There’s been a lot of discussion lately over the future of the local bank branch. Mobile banking technology has done more than shake things up, and now that nearly every customer has a bank in their pocket in the form of a smartphone, the question is:
Are brick-and-mortar bank branches really necessary, or are they quickly accelerating toward obsolescence?
After all, it’s no secret that more than 10,000 bank branches in the U.S. have closed their doors since the late 2000s — an average of three per day, according to McKinsey & Company. While financial insiders around the world have been (loudly) predicting the death of the bank branch for the last several years, it looks like things are changing.
According to The Financial Brand, 81% of banks said they had no plans to close branches in 2018, and another 10% only planned to close one or two locations. As it turns out, branch closures have slowed substantially in 2019, and the reason for it is clear. Customers don’t want their local bank branch to close — they want it to be reinvented.
Customers don’t want their local bank branch to close — they want it to be reinvented.
Meet the Branch of the Future
The truth is, 64% of consumers still go to a branch to conduct a teller transaction at least once per month, according to a Market Force Information study, and Bank Administration Institute found that convenient bank branches is still the number one priority for both Millennials and Gen Xers.
Bank branches are still relevant — even to younger generations. The difference is, most typical teller transactions are now performed online or through mobile banking. That means that while branches are still necessary, their core function has changed.
Customers now go to banks for more personal interactions — for guidance and advice on those bigger financial decisions that can’t be completed simply via a mobile app. Banks must rethink the traditional teller and line model to become more focused on delivering exceptional, inviting, and frictionless customer experiences driven by technology and personal interaction.
The good news? Many already have.
Bank branches are still relevant — even to younger generations.
A Whole New Look
The bank branch of the future — the one that forward-thinking banks around the world are already busy creating — can’t focus on the day-to-day transactions that it used to. Things like depositing checks, transferring funds, and even opening new accounts are all easily completed via mobile apps or in-branch self-serve kiosks.
Modern branches and their employees must focus on creating an environment where customers feel comfortable, in control, welcome, and well informed. To achieve this, branches around the world are experimenting with new models that deliver far more than tellers behind tall counters. These future-focused branches offer exceptionally designed spaces that look more like an Apple Store or Starbucks than a bank branch, and they’re delivering value in truly unexpected ways.
Modern branches and their employees must focus on creating an environment where customers feel comfortable, in control, welcome, and well informed.
Connections Over Transactions
Some of the most commonly incorporated features in ultra-modern branch settings are cafés and informal meeting spaces. Here, bank employees actively approach customers to start conversations and discover how they can assist them in a low-pressure, comfortable environment, armed with tablets and wearables for exceptional and efficient service.
For basic transactions, customers are directed to self-serve digital signage kiosks. Here, they can withdraw funds, transfer cash, open new accounts, research promotions, and more. For bigger, more private conversations, they can sit down with the bank employee in the lounge or head into one of the nearby semi-private rooms.
After all, customers today typically visit a branch seeking expertise about things like investing and mortgages. According to Trevor Dryer, EVP and GM of Mirador at CUNA Mutual Group, “Branches are the ideal place for these complex conversations to take place, so banks and credit unions should rethink their branches first with a customer-centric focus.”
Powered by Technology
This high-touch, retail-style customer interaction is far different than historical bank models, but it’s what customers have grown to expect from their favorite brands. Now, it’s less about basic transactional execution and more about relationship building, providing expertise, and delivering value — and it’s all driven by loads of technology.
The most popular technologies for these new branches of the future are:
- Digital Signage and AV Solutions — From interactive digital walls to video displays that greet customers as they enter the lounge, digital signage is playing a huge role in transforming banks around the world. Digital signage helps customers learn about new offerings and even get the expert guidance they need from financial experts through video conferencing rooms. When it comes to audio hardware, sound systems enhance environments through music, and advanced sound masking technology is helping protect customer privacy during those one-on-one meetings.
- Interactive Teller Machines — ITMs are helping customers everywhere complete the basic transactions that used to require interacting with a teller — things like withdrawing funds, transfers, getting new cards, depositing cash, and more. These interactive kiosks can appear both inside and outside of the branch to provide customers with 24/7 access to the bank’s core functions. Many even connect customers to a live human banker through video conferencing for assistance.
- AI, Analytics, and Software — IoT beacons will be used to track customer behavior, and employees will be equipped with relationship-management software and advanced dashboards to gather data on how their efforts are affecting customers’ experience. Analyzing this data will play a key role in determining what’s working and what’s not, and optimization will be a big focus. Finally, AI-powered chatbots and personal assistants will continue to grow as impactful resources for both customers and employees alike, providing guidance and resources, helping set goals, and developing budgets based on behavior.
Some of the most advanced branches around the world are even taking disruptive design changes a step further. DBS’s Plaza Singapura, for example, reimagined their space to create a technology-fueled, café-style experience that features a virtual reality corner, video teller machines, and even a humanoid robot named Pepper. For a different spin, Umpqua Bank transformed their space to act more like a community center, offering free yoga classes, movie nights, spaces to sit and read, meeting rooms to conduct business, and — of course — plenty of coffee.
With digital banking dominating day-to-day transactions, it might appear like the local bank branch is on its way out, but remember — people believed something similar would happen when ATMs were first introduced in the 70s. Technology isn’t here to kill the local bank branch — it’s here to help transform it into something new and valuable to modern consumers.
Technology isn’t here to kill the local bank branch — it’s here to help transform it into something new and valuable to modern consumers.