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Amir Khan By Amir Khan • January 17, 2018

What Banks Should Learn From the Demise of Retail Store Fronts

Banks looking for compelling case studies about how technology is changing brick and mortar business can derive many valuable lessons from the evolution of retail. The banking industry and the retail industry have several parallels: both depend on customer satisfaction to survive, both have business practices that currently depend on running expensive physical storefronts, and both have been impacted by aggressive competition from startups that offer low-cost alternatives to the modern, millennial consumer.

Gas prices are low, GDP has been growing for years, unemployment rates are under 5 percent, and wage growth has dramatically improved in the last eighteen months. Despite this, there have already been multiple retail bankruptcies and store closures in 2017. Payless, Sports Authority, RadioShack, J.C. Penney, Sears, and Macy’s, are all victims to the growing extinction event of retail store fronts. Several trends and factors have contributed to the sudden change of shopping habits:


E-commerce has exploded.

  • Amazon sales in North America increased from $16 billion to $18 billion
  • Half of American households are subscribers to Amazon Prime
  • Improved return policy has made online shopping easy

Mobile retail is booming.

  • People used to make trips to the store, and would also make small purchases in the process
  • This changed when people were given the opportunity to do shopping prep online

America built too many malls.

  • There are about 1,200 malls in America 
  • According to Cowen and Company’s analysts, between 1970 and 2015, malls grew twice as fast as the population
  • After the Great Recession, mall visited declined between 2010 and 2013 by 50 percent, and it continues to decrease

What this Means for the Future of Banking

Banks face similar threats as the retail industry when it comes to technology, and should learn from its missteps. WIth that in mind, banks need to focus on digital relationships with customers before attempting to expand their physical branches. Banks need to use their existing data as leverage on customers and adapt to changing consumer needs and demands, while also learning more about them.

Using customer data to implement targeted advertising will be a key strategy. Omni-channel marketing is a great way to leverage this data, opening up different ways to reach customers. For example, there is an increasing number of customers who have shown that they are more comfortable making decisions over the phone. This means that banks need be consistent in their over-the-phone customer service.

Banks must prioritize forming intimate digital relationships with their customers, and using fintech is a smart investment. Fintech companies collect customer data, while also providing frictionless decision-making for customers, allowing them an easier way to manage their finances. Zikher is helping banks stay relevant by allowing customers and banks to store data and manage it properly in order to approve loans.