeframeworks–architectural,people,anddigital–andproposesamodelwiththreelevelsofhybridity.Itsfindingshavebroadimplicationsfornewwaysofworkingandinteractioninfinancialservices.

Keywords:workplace,ethnography,branchnetwork,hybridspaces,digitalrealstate,innovation,connectivity,financialservices

Introduction

Asdigitaltechnologydisruptsfinancialservicesglobally,thebricks-and-mortarbankbranchseemstogetmoreandmoreobsolete.Banksareclosingbranchesbecausepeopleareusingthemless,infavourofonlinebanking.AccordingtotheEuropeanBankingFederation,bankswithintheEuropeanUnionclosed9,100branchesandcut50,000staffin2016,partofatrendthathasreducedEuropeanbankemployeenumberstotheirlowestlevelsince1997.

Atthesametime,multi-channelretailingthatcombinesphysicalanddigitalchannelsisontheriseascustomersincreasinglycombinetactileandvisualstoreexperiencesinpersonwithonlineordering,selection,reviewsandtips.Thiscollisionbetweenbricksandbytesisdisruptingretailatbreakneckspeed.

Bothtrendsforcedustorethinktheroleofthephysicalbranchinthedigitalworldandhowtogoaboutplanningthenextgenerationofbankbranches.

Context

UniCreditisaleadingEuropeanfinancialgroupwithaninternationalnetworkspanning14coremarketsandanother18countries,with5,500branchesand25millioncustomers. Inregardtoitsbranchnetwork,Unicreditembracedchangingcustomerbehaviouratanearlystage.Anewbranchmodelforabettercustomerexperiencewaskickedoffin2012andhasbeencontinuouslyrefineduntiltoday.Thelookandfeelmaydifferslightlyfromcountrytocountry–alsoreflectingheterogenousmarketsandcustomersegments–butall

followkeyprinciples.Eachphaseofthecustomerjourneyissupportedinanoptimumwayleveragingon:

• Transparencyandremovalofbarriers• Engagementandmobility• Blendingofphysicalanddigitalspace

Morethan1,000brancheshavebeenalreadyrefurbishedaccordingly-adoptingthenewmodel.

Figure1:NewBranchModel,SofiaBulgaria

Thechallengesofthedigitaleconomy,thecontinuousneedforinnovationandtheobjectivetomoveclosertothecustomerhasalsoledUniCredittonewbranchformatssuchasthemobilepop-upbranch(BranchUp!).Supportingthemainbusinessobjectivesofnewcustomeracquisitionaswellascostreduction,thepop-upbranchcomeswithaninnovativeanduniquedesigntoallowfor:

• Flexibilityandadaptability:thebasicstand-alonemodule(6.6sqm)canbecombinedtocreatetemporarybranchspacesof40-70sqmetresofferingmultipleservices(e.g.cash,advisory,accountopening)

• Lowcostofimplementation:EUR15-20kforpilotproductioncost(permodule)• Easytohandle(setupinlessthan2hours)• Abilitytoattractandengagethroughdigitalenhancementsandgamification• Sustainability(madeofwood)

Thefirstprototypestartedin2014.Morethan30installationsinAustria,Italy,Germany,RomaniaandCroatiafollowedtoprovetheconcept.

Figure2:MobilePopUpBranch(BranchUp!)inIasi,Romania(2016)

Themobilebranchconceptisalsoillustrativeofhowinnovativeformatscouldhelpaddressingcustomerneedsinacostefficientway.Themobilebranchliterally‘comestothecustomer’–itdeliversservices(e.g.cash,wi-fi),advisoryandthe‘humantouch’inlocationsandareas(i.e.ruralareas,universities,hospitals,andsoon)rarelycoveredbytraditionalbankbranches.

Inthisway,themobilebranchconceptmaycontributetoanoptimizedfootprintofafuturebranchnetworkinacomplementaryway.Butthekeyquestionofhowbanksshouldgoaboutplanningthenextgenerationofbankbranchesremainsasubjectofongoingresearch.

