The future of bank branches
Urszula Wysocka – Efma Country Manager in Poland Efma, Physical Channels Council Director, EBA Content Advisor – writes about the evolving nature of bank branches, especially with the impact of Covid-19.
The increase in popularity of online banking over the last few years combined with the effects of Covid-19 have changed the functioning of bank branches. Certainly, we have seen a downward trend in the number of bank branches, but major trends have also forced a change in the concept of bank branches. So, what will bank branches be like in the future? And will customers need them?
During the pandemic, bank branches reduced their working hours, some of them were temporarily closed, and customer visits to branches were severely limited. Certainly, customers have been "forced" to move to online banking faster, and digital technologies and cashless payments have been accepted faster than experts predicted. This acceleration was certainly influenced by several factors: limited access to branches, a decrease in the number of cash transactions, an increase in online purchases (e-commerce), a significant increase in online banking transactions (in 2020, about 20 percent of users were users who logged in for the first time), an increase in contactless payments, contact with others via videoconferencing and other digital tools, and the need to maintain social distancing.
Research carried out among banks and customers around the world has shown that a bank's customer still needs a branch - but not to deal with everyday matters related to its operation. A bank branch is needed to provide support in more complicated and complex matters. It will remain a place to build the bank's relationship with the customer, educate customers, and strengthen the bank's brand.
Many banks are still far from full digital maturity in opening accounts and other transactions. In such a situation, the customer must complete/execute the transaction at the bank branch. Of course, as the digital part of a bank grows, the number of such visits will change and customers will benefit from online banking.
SME clients also have an impact on the functioning of the branch. This is a group of customers who often deposit cash at the bank. While the Covid-19 crisis has popularized digital payments and has radically limited the use of cash, there is still a need to access cash through branches and ATM networks.
Research shows that over 70 percent of bank customers need contact with bank advisers for complex products, such as mortgage loans or investment products. As customers become more comfortable using technology, financial institutions can start providing remote adviser services to customers who go to a branch or stay at home. Banks are introducing solutions that allow a customer who goes to a branch to talk online with a bank advisor who is an expert in a given area.
Branches will always play an important role in direct experience and customer education. Thanks to them, banks can become part of the community and foster greater brand engagement. As digital channels develop, branches can personally support customers who are less familiar or comfortable with online banking.
So, what should the bank branches of the future look like?
• Their concept will certainly depend on the level of interaction between the channels of contact/customer service
• They should be designed so as to constantly change their shape and functions - thus, to meet the changing needs of customers
• They will continue to act as bastions of customer experience and brand ambassadors for seamless multi-channel interactions
• They will reduce cash handling costs while providing comprehensive product advice using digital tools and remote interaction
• They will continue to play an educational role until all their customers are comfortable using the bank's digital channels.
There is no one perfect concept for a bank branch. It depends on many factors: demographic data, customer preferences, their needs and expectations, the market, etc. However, the concepts of bank branches currently implemented in the world and viewed very positively by customers have some common features. They consist of three zones: a service zone, a zone for building relationships and educating the client, and the zone of cooperation between bank employees. These zones are connected by highly developed technology, which supports the preparation of a personalized offer for the client and quick service in a standard transaction.
The concept of bank branches will continue to evolve, adapting to the changing needs of customers, their level of education, and the development of technology in the bank. The authors of the best concepts for bank branches in the world recommend the application of one principle: "do not look for the perfect concept, introduce ideas, test, and improve."