It seems like we have been talking about the end of branch banking for quite some time – it’s always on the horizon, but never here. Now, according to a recent Accenture report, more than 50% of UK customers use a branch every month. Reported on July 14 by The Telegraph, the article notes that 21% of customers use a branch at least once a week, up from 12% in 2012, while 52% use a branch at least once a month, up from 45% two years ago. Despite many predictions to the contrary, these numbers do not seem to indicate a conclusive end to in-branch banking.
The research was the result of 3,604 interviews with UK consumers, and among other findings, the research notes that there is a growing subset of consumers who would be happy to only use online banking, or at least could do without call centres and the like. Somewhat surprisingly, the 18-24 age cohort was the least receptive to using an online-only bank (22% would consider), while the 24-35 cohort was the most receptive (33% would consider). Unsurprisingly, the research notes an increase in online and mobile usage for behaviours such as account balance updates and payments. One would be forgiven for assuming that this increase in online channel usage, particularly among the younger, more digitally-inclined generations, would correspond to a decrease in branch demand. According to this research, that is not the case – branches face steady or increasing traffic, with support among the youngest age cohort, at least in the UK.
Customer behaviour is changing
Regardless of the findings in this new survey, it is clear that branch banking – or the behaviours and needs of the customers who use branches – is changing. We recently published an article in our Journal The Relationship Banker entitled “Designing the Bank Branch of the Future,” that details some of the ways banks are responding to this new challenge, and more importantly, how they can deliver a transformative customer experience while realizing increased profitability at the branch level. For example:
One example of a bank looking to create the branch of the future is Bank of America. They recently announced they are adding video teleconferencing to 500 branches, allowing customers to connect face-to-face (virtually) with investment, small business and mortgage experts, even if those resources are not available in-branch.
It’s a simple example, but it illustrates how a bank can deliver improved customer service by making specialized resources available, while simultaneously improving cross-sell and decreasing or at least spreading the cost across a larger customer base.
‘TED’ for banks: Technology, Experimentation, and Design
The article covers three ways banks are creating the ‘Branch of the Future’ – through technology, experimentation (through innovation labs), and design. Call it ‘TED’ for branch banking. Another example of transformational customer experience that banks are exploring is relationship-based pricing:
While improved value through service is the outcome banks want in branch redesign, middle and back-office software can impact several customer centric variables, including relationship pricing, offering, and onboarding. There are two elements we should look for in this technology: first, it has to increase the tangible value a client receives, and secondly, it has to improve the in-branch experience. A clear example that delivers tangible benefits is relationship pricing. If you consider the branch experience, the power of in-person, on-demand pricing, delivered through a shared experience like a tablet, takes relationship pricing to another level.
While it is true there are many disruptive threats to ‘traditional’ banks, it is heartening to see so much innovation in an area that was previously considered stagnant. From leading regional banks like Umpqua Bank in the Pacific Northwest, to global powerhouses like JPMorgan and BBVA, we’re seeing massive change, perhaps even a ‘renaissance’ at the branch level.
To learn more, download the article, or become a subscriber of our quarterly publication, Relationship Banker: Journal of Product and Pricing Lifecycle Management.