Hello bank! farewell branches

Any large bank with cumbersome legacy systems would do well to copy the approach taken by French major BNP Paribas to increase engagement with the next emerging cohort of young customers.

 As Xavier Dumon, marketing director for Hello bank! Belgium, explained at a media briefing yesterday, the "pure mobile" bank was launched by BNP into the Belgian market in May 2013 as "a new way of banking."

 The intention was to set up a purely mobile bank and, rather than being a disruptive play, this quickly became a way to increase customer engagement and reduce the churn rate of customers leaving the parent bank.

 "Customers needed to download an app to begin enrolment. We were aiming to attract new customers in the 18 to 35 year age group and to retain existing customers," Dumon said.

 Dumon said that BNP Fortis - the parent bank in Belgium - was seen as a business and commercial bank.

 With Hello bank! having been in place for up to two years, Dumon claimed churn has reduced and percentage of assets under management increased across the group, although he was reluctant to provide many hard numbers.

 One statistic freely quoted was that Hello bank! in Belgium has 350,000 customers heading towards 400,000, and 70% of customers do more than ten transactions per month.

"That's really active for youngsters," he said.

 The bank was also making efforts to attract and convert website traffic into customers "in a progressive way". Among its strategies was to engage through education, such as commenting on university students' analysis, through partnerships such as sponsoring music festivals, equipping trams and buses with free Wi-Fi or working with student consulting boards.

 "The digital bank has a role in educating young consumers, to bring them in to the bank in a very easy way," said Dumon.

 For instance the contact centre in Belgium has 20 people with their own Facebook and Twitter accounts with which they answer questions personally from customers they speak to.

 Hello bank! is a very much like a plain vanilla retail bank in digital format. Dumon said they offer a savings account current account credit prepaid and debit cards, along with personal loans.

 Among its future product lines, the bank is working on having just one mortgage product before the end of 2015, and a strategy to redirect customers to the parent company if the mortgage on offer was not for them.

 Similarly, Dumon said Hello bank! was working on a pension fund option for its "members" but also hinted this was subject to IT resource priorities at head office in BNP Paribas.

 There are also plans afoot to offer crowdfunding via the Ulule.com French platform next year, but it will be reward based rather than offering equity to investors.

 Dumon also said that the pace at which the digital bank is running has changed the dynamics in the main bank. Hello and its peers are stretching the banking regulators and lawyers, forcing the rest of the bank to look further ahead than otherwise might have been the case.

 Initially the bank was launched with the tagline "we are the bank in your app". However, that scared too many people who asked, "what happens if I lose my smartphone - that means I lose my bank?" and "what about security?"

 Part one of the strategy has been to acquire new customers; the next part is to increase awareness without resorting to further - and expensive - above the line advertising campaigns. The next stage will be to shift customers to products and to increase share of wallet either through Hello bank! or through redirecting them to the main parent bank, BNP.

 And Dumont said his biggest risk at this stage is that the head office at BNP will not allocate enough resources internally to move as fast as Hello bank! wants to - understandable in the light of new laws on the way.

 The new data management laws that will apply to European banks and other businesses may, for instance, limit lifespans for cookies to one month.