Why should Financial Institutions keep branches open in a digital age?

“Why should we keep branches in a digital age?” is one of many questions we approach in #ElephantinBranch: A Special Report.


We interviewed more than 40 industry leaders about Branch Transformation, and the following is a summary of that exchange, and the reasons they gave for keeping your FI’s branches open when digital and automation are becoming the norm.  



There are questions to be dissected, analyzed, and understood if we are to manage the Elephants (or the issues and challenges that we encounter during our Financial Institutions’ (FI) Branch Transformation) out of our branches.


One important question to consider is: why should FIs keep branches open in a digital age?

Here’s what industry leaders had to say.


People still end up in branch

“In the US, 60% of customers start their new account journey online, but 70% end up in a branch. The real gold in the branch is the staff. This is why customers will bypass other channels to go to a branch,” said Anthony Burnett, Customer Experience Director at Level 5.


Cash, human contact, and organic growth

“In the digital age, customers perform daily transactions on mobile and fulfill their cash needs using ATMs. Financial Institutions are able to lower the cost to serve these customers, but at the same time see customer relationships getting more shallow when they lack human contact,” said IBM Global Banking’s Worldwide Channel Transformation Leader, Danny Tang.


With less face-to-face contact with customers, branches are more critical than ever because of the role they play in maintaining and growing customer relationships.


Personal service still wins

“Consumers continue to prefer personal service. Devices can deliver cost-effective, fast assistance, but immediately available, personal service continues to be a requirement,” according to Automated Transaction Delivery’s CTO Fred Wheeler.


Stats say it’s (still) a preferred channel

Marilyn Carpenter, Customer Acquisition Strategy for Source Technologies added that stats say people still prefer branches.


“Branches have remained a relevant channel (even preferred by some) to a large enough demographic for opening new accounts, applying for loans, and for general account assistance.”


The future is “convenient consultations” a la mainstream retail


Mark Charette, CEO of Solidus said millennials are the future highest-profit segment of the banking population.


“According to surveys, around 80% of them say they still want the option to walk into a financial institution. 80% still use cash, and 64% of them still carry cash most of the time."


Competition to retain this customer segment will intensify as they reach their more profitable 40s and 50s, and it is critical that branches reflect the kind of high-tech image that millennials have grown up with. This includes data-driven design and branding as much as electronic, interactive retail and banking technologies.


The ‘information generation,’ as they are also known, will be significantly more financially savvy than their forebears. Branches will function as consultation and sales offices while smaller express deposit and withdrawal offices will cater to more basic transactions via technology, such as ATMS.


We are also seeing the emergence of ITM branches (remote video teller technology) which allow for more convenient banking and can be open during evenings and weekends. These will continue to grow in number. The fact is that branch banking must now emulate the designs and principles of the rest of the retail world, as its customer-base is poised to change dramatically.”


You can close some branches and keep others


“Not all branches are worth keeping,” said Antuar’s CEO Gearóid Power. “A branch network needs to be evaluated on its costs and benefits. Some of those measurements may be easily quantifiable in terms of the cost of associates or the rent on a property, but others maybe not so. The brand awareness that comes from being on a main street, customer satisfaction, and reduced churn from a staff member being able to explain something in person, or customers just feeling secure that the branch is there. Each FI needs to evaluate based on the customer base, their marketing strategy, and the go-to market approach.”






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