Over the past 20 years, we have seen how social, mobile, analytics and cloud (SMAC) technologies have affected hundreds of banks, large and small.
These innovations have transformed the way in which banks handle money and underwrite loans, gauge real-time demand, engage with current and prospective customers and deliver goods and services.
But digital banking encompasses more than just web and application experiences.
It includes the way in which banks seamlessly blend the physical and virtual touchpoints needed to create a consistent omni-channel experience. What better place to do that than within the branch?
Branches will continue to maintain an important role in acquiring, retaining and serving customers across digital and physical channels. Here’s why, how, when and where.
Location still matters
While the boundary-free workplace is alive and well, consumers still value a retail banking presence. In fact, 80 per cent of consumers say branch location influences their choice of bank, according to a study by SNL Financial.
Consequently, banks that have attempted a ‘branchless’ approach or reduced their footprint too quickly have experienced brand erosion and undermined the ability for customers to complete complex interactions and transactions.
Of course, not all locations are equal. To distinguish the hits from the misses, banks can use analytics to identify large concentrations of high-touch customers and examine the cross-channel behaviours of millennials and digital natives.
When branches beat digital
When it comes to depositing, transferring or withdrawing common denominations of money, branches are no longer the go-to option. For that, consumers have smartphone apps, secure websites and strategically placed ATMs.
For everything else, customers head straight to a branch. These are useful for new account openings, point-of-sale services and hard advertising.
They are the only game in town when it comes to the in-person support needed to resolve claims or provide advice on complex, high-value transactions such as loans, mortgages and retirement investments.
This may change as technology improves and millennials become the majority of customers. But the impact will be felt several years (if not decades) from now.
Until then, branches will flourish, continue to provide credibility and remain business-critical to banks.
With branch traffic diminishing, careful analysis is needed to make economical decisions on viable locations and staffing needs.
This is where analytics can give banking executives a better understanding of changing demographics and user experience demands.
Over the next 10 years, banks will require 30 per cent fewer branches and see a 40 per cent reduction in branch real estate, according to industry gurus.
To fill the void, banks will deploy more powerful ATMs and digital kiosks to replace the majority of teller functions, particularly in low-traffic branches.
Customers will be encouraged and coached to frequent self-service digital cafes, which are already replacing branches in locations where leases or office space aren't easily exited.
What the future looks like
Fewer, smaller, smarter and more open: That's the future of retail bank branches.
Instead of stationary tellers standing behind barriers, roaming bankers will move from one location to another, depending on customer need. More automated kiosks and digital signage will be put in place. Less transactional work will be performed by personal bankers in favour of high-value sales and financial advice.
For high-touch customers, banks will turn more and more to customer relationship management software to improve return on investment (ROI) at expensive physical channels, from tracking and funnelling their interactions, to automating the appropriate services.
Some branches have even experimented with geo-location services to contextualise in-person appointments after identifying customers via their smartphones.
Clearly, this is just a glimpse into the future of branch banking. Since not everything can or should be done digitally, branches will continue to play an important role, albeit in limited and smaller-scale doses.
Whatever happens, both banks and customers stand to gain, so long as the evolving services can be accomplished flawlessly between both digital self-service and relevant branches.