Followingthetrendsofholisticcustomerexperienceandblurringboundariesbetweenphysicalanddigital,thehybridizationofspacesemergedasakeyfocusareatobefurtherexploredinthiscontext.UniCreditalreadyexperimentedwithhybridformatscrossingtraditionalboundariesbetweenofficeandretail,publicandprivatespace(seeCREJSandbilleretal.)Thenextstepwastodevelopasystematicapproachonhybridspace-making,drivenbyastrictbusinessagendaandcoveringtwodesigndimensionsofhybridspaces:

• Blendingdifferentusesandoffersintoonespace• Mergingphysicalanddigitalspace

Researchobjectives

Intheageofonlinebanking,whatarethenewhybridstrategiesthatwilldrawcustomersin,improveworkingconditionsforemployees,connectwithlocalcommunitiesandoptimisethepropertyportfolio?

Thisprojectisexploringanumberofquestionsaroundtheuseofthebankbranch,drivenbytheopportunityforUniCreditto:

• Leverageunusedspacewithinthebranchnetworkthatisofteninthecitycentreandwelllocated(IncreaseSpaceefficiency)

• Useexcessspaceinthebranchtosharecostsandgeneraterevenue(ReduceCost)

• Addofferswithinthebranchtoattractcustomersandgeneratetraffic,encouragingcustomergenerationandretention(Attractcustomers)

• Improvecustomerloyaltyandexperiencewithaportfolioofservices• Improvetheexperienceforthestaffinthebranch

ResearchApproach

Toinvestigatetheemergingopportunitiesforthehybridbankbranchnetworkofthefuture,itwasnecessarytodefineandunderstandhowthreeimportantelements–architectural,peopleanddigital–mightworkintandemandwhattheunderlyingbusinesscaseforthedifferentdegreesofhybriditymightbe.

Abroad-basedresearchteamwasassembledcomprisingrepresentativesfromtheUniCreditbank,theUnwiredconsultancy(aspecialistindigitalworkfutures)andtheHelenHamlynCentreforDesign,RoyalCollegeofArt(anacademicresearchpartnerthathasapeople-centricfocusandanexpertiseindesign-basedethnography).TheprojecttookUniCredit’sspacetypologymatrix–itsfourquadrantstoaidcollaborationandinteractionspanningfromprivatetopublicandfromworkspacetoretail–asastartingpoint.

Figure3:Matrixshowingfourspacetypologies

Theresearchteamorganisedtwostudytours–oneinLondonandoneinMilan–tolookatreal-lifeexamplesofhybridspacesthatcombineelementsofworkspace,retail,hospitalityandbankbranch.Theteamvisiteddifferentmodelsofcuratedandservicedofficespace,newretailandhospitalityenvironmentsandnewbankbranchformats,lookingforemerging

examplesofhybridspace.Ateachplace,thedesignapproachwasanalysedfromtheperspectivesofoffer/service,curation/deliveryandinteriorstyle.Thisprecedentstudypaintedarichpictureofthedifferenthybridspacescurrentlyonthemarket.Eachvisitwasrecordeddiagrammaticallyusingacolourcodingofredforbanking,blueforwork,yellowforhospitalityandgreenforretailtochartthedifferentelementsinrelationtoeachother.

Figure4:CopernicoinMilan,showingmixesofusesindiagramInMilan,forexample,theresearchersvisitedtheCopernicoco-workingspaceandpubliccafé,andanewcity-centrebankbranchformatforIntesaSanpaolothatfeaturesacollaborationwithafurniturecompanytohelpfosterbetterrelationshipswithclientsbycreatingapublic‘square’tohostevents.InLondon,wevisitednovelconceptssuchasthe02StoreretailstoreatWestfield,whichrethinksthetraditionalmobilephoneshopasaninspirationalshowcaseforthelatesttechnology,andVirginMoneyLounge,whichreimaginesthedeliveryofbankingservicesthroughafree,open,tech-enabledcommunityhub.EachplacewevisitedwasthenmappedontoUniCredit’sspacetypologymatrix.Adatabankswiftlybuiltuptoshowtherangeofhybridpossibilities,whichenabledustoidentifysomeessentialcharacteristicsofretail,work,bankbranchorhospitalityrelatedtodwelltime,permeability,flexibility,security/privacy,interactionandambiance.Thisbodyofworkalsopointedthewaytothecreationofover-archingframeworksforthearchitectural,digitaland

peopleelementsoftheproject.

