Branch banking

Is branch banking a thing of the past?

Digital Branch
Digital Transformation
Change is here, more is coming. Digital banks and fintech startups have brought disruption into the banking industry. There has been a dramatic change in the traditional banking system as banks feel the pressure to match the innovative solutions and services offered by new fintech startups.

On the customer side, the mobile platforms are enriched to provide a variety of transactional features as more and more customers now prefer banking on digital channels. The majority of the population doesn't want to take the time to visit a branch and wait in line. The questions then arise, "What does the future look like for branches in the banking ecosystem? Is branch a thing of the past?"

Surprisingly, the answer is Not Just Yet! There are still many customers who continue to see the value of branches. When we look deep into demographic details, customer preferences and trends, we clearly see that branches remain a relevant part of customers' financial engagements.

Let's take a look at some statistics and consumer responses from the Asia-Pacific region for instance. While the internet penetration has taken the Asian market by storm, the culture of trust remains the main factor influencing customer behavior. Traditionally, the region has been known to value trust and personal relationships the most. This also applies to their financial handlings; half of the consumers still prefer face to face interactions in branches. (PwC 2018). 

Similar trends are recognized in the Australian consumer behaviors. A PwC Consumer survey* identified that 59% of Australians still prefer branches as their go-to channel when it comes to loan products. So much so that Australian banks chose to re-open branches. 45% of customers who responded to a KPMG survey* selected branches as their go-to channel for home loan applications. The statistics clearly show that for Australian banks, where home loans for a total amount of $21 billion were issued in 2018, losing the branch channel is not an option (KPMG 2017).  The trend continues with a major impact of branches on customer acquisitions for Checking and Savings accounts (58%), brokerage and investment accounts (43%) and financial advisory services (37%) (PwC 2018).

According to another recent study conducted by Bain & Company*, globally 65% consumers are influenced by the presence of branches in their neighborhood. The branches or let's just say the assisted channels with human presence have high value when it comes to meet with the customer's rising expectations. The study also shows that in the US, most of the customers choose channels where they can interact with humans.

While branches maintain their strong position in the banking ecosystem, the operational costs are a serious concern for most banks, especially in a highly competitive financial landscape. The challenge is to find a good balance between maintaining branches cost-effectively while offering high service capabilities and digital offerings. This is where digital teams in a bank need to consider how to shape their digital journeys. An answer to this challenge is VeriPark's Customer Engagement Suite. The Omni-Channel Delivery, Customer Engagement and Branch Automation solutions bring a unique set of offerings that not only help banks to reduce interaction cost but also help to become more customer-centric. Collectively they provide the right tools for the banks to elevate customer experience. 

*Sources :

  • KPMG (2017) 'The Australian home market, winning the fight for customers'
  • PwC (2018) 'PwC's 2018 Digital Banking Consumer'
  • Bain and Company (2017) 'Evolving the Customer Experience In Banking'