2020 was a year all of us are probably keen to forget.
From an economic and business standpoint, the two extended periods of ‘lockdown’ delivered an unprecedented body blow across all commercial sectors.
The negative effects of lockdown
Hospitality and travel experienced an existential crisis, along with large swathes of retail suffering the most dramatic economic downturn ever recorded – resulting in a succession of closures and business failures.
The grim year concluded with an announcement of liquidation from Debenhams – the 240-year-old business closing its 124 remaining stores and laying off over 12,000 staff in the process.
In the same week Arcadia group, owner of Topshop, Burton and Miss Selfridge, also fell into administration, the latest in an ever-growing line of casualties from the so-called ‘fall of the UK High Street’.
Our collective hope and optimism entering 2021 suffered an immediate setback with the announcement of Lockdown 3.
Of course, the health and safety of citizens is rightly paramount but there are steps retailers, and other businesses, can take to better equip themselves to weather their economic storms.
Most importantly, perhaps, is that there is a clear opportunity for banks to play a leading role in helping prepare businesses for recovery and return to growth.
New challenges
The fall of the UK High Street is not new news.
Excessive inflation of urban rents, changing preferences and, of course, the shift to online shopping has been negatively impacting the High Street’s performance for years.
In fact, 2019 had already been a record-breaking bad year for the sector, with store closures meaning 1 in 10 shops stood vacant across the nation, with the figure rising to 30% in some regions.
Cue the coronavirus, and the outlook for the High Street has only worsened.
With enforced lockdowns and health anxieties throughout 2020 to contend with, physical stores have lost even more of their revenues to online retailers.
The value of monthly internet retail sales in the UK had already risen from £900m in June 2016 to £1,850m during the same month in 2019. By June 2020, this figure rose to £2,350m, putting the monthly value of internet retail sales above those of the 2019 Christmas period.
This represents a year-on-year change in the value of online retail sales of around 50 percent in 2020.
Disturbingly, it has also been accompanied by a significant rise in online fraud.
The switch from High Street to digital shopping has occurred more rapidly than anyone anticipated only a year ago.
Online shopping had already surpassed off-line retail in 2018 as the most popular commerce channel in the UK, and in 2020, mobile replaced desktop as the preferred platform.
Debate about how, or even whether, to save our High Streets aside, it is in any case absolutely imperative that stores curate and improve their online offerings in order to survive.
Enforced lockdowns accelerated existing digital transformation trends, and the pandemic sharply exposed those businesses that had failed to plan and prepare for the seismic consumer behaviour shifts that were well underway long before ‘coronavirus’ became part of our daily vocabulary.
There are clearly some lessons businesses can learn to avoid becoming the next digital casualty.
One key area to address is abandonment rates. Cart abandonment has reached over 80 percent in many sectors and has reached over 86 percent for online department stores.
This begs the question, could an improved digital customer journey to reduce online abandonment have saved retailers such as Debenhams and the Arcadia Group?
How Digital Identity can help struggling retailers
So, what can businesses do to best embrace this digital and mobile move by their customers?
The obvious and commonly cited answers are to optimise sites for mobiles and be transparent about extra costs throughout the customer journey – this one is key, as surprise high shipping costs are a clear driver behind consumer purchase abandonment.
But there are also many points of friction in the customer journey that causes lost business.
For example, having to create new user accounts, long and confusing checkout processes and concerns about security all fall under the top five factors costing businesses online sales.
New customer acquisition creates a huge point of friction in checkout journeys and consumers struggle to find a balance between a smooth and convenient process and one in which they feel secure and safe.
This is where banks have a key role to play.
Digital identity platforms can provide a solution to such onboarding problems.
OneID, the UK’s only bank-backed solution, enables consumers to give one-time access to businesses to the validated data held about them by their bank.
But how does this reduce points of friction in the customer journey and convert mobile traffic to sales?
Identity solutions like OneID simplify the sign-up process for consumers to a near one-click onboarding process.
After selecting OneID as their sign-up option, consumers only need to verify themselves using their biometric login to their banking app and give their one-time consent to share the data requested by the business.
Once this is complete, all the necessary personal details from the consumer have been shared with the business and the onboard is complete.
No longer will customers need to spend time filling out manual forms or feel concerned about data sharing with social logins. Not only will businesses immediately improve their onboarding process for customers and improve conversions, but they can also be confident that they truly know their customers with bank-validated data – reducing fraud and significantly reducing new customer acquisition and verification costs.
Innovative solutions
Such a digital identity solution enables banks to create new value from offering their customer data, with clear consent, using existing Open Banking APIs – commercialising their existing Open Banking investments.
Banks can enable retailers and corporates to benefit from receiving validated digital identities, and for consumers to control who has access to their data, simplifying and securing their digital lives.
Just as businesses face an innovation imperative, so too do banks who need to look ahead at the wider role they can play as trusted custodians of finances and data in helping their corporate and personal banking customers overcome today’s many challenges.
Providing innovation to their corporate customers and secure solutions for digital consumers will provide banks a huge boost in reputation and revenues and re-establish them as leaders in our economic recovery and growth.
Article originally featured in Bobsguide.