ArchitecturalFramework

Theprojectaddressedthechallengeofcreatinganarchitecturalvocabularyforhybridspace.Ouranalysisidentifiedandarticulatedaseriesofcoresettings–advisory,service,loungecommunity,meeting,exhibitandfoyer–andplacedaservicebaratthecentreofthemodelasthemainactivationelementforthespace.

Figure5:ArchitecturalFrameworkWhetheraservice,sales,receptionorcafébar,thebarisacommonarchitecturalcomponentthatcanactasa‘blade’penetratingthespace.Thebar‘blade’buildsontheexistingwelcomepointwithinthecurrentbankbranch,reinforcingtheemphasisplacedon

themomentapersonentersthebranch;itnodstothetraditionsandritualsofretailenvironmentsbutoffersanewandinnovativeserviceapproach.Critically,itprovidestheprimarypointaroundwhichaflexible,modulararchitecturalstructurecanbebuilt;havingestablishedthekeyparameters,thestudyfleshedoutanarchitecturalkitofpartstocreateeachoftheidentifiedsettings.PeopleFramework

Hybridspacesareanimatedbyhumanbehaviourandinteraction.Sothenextphaseoftheprojectengagedamixofbankemployees,customersandparticipantsfromthewidercommunitytogenerateinsightsintorealneedsandcontextsthroughtherecordingofpersonalstories.Wewantedtounderstanduserjourneysandinteractionsthroughdigitalandphysicalspaceasakeycontributiontobuildingthenarrativeofthehybridbranch.

Figure6:PeopleFramework

Frontofhouse,backofficeandheadofficestaff;existing,newandpotentialcustomers;smallbusinessowners,entrepreneursandfreelancesfromthewidercommunity–allareplayersinanyhybridbankbranchnetworkofthefuture.Soallwereinvitedtoparticipateinaprogrammeofobservations,interviewsandworkshopsinMilantoidentifyusermoti-vations,expectationsandgoalsresponsiblefordrivingbehaviouraroundbankbranchuse.

Figure7:Participatoryresearchexercises

Notonlydidwegatherrichinsightsbutwealsotestedourinitialarchitecturalideasonthesegroupsanddiscoveredarealappetiteforsomeoftheideasbeingdescribed.Fromthisbodyofethnographicresearch,wecreatedfourarchetypalbankbranchusers(twoyoung,twoolder)whohaveparticularunmetneeds:SofiatheUrbanite,whoviewsbankscurrentlyasold-fashionedandtraditionalandseeslittlereasontoenterabranch;GaiatheStartUpEntrepreneur,whofeelsthatbankscandomoretohelpherbusinessgrow;PietrotheProfessional,whomissesthepersonalserviceandclientmanagementearlierinhiscareer;andAntoniotheSenior,whostruggleswithonlinebankingandissentimentalaboutthelocalbranchofthepast.Thesefourpersonashelpedthebanktofocusonvalueandbenefitsforkeycustomergroups.

Figure8:Thefourpersonas

DigitalFrameworkMorefluidinteractionsofawiderangeofpeoplewithdifferentneedsinflexible,modularspacenecessitatedanewapproachtotheapplicationofdigitaltechnologywithinthephysicalenvironment.Sotheresearchteamdevelopedasmartbranchinfrastructurewithadigitalframeworkbasedonfourlevelsofinteraction:Detect,Connect,LocateandEngage.

Figure9:DigitalFramework‘Detect’providesubiquitouscomputing,withcustomers‘checkingin’forfreewi-fi.Thisenablesthebanktointeractwithpre-registeredcustomersonapersonalisedbasis,byutilisingcustomerprofileswithbankinghistory,searchhistory,traveldataandsoon.Thissystemwouldgenerateuseranalyticsthatcouldbeanalysedforreal-timeadjustmentstoservices.

‘Connect’providesambientinformatics,expandingdigitalmediaintothephysicalenvironmentwheredataandinformationisavailableinspaceandtimeassomeonerequiresit.Thiscreatesopportunitiesforthebanktostart‘conversations’aboutnewproductsandserviceswithpeopleloggedintothesystem.‘Locate’takesthistoamoresophisticatedlevelatwhichlocation-baseddataandlocativemediacanhelpthebanktolinkpeopleandplace,improvingtheuserexperience,interactionsandservicesbothinstoreandonline.ThereisbetternavigationthroughIndoorPositioningSystems(IPS).

