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.

Please login with linkedin to comment

Latest News

Why The “No” Campaign Is Just One Long Slippery Slope
  • Opinion

Why The “No” Campaign Is Just One Long Slippery Slope

Not exactly your typical marketing/media piece, but here playwright Ron Elisha (pictured below) explains the damage done by the “No” campaign and the now infamous skywriting on a recent blue-sky Sydney Sunday… My daughter is crying. It’s not that she’s fallen over and barked her knee. Nor is it the trauma of immunization, or the […]

Opinion

by B&T Magazine

B&T Magazine
QMS Goes West With ‘The Leeder’
  • Advertising
  • Media

QMS Goes West With ‘The Leeder’

QMS Media continues to expand its digital portfolio across Western Australia, switching on an iconic billboard in the heart of Perth. Following the launch of two new digital billboards in the major WA regional centres of Bunbury and Kalgoorlie in recent months, ‘The Leeder’ further delivers on QMS’ digital expansion strategy out west. Positioned at […]

PR Firm Text100 Wins NetApp Account For APAC
  • Marketing

PR Firm Text100 Wins NetApp Account For APAC

Global marketing communications agency Text100 has announced it been appointed by data management company NetApp to drive its brand transformation effort across the Asia-Pacific (APAC) region. Following local competitive pitches conducted across the region, Text100 has been appointed as the APAC lead agency out of Singapore, and as the local agency of record in Australia, […]

MFA Awards 2017 Winners Revealed!
  • Advertising
  • Marketing
  • Media

MFA Awards 2017 Winners Revealed!

B&T once again donned the tux, applied the Brut, and primed the liver for last night's MFA Awards in Sydney.

Concrete Playground Launches Voice-activated Nightlife Guide With Google Assistant
  • Media
  • Technology

Concrete Playground Launches Voice-activated Nightlife Guide With Google Assistant

Digital publisher Concrete Playground has unveiled a new app that helps Millennials plan their night out using voice control – the first of its kind to become available in Australia. Concrete Playground’s Guide to Tonight now works with Google Assistant, making it available on a range of Google devices and helping people to decide what […]

Digital Agency Inlight Secures Two Key Client Wins
  • Marketing
  • Technology

Digital Agency Inlight Secures Two Key Client Wins

Independent agency Inlight has announced it has won the digital account for Benetas, a not-for-profit aged care provider in Victoria. Following a competitive pitch process, Inlight was chosen to handle Benetas’ new website design, build and ongoing optimisation. Richard Barker, marketing manager at Benetas, said: “We wanted an agency that could be our true digital […]

AMI Awards 2017 Winners Revealed!
  • Marketing

AMI Awards 2017 Winners Revealed!

With almost 30 awards handed out, B&T predicts plenty of numb bottoms at last night's AMI Awards in Melbourne.

Clems Sydney CEO Andy Pontin Quits
  • Advertising

Clems Sydney CEO Andy Pontin Quits

Sure, B&T flashed the news of Andy Pontin quitting this morning. White lies aside, he's actually still got six months.

by B&T Magazine

B&T Magazine
Adobe MAXes Most Creatives In A Room Record
  • Advertising
  • Media

Adobe MAXes Most Creatives In A Room Record

B&T's journo is reporting live from the annual Adobe Summit in Vegas. Although, "reporting" is somewhat of a stretch.

Opinion

by David Hovenden

David Hovenden
Digital Women’s Network & The Australian College Of Marketing Unveil Latest Short Courses
  • Marketing

Digital Women’s Network & The Australian College Of Marketing Unveil Latest Short Courses

The Australian College of Marketing is collaborating with the Digital Women’s Network to bring new short courses aimed to provide the latest skills across all aspects of the Digital landscape, kicking off in Melbourne and Sydney in 2018. Course content will focus around various topics related to the digital marketing landscape. All courses will run […]

Man working at office desk, looking at computer and scratching head
  • Technology

Where Are Digital & Tech Skills & Salaries Headed?

The rapid pace of technological change in the digital sector is seeing demand for those with the right skill sets outstrip availability, both locally and globally. The individuals who have kept their skills up to date are being well-rewarded financially. Now, Digital + Technology Collective’s expanded annual Skills and Salary Survey will put some numbers and context […]

Disney & ESPN Unify Sales & Partnerships Teams
  • Advertising
  • Marketing
  • Media

Disney & ESPN Unify Sales & Partnerships Teams

Disney and ESPN have formed an even closer bond, announcing a new alignment of the two properties through their media sales and partnerships teams. Instead of entering through three doors, Disney ESPN Media Sales & Partnerships will give media buyers and marketers a refined, singular point of entry for Disney, ESPN Digital and Maker. Nik […]

by B&T Magazine

B&T Magazine
Sydney Start-up Muzaara Partners With Commission Factory To Turbocharge Digital Ad Spends
  • Advertising
  • Marketing

Sydney Start-up Muzaara Partners With Commission Factory To Turbocharge Digital Ad Spends

Sydney-based adtech start-up Muzaara has announced a new strategic partnership with performance marketing platform Commission Factory. Together, Muzaara and Commision Factory are providing SMEs with a secret weapon to skyrocket their online brand visibility and effectively manage and maximise their online advertising campaigns. This partnership will allow both online marketing companies and their impressive roster […]

Kellogg’s Creates AR Halloween Trick Or Treat Experience Via Shazam & Orchard
  • Campaigns
  • Marketing
  • Technology

Kellogg’s Creates AR Halloween Trick Or Treat Experience Via Shazam & Orchard

Breakfast cereal manufacturer Kellogg’s has joined forces with Shazam and digital agency Orchard to deliver a first-of-its-kind augmented reality (AR) Halloween Trick or Treat experience for families. The campaign, which leverages Shazam’s visual recognition platform and recently-launched AR platform, sees Kellogg’s pilot the replacement of physical gifts in cereal packs with a digital experience that […]

Kraft Heinz Appoints Cummins&Partners As New Creative Agency
  • Advertising

Kraft Heinz Appoints Cummins&Partners As New Creative Agency

Kraft Heinz today confirmed the appointment of Cummins&Partners as its new Creative agency after an extensive pitch process. They will be responsible for brand strategy and integrated creative across the expanding Kraft Heinz portfolio including Kraft, Heinz and Golden Circle. A Kraft Heinz spokesperson said: “After an exhaustive search involving a competitive pitch, we have made […]