I remember my grandfather taking me to his bank when I was little. It was quite an experience, a massive, open-plan office with impressive marble pillars and loads of desks with people rushing from one to the next with papers in their hands. To one of its sides, a long line of bank tellers attending to a massive queue of customers who’d be patiently waiting, for what felt like hours, to cash a cheque or pay a bill, a process that back in the day involved a lot of stamps and paper work. Back then there was almost no computing or anything similar, other than maybe a calculator. Of course, I’m talking about quite a few years back (maybe 25 or even 30), however, I think many banks (and probably some of their customers) still rely on these processes nowadays. But technology has evolved and so have customers’ expectations.
I doubt any 10 year old today, or in the future, will experience this version of banking?
Today, banking is done in an almost unnoticeable moment, while having lunch, dinner, in the middle of the night, or even during a run… More and more transactions are done on mobile devices by the customers, and this trend is only due to increase. With new technology and security features, more transactions will be available to customers, and customer-employee interaction will become less of a reality.
I think this is what banks are currently understanding and in a way, struggling with, both in the areas of physical branches and how they should evolve, and the changing role of the bank employee.
There are plenty of examples where banks are looking for alternatives on how their branches should adapt to this new reality. Some take a minimalistic approach, reducing branch sizes and minimizing the number of employees in them while relying on more powerful devices to enable transactions. Others invest in evolving their branches to a new “social” environment, where people can go in, have a coffee, surf the internet and, if needed, bank. There’s been plenty of discussion about whether banks should plan to minimize or even eliminate their branch networks, and here also we are seeing the entry of new challenger banks that operate without any branches; others believe branches are still key to their business, mostly to maintain customer retention (another big challenge of our times).
One thing is certain, Progress progresses: technology will develop further, generating even more simplification opportunities, customers will continue to adapt (and demand) the use of new technologies, all processes will become simpler and more personalized, not only in the financial services industry but in all aspects of a person’s life; and maybe even paper money will cease to exist sooner than we think…
I believe that all this is inevitable and it ultimately will mean that banks will have to move from their branches to meet their customers where they really need them. This could be a physical movement, or a “virtual” one, but people are used to having the solutions they need, at hand. Having to go and visit a branch (a shop, or even a supermarket), is a well calculated decision, it is an option; and to that end, there has to be a motivation to do it.
Therefore, I foresee an ever closer future where bank branches will form part of bigger meeting/shopping places. It could be a small stand within a mall or a shopping centre, an office in a supermarket, or even a private table in the local coffee shop! I’m sure there will continue to be traditional branches but these will be limited to a few select locations.
In any case, banks will need the right technology to be able to sustain a very different business model to what it has traditionally been so far. This technology must be mobile, attractive, and provide an easy and fun-to-use experience for customers as well as for the banks’ employees. It will provide the most robust security and the ability to do most (if not all) possible banking transactions.
More importantly, from an operations and future proof perspective, technology must be flexible and adaptable to any new development and technology device, feature, or evolution. In order to achieve this, the bank’s platform must use open technology such as RESTful services that allow seamless integration with any new technology, making it easy to integrate new features when they become available and with minimum integration efforts. The key for the platform to be successful is that it must be completely secured, preventing and rejecting any attack or penetration attempt.
But a future-ready branch is not only about technology, there will be other challenges such as logistics, processes and more importantly, people. Future banking might involve less of people coming to the branch, and more of being out there, meaning bank employees will go to the customer. Being out there will mean banks have to address some of the most complex processes in ways that will continue to serve great value. Processes that involve any physical article (cheques, cash, or items that a customer would want to include into their safe deposit boxes), will demand a great deal of logistics in a scenario with smaller, more distributed branches. Maybe this will lead into banks moving from a solely brick and mortar approach to more of an Amazon-like approach to resolve these processes? Most other processes though, are simpler to resolve as they are easier to digitize (i.e. remote onboarding of new customers, account origination processes, etc.) therefore posing even more opportunities in simplification and customer retention.
As mentioned before, a key factor to the success of this model will be the people that run the branch of the future. The new branch champion will have to be able to deal with most business processes of the bank, and therefore the right level of training will be key. And we must not forget that new generations of bank employees will be millennials, or digital natives. I believe this already post challenges in itself as their expectations when it comes to workplaces and the daily work activities is different to what traditional banks are used to.
The banking experience of today is one that is simple, quick, and efficient. Even the slightest of leaks from these 3 characteristics may impact customer retention straight on. This is an era of great challenges for banks but also of great opportunities – maybe even to make banking more exciting.
Bank goers of tomorrow may not experience vast branches, lined with tellers, but they will experience a more personalized banking experience in which they interact with their bank on a daily basis across devices, giving banks far more chances to engage and increase business.
Nicolas Grilli, is the Global Product Manager at Axxiome. Nico brings more than 13 years of experience working in transformation programs for the financial services industry. Over the years he has played many different functional and leading roles. Along with a wealth of experience working with financial institutions of all sizes and in different regions, Nico brings a strong passion for innovation & process optimisation, always striving to help financial institutions to be able to bring the best possible customer experience.