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As consumer banking habits evolve, financial services institutions are rethinking the traditional branch model.
The number of bank branches has dropped a lot in recent years, with nearly 2,000 bank branches having closed in the UK alone. The shuttering of branches is mostly because of reduced footfall and increasing digital banking usage. Changing consumer expectations is seeing customers wanting faster, more convenient service, with apps offering 24/7 access and a more personalised approach.
However, many customers still value in-person banking and there are certain elements of banking that simply can’t be completed digitally or work better when handled face-to-face. Cash withdrawals are also rising, with these increasing by 10 percent in 2024 compared to the year before, proving the need for physical banking services is still prevalent to some extent.
This mix of banking needs across society has led to the rise of the hybrid branch, coined the branch of the future. By blending digital capabilities with human interaction, the hybrid branch offers the best of both banking worlds to fit the needs of every customer, no matter their preference.
What is a hybrid bank branch?
A hybrid, or “phygital,” branch mixes physical spaces with digital features, creating a combined, multi-channel experience for customers.
The model uses self-service technology like ATMs, kiosks, and video tellers to handle routine transactions quickly and efficiently. This happens alongside on-site staff who can help with more complex or high-value services from mortgage consultations to fraud support.
The automation of certain services also enables staff within the bank to provide advisory services and be able to up and cross sell to customers, keeping a human touch for customers who value face-to-face help. In this way, branches can operate with a smaller footprint and lower operating costs, while maintaining a local physical presence.
The key technologies driving branch transformation
There are many technologies which are enabling this hybrid branch model, including:
- Automation and artificial intelligence (AI): Internally for banks, AI automates repetitive tasks and transactions, with AI-powered chatbots and virtual assistants playing a central role in delivering tailored services to customers. These chatbots can provide constant support and can handle routine inquiries and transactions. Through this, customers are provided with immediate support, and it frees up time for humans to work on more complex enquiries.
- Machine learning: At the same time, machine learning analyses data from all channels to deliver real-time insights, create hyper-personalised marketing strategies to target specific customer segments with tailored promotions and offers, maximising customer engagement. By having a deep understanding of each customer and analysing transaction histories and spending patterns, it creates a comprehensive picture of the customer.
- Self-service kiosks and smart ATM’s: Self-service kiosks and smart ATMs help customers with account opening, loan applications, cheque deposits and card management. These machines speed up processes and wait times for customers, with smart ATMs able to handle more complex transactions than traditional cash machines. Moreover, cash recyclers within modern ATMs automatically process customer deposits for withdrawals, streamlining cash handling.
- Video banking: By integrating collaboration through video banking, staff can remotely assist customers at self-service terminals when needed, providing a human touch to services. This hybrid model offers self-service autonomy backed by expert guidance.
The benefits of a hybrid banking approach
By leveraging a hybrid banking approach, and blending a digital bank branch with physical services, financial services organisations can benefit from increased efficiency across their operations, whether digitally or in-person.
They appeal to a wider audience across generations, from tech-first digital banking users to those who still value personal interaction, and can meet urban, rural and remote customers alike.
With a mix of self-service, automation and personalised service, banks can enhance customer experience to attract and retain business, with customers able to choose how they’d like to interact. The implementation of technology like biometric authentication can also increase security and increase consumer trust.
By strategically blending people and technology, this approach delivers the best of both worlds, digital efficiency paired with a human touch.
