Will Digital Kill Off The Bank Branch (& What Happens To All That Real Estate If It Does)?

Will Digital Kill Off The Bank Branch (& What Happens To All That Real Estate If It Does)?
SHARE
THIS



Is the branch dead? Billions of dollars of banking real estate may hinge on the answer to that question.

According to Elizabeth Robillard, author of the recently released Director’s report: Future Branches 2016 the answer is; “no, but it is changing.”

The report, based on four months of research, was released in preparation for the upcoming Future Brands conference in SanDiego. It advocates for change in order for retail branches to stay relevant in the digital age.

Transactions in branches are declining, with the vast majority now occurring online. “Banks are transforming their branches from transaction hubs to spaces where customers can go for education, complex banking issues, and especially where they can purchase new banking products like loans and investments,” according to the report.

“A new strategy needs to be put into place that can revitalize this piece of infrastructure to make sense in today’s digital world,” it said.

Australian bank branches have seen a slight decline in recent years.

An Australian Bankers Association spokeswoman recently said: “Over the year to June 2016, the number of bank branches in Australia declined by two per cent. This reflects changes in consumer demand, with more customers choosing to use online and mobile banking channels.”

But she maintained this does not spell the end for branches, saying branches are; “An important channel for customers to do their banking. Banks are looking at how to improve their branches to make them more user friendly and ensure they’re equipped with the latest technology, such as ‘smart ATMS’ to fast-track basic banking transactions.”

Just this week the Commonwealth Bank released a statement saying it remains committed to its branches.

commonwealth bank branch network

The bank says a $50 million investment in branches last financial year includes; “Opening new branches, relocating to areas of population and business growth and refurbishing them.”

The banking giant acknowledges a rise in its digital services and a focus on customer service, which is in alignment with the changes outlined in the Future Branches report.

According to the report it is important branches change to accommodate these new purposes because, despite declining transactions, they still remain the place where most revenue is generated.

The report says changes are occurring in branch people, space and technology.

Throughout the change “A bank’s customer needs to be the focus of its branch strategy,” the report said.

Where’s the customer need?

But therein lies the problem. When banks discuss their branch strategy the conversation is always centred around the sales opportunity. The bankers, and their advocates struggle to explain the customer benefit of a branch long term.

Likewise there is little scant evidence that the banking sector generally has genuinely asked itself whether their natural bias towards the branch networks really reflects the whims of increasingly digitally native consumers.

Who’s to say an 18 year old kid today will be the least bit uncomfortable buying a mortgage online when he’s 21.

And as retail stockbrokers in the late 90’s learnt on their rapid path to extinction, when the switch comes, it comes quickly.

Branch employees must be informed and engaged to provide these more complex services. But the question of why this is so is left unanswered.

The report identifies the challenge of a changing employment model and managements responsibility to; “make sure that longer term employees are being re-trained and new recruits are being onboarded correctly.”

The space in which the employees operate is shifting as well. Branch designs must reflect their new purpose. Advisory banks have teller pods and meeting rooms to allow tellers to assist with more complex issues. While community banks design reflects the interactions taking place, think a café or a bar.

Incorporating technology to better assist customers in branches must not come at the cost of the human element, or as the report terms it; “digitising without dehumanising.”

“It doesn’t make sense to invest in something fancy and expensive that the customer doesn’t need or want.”

Digitisation means investment in physical branches is costly and needs to be backed up by serious returns, according to the report. A change in the people, place and technology needs to reflect the changing nature of branches.

Failure to respond to these changes has the potential to send banks into a spiral of decline. Given banking’s significant investment in real estate, the question of branch viability may become a billion-dollar one.

Glass half full

Of course there is still strong contestability over the role of the branch banking, and it would be wrong to suggest the analogue world of bricks and mortars lacks advocacy,

According to Deloitte Digital’s lead partner in spatial and brand experience, Robbie Robertson, argued that branches would still be viable in 10 or even 20 years.

“Absolutely. It’s the bankers role in the branch that will change,” he said.

Robertson and his team provide intelligence and strategy to banks as they redevelop their branches to reflect their new purposes. He believes a branch provides trust, business advice and a place for businesses to connect; “you can’t get that online”.

“We see tangible moments of connection between businesses,” he said.

Robertson said he couldn’t envision a day when branches leave the high street. Instead, branches and there employees will become more specific to their customers needs; “It’s a fundamental change, but not a reduction.”

The digital shift driving the changes also presented opportunities says Robertson. He believes virtual reality would allow branches to provide more services in a smaller space. “Branches will still exist, but their physical footprint will be reduced,” he said.

This article originally appeared on B&T’s sister business site www.which-50.com and was authored by its editorial intern Joe Brookes.

Latest News

News.com.au Unveils New Homepage
  • Media

News.com.au Unveils New Homepage

Australia’s leading national news website news.com.au today unveiled a new homepage. As the gateway to Australia’s largest news website, the news.com.au homepage delivers 135 million page impressions per month. The redevelopment of the news.com.au homepage has been designed to evolve the brand into the next decade with plans to roll out continued updates across the […]

Study: Startup Mentality Defined By Culture More Than Age Or Size
  • Marketing
  • Media

Study: Startup Mentality Defined By Culture More Than Age Or Size

The lines between startups and corporates should no longer be defined by organisation size, but by the kind of culture they foster, a panel of top marketers have agreed. Some of Sydney’s top marketers – including Guzman y Gomez CMO Lara Thom, Outdoria CEO Nick Baker, Menulog’s head of marketing Tasman Page and Facebook ANZ’s […]

Cupcakes on a cake stand with sparklers
  • Media

The New Daily Turns Five

Online news site, The New Daily, the brainchild of industry super fund boss Garry Weaven and former Age and Herald Sun editor Bruce Guthrie, turns five this week. It boasts a monthly Google audience of more than two million and close to 500,000 daily subscribers. It’s impressive climb up the Nielsen news site rankings – from outside […]

Nielsen: Aussies Aged 50-Plus Spent Most Time Online With News
  • Media

Nielsen: Aussies Aged 50-Plus Spent Most Time Online With News

Nielsen Digital Content Ratings monthly-tagged data for October 2018 revealed that more than half (52 per cent) of the total time spent online consuming news-related content during October 2018 was by Australians aged 50 plus. Desktop was the device of choice for Australians accessing news stories online, contributing to close to half (49 per cent) […]

Haystac Shakes Up National Leadership Team
  • Marketing

Haystac Shakes Up National Leadership Team

Haystac, part of the BWM Dentsu Group, has announced three key changes to its national leadership team as the agency evolves to service the needs of major national and global brand clients. Haylie Marchant moves into a new national role as head of strategy at Haystac. Formerly the general manager of Haystac Brisbane, Marchant will drive Haystac’s new business […]

Virtue Announces New Key Hires, Campaigns And Partnerships In Australia
  • Marketing
  • Media

Virtue Announces New Key Hires, Campaigns And Partnerships In Australia

Creative agency VIRTUE has introduced a number of key hires, innovative campaigns and an expanding roster of clients within its newly established Sydney office. VIRTUE is the creative agency born from global youth media company VICE, and will service the whole of Asia-Pacific from three offices in Sydney, Singapore and Seoul. The agency aims to […]