‘Engage’isthemostadvancedlevel:itprovidesthetechnologyforsynchronouscommunicationandaugmentedenvironments,facilitatingcontinuoustwo-waytransferofinformationbetweenanynumberofusers.Real-worldenvironmentsareaugmentedbycomputer-generatedsensoryinputsuchassound,video,graphicsandGPSdata,creatingbespokeexperiences.Therearedigitaldashboardsforbothcustomersandemployees,andconferencingandaudio-visualcapabilitieswithinthebranch. Thefourlevelsofthedigitalframeworkhelpedtoprojecttoframetheideaofthefuturehybridbranchasmoreexperiential,community-mindedandmarketfocused.

ThreeModelsofHybridisation

Inbringingthedigitalframeworktogetherwiththepeopleandarchitecturalframeworks,theresearchteamdevelopedthreedifferentmodelsofthefuturehybridbankbranchatdifferentscales;MiniHybrid,alsoknownasBankBranchPlus;MidiHybrid–BankBranchShared;andMaxiHybrid–BankBranchJunior.

Figure10:

AllthreemodelsweredesignedtosupportUniCredit’sdrivetoleverageitslargepropertyportfolioinamoreimaginativeandcost-effectiveway,connectingtolocalcommunitiesandcustomers,andprovidingabetterworkingenvironmentforstaff.Allthreeweredesignedtobuildonthearchitectural,peopleanddigitalframeworksestablishedearlierinthestudy.

MiniHybridmodel:ThisBankBranchPlusmodelisstillrecognizablyabankbranch.Itoffersupto90percentofspacedevotedtobanking.Thebankownsthespaceandgetsasmallcostcontributionfromotherpartnerssuchasabookshopinthecorneroracoffeeshoparea.ArchitecturalelementswithinaMiniHybridmightincludeacommunityco-workingareaandinformalloungeandmeetingareasalongsidecorefunctionsofthebankbranch,includingadvisorysettings,self-serviceareas,privateconsultationroomsandothers.TheMiniHybridmodelexploitsopportunitiestousespacewithinthebankbranchmoreeffectively,adaptingtheinfrastructureandlayouttooffernewservicesalongsidetheexistingbankbranchfunctions.Thebankwouldoperateandmanagethenewspaceswithafocusonimprovingcustomerexperience,loyaltyandacquisition.

MidiHybridmodel:ThisistheBankBranchShared,offeringonlyaround50percentofspacedevotedtobankingservices.Thebankstillownsthespacebutalargeproportionofthecostsarereimbursedbyexternalpartners,helpingtoleveragethebranchnetworkinaneconomicandcommunitysense.ArchitecturalelementswithinaMidiHybridmightexpandcommunalco-workingandprivateindividualworkareas,meetingroomfacilitiesandinformalloungeareasalongsidecorefunctionsofthebankbranch.Thebankmightbringinpartnerstooperateandmanagethenewspacesasajointventure,withagrowingfocusonbuildingmembershipaspartofanenhancedcustomerexperience.

MaxiHybridmodel:ThisistheBankBranchasJuniorPartner,devotingonly10percentofthespacetobankingservices.Twoscenariosexistwherethebankstillownsthespacebutitishandedovertoaservicecompanyorprofessionalpropertymanagertorun,orthebanknolongerownsthespacebutrentsaportionofthevenuealongsideotherserviceproviders,witharealestatecompanyowningandoperatingthemodel.ArchitecturalelementswithintheMaxiHybridmightextendtohavingamixofretailstores,exhibitionareasandinteractivezonesbetweenothersharedandbreakoutspaces.Thismodelisaboutincreasingcustomercoverageinalessintensiveandmoreinterestingwayinwhichthehybridspaceisnotperceivedasabankbranchanymorebutmorelikeanew,mixed-useenvironment.Technologiesforthesehybridspacesextendwiththelevelofhybridityfrombasicpublicwi-fiandvideoconferencingwithbankexpertsinremotelocations(MiniHybrid)throughtheprovisionofwi-fiprinting,electroniclockersandanapp-basedspacereservationandcheck-insystem(MidiHybrid)toadvancedcloud-basedservicesandspecialistsoftwareapplications,ageniusbarandITsupport(MaxiHybrid).

