Pundits on every side of the branch banking argument speak with great conviction about their views. The branch is dying…its inefficient…it’s evolving into a key differentiator.
It’s hard to know which prognostication is “right,” but there is one thing we do know about the future of retail banking — it’s all about client centricity. A clear movement from product focus to customer focus started in the midst of the last financial crisis and has accelerated with roughly the same societal velocity as the adoption of smartphones and other mobile technologies.
So, the question becomes, what does the customer want?
What makes this question difficult is that customers themselves often don’t know the answer until they see it. They expect banks to know what they want in terms of convenience and service levels (especially with commoditized offerings), but they also want to be surprised and delighted with new services that make it easier for them to understand various financial topics and accomplish specific goals — like creating a lifestyle they want for their families or amassing sufficient wealth for the retirement they envision.
While it’s true that a growing majority of consumers expect to access more and more retail bank offerings though digital channels, it’s also true that the desire for human interaction — especially expert advice or immediate help in case of an emergency — is not diminishing.
In fact, it appears the most innovative and strategically driven banks are deploying strategies that fully leverage online and mobile technologies to remove friction and cost from the more commoditized offerings — and redesigning their branches to provide product- and service-level differentiation through new efficient technologies and human interaction.
The expertise, products and services delivered through a personal branch experience seems to be the most effective way for banks to differentiate their brands. There is room across the digital channels for differentiation, but platforms and apps mature so rapidly today that true points of difference seem to last for a relatively short time.
Products, services and expertise delivered through a combination of self-service and human interaction provide opportunities for banks to develop deeper connections with consumers and meet their need for real-time response. For example, when a breach requires replacement of credit or debit cards, customers can walk into a branch, speak with a bank employee and walk out with ready-to-use cards in a matter of minutes. When they want to understand the security measures behind online or mobile transactions, a digital expert in the branch can walk them through the various transaction authentication technologies and provide them with digital identity tools.
Or if they have questions about investment tools or lending products, having an in-person discussion provides the bank with a way to establish a connection and build an understanding of its offerings and its brand. This isn’t to say that there’s not room for automation and frictionless experiences in the branch as well. Advanced kiosk and ATM platforms (both deployed and in development) can quickly provide a self-service option for basic banking needs and get customers in and out of the branch quickly.
So, while opinions regarding the future of the bank branch vary greatly, one thing seems certain — the role of the bank branch seems strategically essential for banks looking to differentiate on customer experience and brand value, rather than price and efficient delivery of commoditized products.