Tony Virdi, VP and Head of Banking & Financial Services, UK & Ireland, Cognizant
The number of branches operated by major banking groups in the UK has halved over the last 20 years. In fact, Britain’s banks closed more than 600 branches across the UK between April 2015 and April 2016. This is hardly surprising as more and more people move online, often mobile-first, to complete most of their banking transactions and check their accounts. The rapid adoption of virtual banking and self-service has led many to question the role of the bank branch and whether it is still needed today. Of course it is, but potentially in a different guise to that of the past, and even for different uses as banks still want to play an important part in helping their customers access services the way they choose to. Amazon, for example, has partnered with Barclays to use its branches as collection points, showing how bank branches are diversifying.
Rise in mobile banking accelerates branch transformation
While customers visited their bank branch 427 million times last year, this represents less than half of the 895 million logins to banking sites on a mobile app, according to consultancy business, CACI. Forecasts actually suggest that the number of branch visits is expected to fall to 268 million by 2020, while mobile app usage is set to reach 2.3 billion logins by the same year.
This rise in mobile banking has not only changed how we bank and for many people, removed the need to visit a bank branch often, but it has also changed the times that we do so. Gone are the days of nipping into the bank branch during your lunch break or early Saturday morning before it closes. According to RBS, the busiest hour for banking by its customers is between 7am and 8am (before most branches open), when customers access their mobile banking account on their commute to work.
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This flexibility to bank from any place at any time has completely transformed the banking sector and how bank branches are set up. ATM’s are a great example of this flexibility as in the UK you can draw money from any banking ATM not just the one you bank with, without charge.
The ongoing shift to a mobile-first approach means banks are developing dedicated mobile products to improve the customer experience and complement other services. For example, many banking apps allow you to pay your contacts using their mobile number rather than an account number and sort code and will also send you alerts and reminders when payments are due. For banks today it is all about enabling the most optimal customer experience.
The role of the bank branch today
According to HSBC, in the last four years the number of customers visiting branches in Britain has fallen by about 40 percent and more than 90 percent of customer contact with the bank is now conducted via the phone or internet. However, the use of digital technologies and the rise of omni-channel services will not make bank branches extinct but will accelerate their transformation to digitally-led customer advice centres.
We cannot underestimate the continued demand for visiting bank branches. According to a survey by ComRes, approximately 70 percent of Britons still say it is important to have a branch close to where they live. Aside from demographics, this comes down to the fact that banks hold a very important possession – money – and we do not want to be left without someone to talk to and to discuss potential loans or transaction issues.
In fact, RBS and NatWest are expected to spend £400 million on branch refurbishments this year –and the look and feel of these branches will be very different to those in the past. Barclays have introduced a Biometric reader in branches which allows corporate clients to access their accounts through their fingerprint rather than password or pin. And, as some banks continue to invest money in bricks and mortar, branches are dramatically changing their role to become centres for sales-oriented advice, or complex transactions that are not suitable for self-service rather than service-oriented transactions. Nowadays, we speak to bank staff equipped with tablets able to access bank accounts and answer queries instantly, rather than sit down and fill out paper forms to open a new account or check transactions.
But this is not the only way technology has transformed the bank branch. Today, rather than meet in store, mortgage advisors, for example, can discuss complex financial services with customers in-person via video. Rather than book an appointment at a branch, the customer – at a time of their choice – can be guided through an application using their preferred method of communication; e.g. tablet or phone whilst they can be sitting on a sofa at home.
However, interestingly while some banks are preparing for bank refurbishments, others have put different measures in place to continue to offer customers face-to-face contact. For example, HSBC has formed a partnership with the Post Office and Barclays is working with supermarket chain ASDA to offer banking services outside of the traditional branch. This is similar to ways of working in Europe, where banking services can often be found in in coffee or book shops.
As we look to the future, the continued adoption of automated self-service systems, biometric technology and video and voice recognition software will dramatically change the bank branch in the years to come. Banks need to act now and plan their bricks and mortar strategy accordingly to ensure they do not fall behind the digitally-focused competition. Without doubt, convenience, effectiveness and quality service will still contribute to banks winning in the digital age.