When was the last time you were in your local bank branch? If you have trouble remembering you’re not alone.
From the introduction of the ATM in the 1960s to the arrival of banking apps in the last five years, financial institutions have witnessed the erosion of personal relationships with their customers. This loss of personal relationships has created a tricky situation for financial institutions as they look to sell new services, engage customers, and build brand loyalty.
While many organizations have gone all-in on a sophisticated digital strategy at the expense of the branch, a recent report authored by Tiffani Montez of the Aite Group, encourages financial institutions to reimagine the bank branch and make it a vital part of customer engagement. While consumers are using digital tools for everyday banking, Montez demonstrates the value of seeing the physical branch as a complement to digital interactions and a way of both adding value to, and nurturing, the customer relationship.
Based on research with over twenty global financial institutions including Bank of America, Chase, Capital One, HSBC, PNC, and the Royal Bank of Canada (RBC), Montez demonstrates that while customers may no longer use bank branches to conduct routine transactions, they want to connect with the bank for more complex interactions and for guidance. However, the traditional bank branch is still configured to support routine transactions and, as such, with lackluster performance there is pressure on banks to close branches to optimize short-term profitability.
In closing branches without considering the possibilities to reimagine the retail bank as a purpose-driven and profitable environment, financial institutions are passing up an opportunity to add value and retain customers. Based on her interviews with over twenty banking executives, Montez showcases how these financial institutions have transitioned from a traditional branch to the branch of the future and the essential building blocks that have enabled the change.
From HSBC’s introduction of Pepper the Robot at its Fifth Avenue branch to PNC’s “ultra-light service centers” in Dallas and Kansas City, what has enabled the change is access to high-quality data about both the bank’s location and its customers. Quality data “can help [financial institutions] determine whether to retain, relocate, or consolidate existing branch locations through tools that allow banking executives to analyze customer data and site characteristics that impact branch network performance,” says Montez.
From this place of knowledge and insight making the right move is no longer a leap of faith but part of a well-designed strategy designed to transform both the bank’s physical location and its relationship with its customers.
To learn more about how banks are innovating to transform the branch banking experience and strategy, click here.