Reports of the bank branch’s death are greatly exaggerated, though you soon might be unable to recognize the old boy. The bank branch indeed has a future, especially if one caters to specific groups or is based in certain parts of the world, SunTec Business Solutions President Amit Dua said.
Here’s what changed the bank branch
He explained that several factors conspired to change the bank branch. As the Internet spawned digital banking, it shaved the cost of completing a transaction online compared to in-person. It’s even cheaper on mobile.
Consider that shift’s significance in emerging markets where accounts are markedly smaller. Banks in India, Russia and Brazil, generate profits by reaching out to as many folks as possible. Servicing costs are crucial in these regions.
“They went after these technologies to service customers as if there was no tomorrow,” Dua said. There were statistics that every bank was presenting on how many customers have migrated from the branch to the ATM and then to the Internet and mobile.”
ATMs eliminated much of the need to talk to bank staff, but at least in the early days, you still had to go there. Neobanks rubbed that out entirely. Then came the pandemic. Many felt that was the end.
Not so fast, Dua cautioned. With digitization came depersonalization. That’s fine for basic transactions, but many feel something is missing even when it works fine. The days of branches as service and general transaction hubs for all are indeed over.
The bank branch as an empathy center
Dua sees three groups who still need the branch experience. The first is older people who are comfortable in that environment; it’s all they know. Then come the wealthy, who want tailor-made solutions. The third is the self-employed who want empathy and someone to address their business needs.
“At the end of the day, it becomes a center for delivering an emotional and personalized experience to each of these three consumer segments,” Dua said.
It takes a different skill set to deliver that empathic experience than a mere transactional one. Customers must be seen as more than the sum of the financial products they hold at that institution.
“It is not about having the opportunity to sell each time the person walks in,” Dua advised. “It’s about empathy, advice and an opportunity to build relationships and learn more about the customer. The nature of the brand changes completely from being a service- and transaction-oriented bank to one offering empathy, advice, and loyalty building.”
Fail to achieve that, and you lose your customers. When bankers change jobs, they are expected to bring clients with them. Why do those people move too? It’s because they value their relationship with the banker.
Some interesting global trends
There are some unique models in different parts of the world. In places like Dubai and the United Arab Emirates, branches can champion their brands. One might find a Ferrari in the middle of the branch, along with the latest gadgets. Someone immediately offers you a Starbucks coffee. This isn’t geared toward someone dropping off their paper route earnings.
Satellite branches have clear futures. Sometimes, they are proximity-based, so seniors and local business owners can complete their usual transactions. There is also the emerging trend of small branches in high-traffic areas like malls. They maybe offer a few ATMs and one person to answer questions.
As emerging economies grow, bankers’ profiles must change because the branch needs to change. People in these regions are learning how to handle new levels of prosperity, and banks are helping them learn how to manage their finances. Some produce videos on budgeting, credit checks and financial health. Armed with reams of evidence from more mature economies, they seek to help their clients avoid the pain produced by not paying a bill, for example.
AI and personalization?
How does AI affect service personalization? Dua sees Generative AI doing well in research, like identifying potentially undervalued stocks. Currently, it cannot make decisions, personalize, or exhibit empathy. AI can suggest to staff what you might need before you reach the counter, but what good is it if the person behind that counter doesn’t relate to you?
Rising inflation plays into personalization too. As costs rise post-pandemic, people are jittery and want better transparency and more control over their finances. What fees are you charging and why? Are they clearly visible? Some banks prioritize this when designing their customer journeys. Show customers what they’ll be charged before they commit.
“It’s about knowing the context and giving the benefit to the customer of that relationship in which both of you benefit,” Dua concluded.
Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.