The Future Role of Bank Branches

Even before the COVID-19 crisis, the rising popularity of mobile banking coupled with the strained finances of banks, was putting the viability of bank branches in question. Between 2012 and 2019, the total number of bank and building society branches in the UK had fallen by ~22%.

However, in spite of this shift branches have continued to play an important role for both consumers and banks themselves. Research has shown that a majority of consumers still prefer branches for more complex financial needs. Research from data specialists CACI has found that surprisingly, the decline of branch visitors has been modest, equating to just 1-1.5% per year, with digital channels supplementing the customer experience rather than replacing it. For banks, branches play an equally important role in brand engagement, ability to offer differentiated services (e.g. premier offerings) and providing essential everyday banking needs for consumers and institutions – all of which are vital for creating loyalty and acquiring new customers. A recent study by Move Your Money showed that branch closures dampen SME lending growth by 63% on average in postcodes that lose a bank branch demonstrating the importance of branches in meeting economic needs.

So, what will the impact of COVID-19 be on the role of branches? Can banks redefine the operating model of branches without jeopardizing their reputation with customers or damaging the overall economic recovery that is so desperately needed?

However, this needs to be complemented by other strategies to ensure that consumer expectations and service standards are maintained. These should include:

• Revamping call centers and creating innovative ways to provide services outside branches: Call centers need to be scaled up to provide more personal and complex services. This requires upskilling of staff and using the latest technologies to ensure that the right data/tools are used to meet user queries quickly. Banks also need to look at innovative ways to provide services like opening more self service centers where video conferencing or interactive teller machines can assist customers without human contact and introducing secure delivery services to enable the elderly and more vulnerable to do banking at home.
• Creating a strong digital infrastructure to enable an omni-channel service: Banks need to provide more and more services (like account opening, loan/mortgage applications) online and ensure that there is a consistent customer experience across channels. This will make customers more comfortable using a broader ecosystem rather than their local branch.
• Bringing customers along on this journey: All this will work only if there is also a strong focus on educating customers on how to use alternative channels and ensuring that they can access relevant services securely and with ease.

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