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

Pooled Energy Appoints Magnum & Co And The Wired Agency
  • Advertising
  • Marketing

Pooled Energy Appoints Magnum & Co And The Wired Agency

Swimming pool electricity retailer Pooled Energy has appointed Magnum & Co and sister agency The Wired Agency to its roster, following a competitive pitch. Magnum & Co will handle Pooled Energy’s social media and PR, while The Wired Agency has been appointed to manage the company’s search and display advertising. Both agencies will collaborate with […]

Masculinity Roasted In Clever New Ad
  • Advertising
  • Campaigns

Masculinity Roasted In Clever New Ad

Think masculinity means drinking a case without chundering? Well, rediscover it (& possibly yourself) with this top ad.

by B&T Magazine

B&T Magazine
WPP AUNZ Partners With Career Trackers Indigenous Internship Program
  • Advertising

WPP AUNZ Partners With Career Trackers Indigenous Internship Program

Advertising and marketing network WPP AUNZ has joined the Career Trackers Indigenous Internship Program as part of its commitment to a diverse workforce, and the creation of opportunities that inspire excellence. As part of the program, WPP AUNZ has welcomed its first three interns: Abi-Leigh Dillon (WPP AUNZ), Amy Mccutcheon (MediaCom) and Jacinta Evans (Ogilvy), […]

Taboo Goes On A Hiring Spree
  • Advertising

Taboo Goes On A Hiring Spree

Taboo has gone a hiring spree. And when it comes to sprees, that's far better than a shooting one or a farting one.

M&C Saatchi Group’s 1440 Shuts Up Shop
  • Marketing

M&C Saatchi Group’s 1440 Shuts Up Shop

Sadly, M&C Saatchi's 1440 is no more. And chances of it being reborn as 1550 not looking much chop either.

by B&T Magazine

B&T Magazine
Luke Kelly Becomes A Partner At HBT
  • Advertising
  • Marketing
  • Technology

Luke Kelly Becomes A Partner At HBT

B&T's not sure what's with that twirly thing in the press photo, suffice to say a vortex to an alternate dimension?

Women In Media Profile: Alison Michalk
  • Media

Women In Media Profile: Alison Michalk

If B&T's Women in Media profiles were an animal they would be a gazelle or lioness, or even a lioness eating a gazelle.

by B&T Magazine

B&T Magazine
Grant Broadcasters Makes Several Changes To Senior Executive Team
  • Media

Grant Broadcasters Makes Several Changes To Senior Executive Team

Independent media company Grant Broadcasters has announced a number of changes to its executive ranks. Grant Cameron will move up to become non-executive chairman for the company, and Alison Cameron (pictured above) – currently the chief operating officer – will assume the CEO role. Dugald Cameron remains responsible for the family’s investment portfolio and is […]

Shopper Media Group Partners With Mist To Offer New Tech & AI-Driven Capabilities
  • Advertising
  • Media

Shopper Media Group Partners With Mist To Offer New Tech & AI-Driven Capabilities

Australian retail out-of-home (OOH) business Shopper Media Group (SMG) has announced a partnership with AI-powered wireless networks provider Mist. The partnership will see SMG offer new WiFi, analytics and location-based services across the company’s portfolio of Australian shopping centres. Mist currently provides WiFi and location services using virtual Bluetooth LE technology to businesses across all […]

Indy Agency This Is Flow Wins Cruiseco’s $5 Million Media Account
  • Advertising
  • Media

Indy Agency This Is Flow Wins Cruiseco’s $5 Million Media Account

Travel organisation Cruiseco has announced the appointment of Sydney independent agency This is Flow (TIF) to handle its $5 million media account. This is the first time Cruiseco has appointed an agency, having managed its communications internally. Cruiseco is the largest and broadest distributor of cruise products in the Southern Hemisphere. With a membership base […]

Women In Media Profile: Naomi Shepherd
  • Media

Women In Media Profile: Naomi Shepherd

Need a Monday morning pick-me-up? You could stand naked next to the office fridge or read these inspiring words.

by B&T Magazine

B&T Magazine
APN Outdoor Takes Off With Queenstown Airport Contract
  • Advertising
  • Media

APN Outdoor Takes Off With Queenstown Airport Contract

Out-of-home media business APN Outdoor has won the tender for New Zealand’s Queenstown Airport. As part of the new agreement, APN Outdoor has flagged extensive development plans for Queenstown Airport’s advertising assets. The new contract adds Queenstown Airport to APN Outdoor’s existing portfolio of Auckland and Christchurch Airports. The media company will hire a South […]