In a recent article for The Times, campaigner Derek French announced he was coming out of retirement to once again fight bank branch closures. He led the Campaign for Community Banking Services for 18 years before he stepped down in 2016, stating that he “didn’t want to mislead people and communities into thinking that the tide of branch closures could be stemmed”.
With so many banks facing pressures to cut costs and increase market share, we wanted to find out the truth. So, we teamed up with ATM Marketplace to undertake some research into the future of bank branches and see whether tech could save the day.
The report “Branch Transformation for Financial Institutions” surveyed about 150 technology bank leaders across Europe and North America. The objective was to explore how advanced technology solutions are being adopted to maximise branch processes, sales and customer experience.
The results indicate that, in fact, the future is a bright one for the bank branch.
Banks investing in their branch networks
Over half of respondents (57%) said closing branches was not something they are planning over the next three years. Instead, banks told us they are investing in their networks. For example,
- 71% said they will modernise branch networks
- 58% said they will increase the number of assisted self-service devices and terminals
- 52% said they will increase cross-channel integration, whereby customers can begin a transaction on one channel and finish it on another
This is great news for consumers, especially those living in rural communities where access to cash is already limited and is further threatened by potential bank branch closures.
Self-service playing a key role in future bank branches
The study also revealed that self-service will be a key focus for banks, something that will free up tellers’ time to assist customers with more complex queries while also shortening queues. 40% of banks said they will replace or supplement 25-50% of their in-branch teller stations with self-service channels over the next three years, and 28% said the figure will be more in the range of 51-75%.
Customer experience at the heart of the bank branch
What else are banks doing to improve the customer experience?
Well, almost three quarters (73%) said they will use technology to improve how customers are greeted. Their reasons?
- 69% said it’s to offer a better in-branch experience
- 66% said it’s to better anticipate individual customer needs
- 63% said it’s to improve the ability of staff to serve customers
But in order to know how to make customers happier and drive loyalty, banks have to really get to know them and understand what they want from their bank branch, highlighting the importance of data analytics.
Even though a majority of banks currently use data analytics software or services (61%), most (83%) still plan to implement data analytics and forecasting capabilities over the next three years to gain a comprehensive view of customer banking channels and services. This will help bank technology leaders decide what else they should change in their physical locations to keep footfall high.
Unsurprisingly, we found that banks are keen on business intelligence (69%), AI and chatbots (68%) and biometric authentication (61%). They weren’t so keen on more hyped technologies like blockchain/bitcoin and augmented reality though – only 24% and 12% of banks respectively rated those as an important technology investment.
Will tech bring to the decision to close?
Overall, the study shows that technology will play a massive role in bank strategies over the next three years. Digital hubs and omnichannel banking are definitely going to transform, rather than devastate, branch banking.
It’s crucial though that banks understand and respond to their customers’ needs across all channels including in-branch much more intelligently and faster. So, alongside a rapid growth in advanced ATMs and delivery of new digital hubs, investment in data analytics is vital, especially as banks seek to better understand and predict customer behaviours.