Why the digital age might not kill off the bank branch

By Mark Aldred | 6 April 2017

The bell is tolling for bank branches. The stream of closure notices doesn’t seem to be easing with RBS announcing only last month a further wave of neighbourhoods, towns and villages set to lose their local Natwest bank. 

Some may believe that it is inevitable the bank branch will become extinct within a matter of years. This really is far from the truth as there is still a strong need for banks to have and evolve their brick-and-mortar presence.

There is an analogy that can be taken from nature for how the banks are at a painful but transformation point in the evolution of how they engage with customers. One of the most successful animal species is birds who evolved from a sub-species of dinosaurs.

In a similar way, while there will certainly be many fewer of them, the bank branch is going to evolve into a new form far removed from the traditional model. The key will be how banks make branches part of their omnichannel strategy for improved customer service experience. 

It is obviously true that people will be drawn to a bank by the ease of use and reliability of their technology, but, as in the past, it will be the human interactions that create the trust that generates enhanced loyalty and a competitive advantage for banks in the future. Therefore, when making strategic decisions about bank branch networks, banks need to base their evaluation on how effective the branches are in retaining and attracting new customers.

While customers have a strong preference for autonomy in how they bank, they also value quality of service and personalised support and advice. It is how banks can resolve both of these desires within their branches that will determine their future. 

The answer is a new breed of hybrid branch that is centred on many more self-service banking machines for a wider range of services and a stronger presence of staff to welcome visitors, assist with routine and more complex financial enquiries. Using modern technologies like touch screen self-service, kiosks with audio and video support as well as staff tablet applications will result in a more flexible and comfortable customer experience. Overall this means bank branches become more tailored and responsive to customer needs including extended opening hours, as well as becoming more efficient and more closely aligned with the modern customer’s needs. Physically the bank branch becomes more of meeting place in which visitors are welcomed and allowed to choose how they run their financial affairs. 

These new branch models are beginning to appear globally. Some banks like Bank of America are creating totally automated branches around the next generations of ATMs and other self-service machines. In Europe, more hybrid approaches are appearing. For example, the Italian Intesa Sanpaolo has created a completely new layout for its bank branches with multi-function ATMs for cash payments and recycling and assisted self-teller services ranged around a central greeting and meeting areas with break out spaces for consultations. The space is re-designed to allow customers to enjoy the wait, with lounge areas equipped with bookshelves, sofas and free coffee, as well as laptops, tablets and free Wi-Fi at customers' disposal.

Rethinking the branch around digitisation and centred on the customer can trigger innovative steps. Notably in the case of Intesea Sanpaolo, the new layout has the branch manager’s desk on the branch floor rather than hidden behind the teller line. They are also making spare space available to local community groups, or complementary services like real estate agencies.

The foundation for these branch models is how they leverage cloud and web-based technologies to have an omnichannel approach so that customers can receive the same high quality of service and awareness of their personal needs seamlessly whether in branch, on their smartphone or using a home or office PC. 

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