Bank Branch Innovation Like Never Before: 5 Brands Redefining Tradition
Sources like CNBC and The Telegraph predict that the retail bank branch will die within the next decade. Research, however, suggests this will fail to become a reality. We can’t help but agree. In fact, the market is heading towards bank branch innovation unlike anything we’ve ever seen.
As an industry slated to experience more disruption in the next 10 years than the last few centuries, there’s no denying that banking is radically changing. Traditional vendors must now compete alongside newer digital-only banks like Ally in the U.S., Tandem in the U.K., and Digibank in India. Today, nearly 30% of millennials would consider doing business with a digital, branchless bank. By 2020, it’s expected that over half of financial transactions in Europe will be made through fintech companies, a shift that’s shaping tech-driven directives like PSD2.
It’s true that mobile, social and digital capabilities have changed the game, but they won’t put an end to branch banking. In fact, 88% of customers still want the option of a face to face discussion about their banking needs, and expect that need to remain the same five years from now. When evaluating an institution for a loan, for example, 64% of customers prefer speaking to someone in person or over the phone. Research shows that even most millennials will be using branches at least two years from now.
There’s no denying that banking is evolving. However, this doesn’t signify the end of the branch. Instead, it calls for unparalleled bank branch innovation.
Not Dead, Just Different
If anything, the bank branch has been ushered into a new era of seemingly limitless possibilities. One that combines digital innovation with the reliability of a traditional branch experience. One that several key players are already capitalizing on.
Consider Bank of America’s new ATM Teller Assist, a next-gen offering that “combines the technology and convenience of an ATM with the human touch of a teller.” In the Middle East, Emirates NBD is investing hundreds of millions into digital innovation to open the first digital branch in the region targeted to millennials. In Italy, banks like CheBanca! (self-described as “the human digital bank”) manage over half a million customers with only a few dozen branches.
5 Brands to Study
The role of the branch is changing. New capabilities are being built. New expectations are emerging. So, what will this new model look like? Consider these five brands that are redefining the traditional branch concept:
- JPMorgan Chase’s Card-less Transactions
Chase customers use ATMs for 90% of withdrawals and 60% of deposits, yet still primarily cash checks with tellers. As such, the brand is evolving to streamline self-service and deliver greater bank branch innovation. For example, the company has developed new ATM machines that can conduct card-less transactions using smartphone PIN codes. The technology has been activated in four test cities including Miami and San Francisco, with 6,000 more already upgraded and ready to go. In 2012, the company also debuted tablet-esque eATMs in branches across the U.S. Unlike traditional ATMs, the machines let users withdraw $1 and $5 bills and deliver up to $3,000 in cash.
- Suncorp’s New “Concept Stores”
Under the leadership of new CEO Michael Cameron, Suncorp, Australia’s fifth biggest lender is looking to evolve from traditional retail branches to one-stop shops for financial services. Described as concept stores, these new developments draw influences from top global retailers in both physical design and customer approach. One branch location in Sydney, for example, has no teller desks or fixed machines but rather staff using laptops to work over Wi-Fi. These new stores will also emphasize zones that target specific financial activities (i.e., applying for loans, refinancing, and wealth management).
- Bank Muscat Integrates for Contextualized Offers
Bank Muscat, the leading financial services provider in the Sultanate of Oman, is implementing a strategy for complete bank branch innovation. Key service roles are more customer focused, and alternative channels improve engagement. Touch screens in branches provide both product information and the ability to directly manage accounts online. The bank also leveraged partnerships with major Omani brands such as Oman Air and telecommunications company Omantel to provide added value through contextualized offers linked to its ﬁnancial products.
- Nationwide’s Video Enablement
In response to a drastic drop in physical bank branches across Britain, Nationwide Building Society has been eyeing video to differentiate its branch experiences. As of last year, the financial institution has equipped 400 of its branches across the U.K. with face-to-face collaboration capabilities. For example, using HD video conferencing and screen sharing, customers can remotely complete the full, end-to-end sales application process with on-site specialists.
Executives claim this new model—debuted in 2013 as the first deployment of its kind in Europe—is already 30% more productive than the company’s previous decentralized model. Three years later, an impressive 99% of customers rate the bank’s video service as “excellent.”
- Bank of China’s Data-driven Strategy
As part of its first-ever smart branch, debuted in 2014, the Bank of China offers a sales area where customers can learn about products and services through various mobile, social and digital channels. The provider is also working to more strategically leverage big data analytics. By gaining insight into the real-time flow of customers in surrounding branches, the bank can work to identify problem hot spots that affect nearby unoccupied ones. In this way, it seems the bank is ahead of the curve: when asked which areas will require the most significant effort over the next five years, the majority (54%) of banking executives said, “enhancing customer data collection.”
Bank branches will remain for as long as customers want them, but that doesn’t mean providers can rest on their laurels. Strategies for improvement may vary, but the cost and operational benefits of bank branch innovation are clear. In fact, as part of a complete digital transformation, branch improvements can increase banks’ revenue by up to 55% and cut costs by up to 30% by 2020. Now that’s something we can get on board with.
IDC’s ebook “Remaking the Branch in the Era of Digital Banking” provides a deeper understanding of the branch in today’s era of digital banking. To plan your own bank branch innovation, dig deeper into the current state of the market and available solutions, including Avaya Solutions for Financial Services.
- JPMorgan Chase’s Card-less Transactions