Pure Internet players are looking for a physical footprint
It would be a mistake to believe that all physical branches will or should close because a vast majority of services can be completed at home or on the move, thanks to mobile apps or websites. The best proof for this is that the biggest pure internet players are all currently seeking to rebuild a physical footprint. They see a need for customers to meet trained experts and get personal answers to their questions, and they recognize that customers need to touch and feel products before they can make a purchase decision.
The bottom line is that when organizations like banks come from the physical world and move to digital, they really should think twice before trashing such a precious asset like physical branches. Because in many cases those digital brands that don’t have a physical footprint would die to have one.
Physical channels and digital channels are complementary, not competitors
Banks’ digital transformation efforts are clearly bringing new customer experiences on digital channels, and that implies that many services that used to be delivered at the branch could be phased out. Instead, bank branches need to be re-thought, and to stop delivering services that can be better delivered via digital channels. However, it would be a mistake to assume that all bank customers have access to such digital channels yet, or that all customers have the education or willingness to adopt such rapid changes. So the physical branch still need to support those customers who are not yet comfortable with new technologies.
More importantly, and beyond the mandatory support for customers that would suffer from digital exclusion otherwise, the physical branch is the opportunity to bring personal advice and custom services into a new dimension. Just like the need to touch and feel products, consumers need support for their own personal financial journeys. Today personal banking is provided only to VIP customers. The future branch, by doing fewer day to day accounts operations, could focus more on the individual journeys for a broader range of customers. Kiosks can take care of basic services, while trained financial advisors can provide deeper personalized support to customers.
A physical footprint calling for more commercial impact, beyond traditional financial services
Any type of business that is fortunate enough to have assets such as a well-known brand, famous logo, and physical branches that customers are used to would be foolish to waste them. So the solution may be to think about what else, beyond traditional banking services, banks could offer to make use of such precious assets and physical locations.
For many consumers, banks are their most trusted brand, with a track record in managing sensitive information with total privacy protection. It would be impossible for most industries to build such a strong reputation up from scratch. So the real question about the future of bank branches, beyond the new mix of financial services, is what partnerships, products or services could benefit from this existing footprint, while offering banks coherent business value. Finding the answer to this will clearly be a major driver in helping to reposition the bank branch.
In the weeks ahead we’ll look in greater detail at how banks can reimagine their branches and what digital services work best in a physical environment. In the meantime though, you can check out our dedicated webpage here.