Turning Over A New Leaf
In the coming years, branch banking will witness a revolution. With increasing adaptability shown by the youth towards technology, the future of branch banking is about to change. The focus will be on delivering more value at less operational cost
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Historically, branch banks have been the front line of customer relationship. As more customers embrace online and mobile banking channels, banks are challenged to stay relevant. Customers’ branch visits have dropped 20 per cent over the past decade as more financial transactions migrate from branch to mobile, online and self-service channels. And as customers rapidly adopt online modes of banking, branches will struggle to stay profitable using their current model. Branch banks are also expensive to operate, with the bulk of the cost going towards real estate and staffing. In this scenario, the biggest opportunity for banks is in migrating front-end activity to digital channels followed by automation of services and fulfilment processes.
But automation and technology cannot replace human workers entirely. Undoubtedly, branches offer comfort, friendly and face-to-face customer interactions that online channels cannot replicate adequately.
However, cost pressures and reduced transaction-based revenue will cause branches to downsize. This will cause branches to reinvent into three distinct formats: the pocket branch or the mobile phone; the skinny branch which would be a small footprint branch staffed with minimum employees using extensive automation points; and last, the full-service branches.
Banks are also facing competition from new players such as payment banks, and disruption from fintech companies who offer cutting-edge technology. In the wake of competition from non-traditional players, it is imperative that banks should automate and go digital.
Traditional transactional engagements involving a teller will rapidly shift to more automation and self-service technologies. Branch banks of the future will focus less on transaction-oriented businesses and more on sales, service and consultancy. The teller would be involved in an advisory or consultative approach, predominantly driving more sales.
Economics, technology, digital adoption and customer demand are pushing banking rapidly into an omnichannel age. Branch networks will become customised and in many cases, traditional branches will be replaced with leaner and smart self-service branches.
Brett King, the best-selling author of BANK 2.0, wrote in his blog Banking4Tomorrow, “It is conceivable that all the transactional elements within a branch will be moved to automated banking with electronic banking centres, automated branches, ATMs, or the Internet within the next five to 10 years. What then is left? The face-to-face, value-add of a real, live human interaction.”
In the foreseeable future, banks will add more automation points within their retail branches to create cost-effective retail-centric banking operations. Undoubtedly, the biggest differentiator in the bank of the future will be the professionalism and knowledge exhibited by the front-line staff of the branch.
Self-service kiosks will become an integral part of the business, handling a variety of transactions such as cash and cheque deposit automation, account opening, card issuance, etc. The account opening and card issuance processes can be completely automated and the entire process will be of just a few minutes. The kiosks will provide personalised video conferencing sessions to help the bank to reach out to far-flung locations that are economically unviable for running a traditional branch.
In the coming years, branch banking will witness a revolution. With increasing adaptability shown by the youth towards technology, the future of branch banking is about to change. The focus will be on delivering more value at less operational cost.
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