Author: Jerry Mulle
Does the rise of online and mobile banking herald the death of the high street bank branch? Despite appearances, no, we don’t think it does and branches can learn a lot from online and mobile banking.
The closure of local bank branches has been a hot topic in the UK news over the past few years. In just the last month alone RBS has earmarked 5% of its branches for closure and Lloyds has announced its intention to close 150 of its own.
You’d be forgiven for thinking that all this down-sizing means the days of bricks and mortar banking are over but the truth is more complex than that. Even after their closures RBS will still have more branches than both Sainsbury and Asda combined.
According to recent research [PDF] by Accenture, the number of customers going into a branch at least once a month has actually risen 15% in the last two years.
What’s more, 39% of consumers aged 18-24 visited their bank branch monthly in 2012. Now it’s 54%.
The number and size of local branches may be decreasing but there are still more than 67 million transactions undertaken in UK banks each week.
Branches are adapting to fill a new niche
As the popularity of online and mobile banking increases, branches are changing the way they provide services to customers.
Online banking, using a computer or tablet is typically used for routine, weekly or monthly tasks. As a result a lot of traditional, day-to-day banking activity has moved online and the transactional activity that does still happen inside branches is increasingly done with terminals.
This sort of hybrid banking that uses familiar technology in a bricks-and-mortar setting may soon extend to other types of services too.
Nationwide Building Society is using video conferencing technology in more than 60 branches to deliver specialist face-to-face advice on mortgages whilst Barclays has installed thousands of iPads in their branches which has reduced the time it takes to open a new account to just 3 minutes.
As a consequence of rising costs and changes in customer behaviour banks are adapting their branch networks. They’re moving to smaller premises with fewer staff and more ATMs.
It isn’t either/or – branches support online banking
Whilst self-service accounts for the lion’s share of banking activity there are still some things people like to do face-to-face; for example twice as many people prefer to make deposits through an advisor than through an ATM.
Deposits and withdrawals aside, the bank’s branch plays a huge role in establishing trust with the consumer. People like to feel their money is ‘somewhere’ and when it comes to discussing, renewing and setting up new financial products talking face-to-face with an advisor is still the preferred interface.
Branches and bank staff also have an important role to play in supporting online services; Barclays has 7,000 “Digital Eagles” helping customers get online and use the latest mobile apps.
By moving routine services on-screen banks can reduce costs and focus their physical resources on delivering better customer service at critical moments in peoples’ lives.
Microsoft, in its white paper on the bank branch of the future, concludes that banking channels are no longer siloed, but mutually reinforcing. Instead of playing a diminishing role, the branch can become more influential as the one channel where all banking channels converge.
The best all-round customer experience will likely come from banks that understand their customers’ behaviour and shape a variety of physical and online channels around them. However some customers will be happy to go without branches and banks who don’t offer them will be able to run leaner operations at much lower costs.
Whether banks adopt a digital-only or a digital+branch service model, customers need to experience each communication channel as a seamless, instant and up-to-date window on their finances. Whatever tasks the customer chooses to do via website, app, phone or branch, their activity must be instantly communicated to the other channels.
As other high street retailers are discovering, even a business that can operate perfectly well online is enhanced by the solidity of a physical and convenient location.
“…for a long time yet … 8 out of 10 customers will be within a 3-mile radius of a branch.” Brian Holland, Head of Points of Presence, RBS and NatWest
However, if branch services can’t match the speed of online services or if advisors don’t know what a customer did with their account online 10 minutes before they entered the branch, their value is diminished.
Different models will work best for different consumers, but allowing the consumer the flexibility to choose what method of account management they want to use, and joining those channels up, will be essential.
Image reproduced from Microsoft’s white paper, Bank Branch of the Future