The future of the branch: How coronavirus has led banks to reassess the value and purpose of local banking services

By Brian Holden, Director, Financial Services at SAS

For years, we’ve heard that branch banking is on the way out. Banks have been focused on the idea that younger generations want to do everything online, and digital transformation initiatives have centred around creating seamless user experiences on web and mobile and a truly networked society.

At the same time, visiting the local branch has been synonymous with manual processes, paperwork, inconvenience and inefficiency. And that’s not just the perception of customers—it’s what the industry thinks too. Over the past few decades, if you were looking to build a top career in banking, you would look to the skyscrapers of Canary Wharf, not the branch on your high street.

Bringing the human touch back to banking

But how quickly things change! Over the past few months, COVID-19 has confronted many people with a prospect of financial distress that they could never have imagined at the start of this year. And despite all the investment in call centres, online banking websites and mobile apps, the digital infrastructure that banks have built over the past decade hasn’t been the panacea that everyone expected.

Banks are realising that customers don’t want to do everything online after all. When their livelihoods and businesses are threatened, they don’t want to wait on hold with the call centre—they go to their local branch because they know they’ll get an answer. And when they’re really worried about money, they want personal advice and face-to-face support from a real human, not just a set of recommendations on a website.

As a result, the crisis has shown the branch in a completely different light: it’s not on the periphery, but at the heart of the banking community.

That’s not to say that digital banking has failed, or that digital investments have been wasted—it’s just that the crisis has highlighted something that should have been obvious all along. Banking isn’t just about processing financial transactions; it’s about helping people live the lives they want to live. It’s about making banking simple, safe and rewarding. Nothing is more personal or more emotive than a small business owner’s dreams or a family’s financial security.

We live in a network society, that’s true—but the network is fundamentally built on human relationships, not technology. Bank branches are critical nodes in that network. You can’t extract those nodes and expect everything to function in the same way. So instead of trying to invent some new means of personal banking interaction online, why not use the ecosystems and talent we already have, and give the branch its due as a trusted focal point for the local community?

From central to local

At the same time, those city skyscrapers no longer seem to be gleaming quite so brightly. Although security and regulatory compliance considerations have historically made many banks resistant to the idea of allowing employees to work from home, the pandemic is forcing them to push those boundaries.

With the ongoing risk of contagion, people are no longer willing to spend several hours a day packed like sardines into a tube carriage just to get to the office—and this is a situation that may continue indefinitely.

Under these circumstances, the branch begins to look like an attractive option not only for traditional branch-based functions, but as a decentralised workplace. By providing a secure location where employees can access bank systems, it eliminates the compliance concerns of working from home, while ensuring that staff aren’t obliged to commute into central offices unless they really need to. Moreover, with the cost of a desk in Canary Wharf estimated at around £100,000 per year, there could be significant cost savings from moving to a more branch-based model.

This isn’t just blue-sky thinking—it’s something that major banks are already actively exploring. Jes Staley, Group Chief Executive of Barclays, has gone on the record about rethinking the balance between central and local, potentially enabling investment banking and call centre teams to work from retail branches. With around 70,000 Barclays staff currently working from home due to lockdown, he told the BBC: “There will be a long-term adjustment to our location strategy. The notion of putting 7,000 people in a building may be a thing of the past.”

Finding the right level of automation

However, if we do see a shift towards more of a hub-and-spoke model, with more responsibility shifting from central office to the branch network, branches can’t stay locked in the past. The in-branch experience needs to be just as simple, fast and seamless as the web or mobile experience should be. Customers won’t tolerate queues, paperwork and manual processes, and they’ll expect consistent service regardless of how they choose to interact with their bank.

Offering the right advice and support to each customer across all channels is a challenge that can only be solved with the right combination of people, processes and technology. Essentially, you need to find a way to make the right information available to make the right decisions at the right time and embed those decision support mechanisms into all your customer-facing business processes.

The value of intelligent decisioning

At SAS, we call this “intelligent decisioning”—empowering humans with real-time insight through artificial intelligence and data-driven decision support. By adopting an intelligent decisioning fabric, banks can either automate decisions completely or provide recommendations that customer-facing staff can act upon instantly. This intelligent level of automation puts human expertise back at the heart of banking: it clears away the routine decision-making and frees up time for advisors to focus on the more complex cases, where their expertise is really needed.

An intelligent decisioning fabric is vital for any bank that aims to provide customers with truly personalised service either in-branch or via the call centre during the current crisis, when many customers find themselves in unprecedented need of their bank’s support.