The COVID-19 pandemic has radically changed customer behavior and banking operations. Some of those shifts are likely to be permanent. For example, the latest McKinsey global consumer sentiment survey shows that bank customers, in just about every country, have significantly increased their use of online and mobile banking for day-to-day transactions, such as paying bills, rather than visiting a branch.
As parts of the world start to tentatively emerge from the initial stage of this crisis, what does the future hold for those bank branches? To answer that, many banks are now urgently looking at how to optimize their branches to give customers the advisory services they value. Based on the feedback we've had from our international bank customers, we have identified five key strategies.
1. The branch isn't dead, but it needs to be re-born
The number of branch visits is likely to increase as lockdown restrictions are eased. However, it's impossible to say by how much. Some people will be more risk-averse than others and not return to branches at all.
But, bank branches are still relevant and valued by many customers. There's also likely to be pent-up demand for face-to-face advisory services. With social distancing being the 'new normal', branches will need to look and feel different.
Branch re-designs will probably involve more self-service terminals for customers. We do not foresee a rush to return to glass screens between customers and banking advisors, although it is a possibility for cash transactions. However, physical distancing of customers, and between customers and bank staff, is a must.
Banks will have to adopt queue management systems to ensure people do not gather in groups in their branches. Timed appointments with an individual advisor are an effective way of organizing this process. Customers could even arrange those appointments in advance via their mobile banking app, completely remotely and contactless – and track them in the app, in the branch or outside, limiting the need to wait physically in the branch to be served.
Good hygiene and respect for other people's safe spaces will be the order of the day. We are likely to see branch staff work stations spaced further apart (probably at least 3-5 meters). Advisors and customers meeting at these 'isolated islands' will need hand sanitizers if they have to deal with any paperwork but, ideally, branches will move more towards authorization via biometrics, mobile, card or PINs.
2. A true omni-channel approach – with more efficient use of time spent in branch
Customers will still want to use the services of the branches, as they demand human interactions for major financial decisions in their lives or for complex financial matters. They want to get personalized advice and discuss the long-term and higher priority products, such as investments and mortgages. But that doesn't mean digital experience should be left at the branch door. It's unlikely they want to spend a lot of time on administrative tasks.
For that reason, banks need to adapt their processes and give their branch advisors the tools to communicate with the customer both digitally and during the branch visit. For remote communications, the customer should be able to use secure channels for electronic document signing, document upload and electronic communication with 3rd parties.
For on-site branch visits, branch staff should focus on productive and efficient meetings with the customer - in an advisory role – and minimize the time spent on filling out forms, printing and signing. All administrative tasks should be fully digitalized and the need for personal contact and paper documentation for sales and servicing tasks minimized.
When customers can use digital channels to change their address, loan duration or card limit and can simply upload notary documentation for a mortgage, regulatory T&Cs and consent management forms, it frees up time for staff to focus on high-value interactions.
In terms of branch roles, this will mean a switch from cashiers to sophisticated advisors, supported by the ability to communicate, maintain and deliver services to clients remotely. Banks that will manage this – and hide the complexity with a powerful branch automation solution – will be the winners.
3. The acceleration of online and contactless payments
The pandemic has already accelerated the transition to online shopping and contactless payments in physical shops. In Mastercard's global consumer survey, 79% said they now use contactless payments for everyday shopping, citing safety and cleanliness as their reason. This trend is definitely here to stay; almost all (74%) said they will continue to use contactless after the pandemic is over.
Banks can take this opportunity to increase card penetration and usage by communicating these health benefits to customers. You may also need to reassure some customers of the security and reliability of card payments, both online and in physical shops. This might involve reviewing complicated 3D secure procedures (7-10 digit codes are not customer friendly and don't increase security significantly).
Most customers find it more convenient to deal with card servicing issues, such as increasing their limit or changing their PIN, in an online or mobile banking app. Similarly, more SME customers are likely to switch to electronic or online invoicing and banks will need to support quick and straightforward payments of electronic invoices.
We will continue to see this significant shift in behavior with more people expressing a desire for contactless payments. However, in times of crisis, many people rely on a basic reserve of cash at home for emergencies. As such, banks still need the infrastructure to support cash withdrawals.
4. Dealing with cash in branches
There will still be a need for cashiers and cash handling in branches, which means banks will need to adapt to reduce the risk of infection. In high-frequency locations this is likely to mean installing more cash deposit ATMs or dedicating one or more places for highly automated, minimal touch cash handling, possibly separated by safety screens. In smaller branches, it may be possible to equip all advisors with mobile safes.
Counting large cash deposits after branch hours will also become the norm. This will require additional security, such as having two team members count the cash and verify the amounts while under camera surveillance. Staff will need to maintain strict cleaning disciplines, using plastic gloves, sanitizers and masks during all cash transactions and hand washing after each cash handling operation.
5. Large presence with enough space in branches
Ideally, banks should still be present in high footfall areas to serve their customers, but with a high level of branch automation and more space between working places, more privacy and a higher sense of safety while delivering the advice.
This should not mean less branches or less coverage – customers will still expect their bank to be conveniently reachable and branches are an important part of the mix for high-value products.
In summary, successful branches will be those where customers and employees feel safe. The branch of the future is still likely to involve advisors serving customers, but in a well-spaced, ventilated environment with strict hygiene standards. The smart use of technology to maintain social distancing, while making customers feel welcome, will be a key factor in that success.
You can find out more about how banks are adapting to the 'new normal' as COVID-19 lockdown measures start to ease in our interview with Esra Beyzadeoglu of Alternatif Bank.
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