Twoscenarios

Totesttheapplicationofthehybridisationmodel,theresearchteamlookedathowthefouruserpersonascreatedbythestudy(Sofia,Gaia,Pietro,andAntonio)wouldinteractwiththehybridbankbranchofthefutureintwoscenarios: abusycitycentreurbanlocation(800sqmetres)andapopularholidaycoastallocation(around400sqmetres).Thismarkedthefinalphaseoftheresearchandcreatedaplatformforquestioningthemodelandidentifyingservicesandfeaturesthatrespondtodifferentcustomerneeds.Forexample,acity-centrehybridmembershipclubenablesPietro,theProfessional,toofferspacetohisownclientswhoareinneedofsomewheretowork;acoastalhybridbranchenablesGaia,theStart-upEntrepreneur,tohostameet-the-innovatorseventatthebankforlocalbusinesses.

Figure11:Scenariosforuseincity-centreandcoastalbranchesexaminedthroughpersonas

UltimatelythisbodyofresearchprovidedablueprintforhowUnicreditcanadaptitsphysicalanddigitalspacestodevelopthehybridbankbranchnetworkofthefuture,reachingouttocustomers,staffandlocalcommunitiesinamoremeaningfulwaywhileoptimisingspaceandmanagingcostsofthecorporaterealestateportfolio.

ImplicationofResearch

Somefirst‘physical’implicationsoftheresearchcanbealreadyseeninMilan.InJuly2017,UniCreditlaunchedthefirstBusinessCenterforsmallandmediumenterprisesservingaround1,600businesscustomersintheMilancentralcommercialarea.Followingtheminihybridmodel,UniCreditconvertedtheformertraditionalbranchinViaVerdiintoahybridbusinesscentrecombiningtraditionalbankingservices(industryspecificfinancialadvisory,bothindividualandautomated24-hourtransactionalservices)andahybridserviceofferforbusinessclients(whichtheycanuseontheirownortointeractwiththeirclientsandproviders):

• Co-workingrooms• Meetingarea• Loungearea• Eventspace/Agora

Figure12:BusinessCenterinViaVerdi,MilanItaly

Conclusions

Fromtheresearchanditsfirstapplications,itturnsoutthathybridspace-makingmightplayakeyroleinthefuturedesignofbankbranchnetworks.Nevertheless,theapproachisnotlimitedtothefinancialservicesindustry,butisrelevantinallcases,whereitcomestothedesignofexperientialspacesandthecapitalisationofrealestateassets.

Additionalsocialvaluecanbecreatedbyopeningspacetothecommunity,providingaphysicalplatformforinteractionandcollaborationinthedigitalworld.Theprincipleofusingspacemoreefficiently,andtoshareitwithotherservicesincombinationwithincreaseduserexperience,willleadtonewmodelsofpropertymanagementandintermediation.

Asinthedigitalworld,aggregatorsorspaceplatformoperatorsmayevolvetohostandcuratedifferentservices(hospitality,co-working,banking,retail,andsoon)tailoredtoaspecificcommunity.Atthesametime,theymayactasnewintermediariesbetweenlong-termrealestateinvestorsandspaceoccupiersbytransforminglong-termrentalcontractsandbigfootprintsintosmaller,moreflexibleuses.

Suchnewbusinessmodelsmayevenacceleratethemergingofphysicalanddigitalspace,sincethisallowsformorefluidinteractionsbetweenawiderangeofpeoplewithdifferentneedsinflexible,modularspacesfosteredbydigitaltechnology.

Lastbutnotleast,alloftheaboveevolutionhastobeenabledbyadynamicandhybridprogrammingofspacesupportedbyarchitecturalanddigitalbuildingblocks–akeyobjectiveoftheprojectdescribedinthispaper.

Footnote:

Theauthorswouldliketoacknowledgetheexceptionalcontributionsoftheothermembersoftheresearchteam:DavideRimontaandGiuliaVarano(UniCredit);PhilipRossandOwenKing(Unwired);andAndrewThomsonandImogenPrivett(RoyalCollegeofArt)