Greg Beaubien
Greg Beaubien Sep 17, 2018

Branches get physical—and digital

You know the drill, because it’s been drilled into your head: Branch locations are closing. Consumers are moving to mobile devices. Everyone talks about giving these branch abandoners a “seamless experience” like what they get on—wait for it!—Amazon.

Now, here’s what you may not know: Four industry leaders contend that bank branches are  not in danger of becoming obsolete. All four will present their case (and showcase their wisdom) in sessions on branch trends at BAI Beacon, taking place in Orlando, Florida Oct. 9–11.

Now, about that branch death thing…

“I personally don’t think branch banking is dead or dying,” says Linda Garner, senior vice president for omnichannel platforms at U.S. Bank. The industry has focused heavily on digital options as customers migrate to self-service, mobile and other channels for routine transactions but “there’s still a strong need for branch banking,” notes Garner, who will co-present “Branch and Digital Convergence … It’s About Time!” “People still want to talk to a human being for more difficult or complex transactions.”

Even that growing group of customers who rely exclusively on digital channels still turns to branches or call centers for advice, she says. “The fact that people want digital doesn’t necessarily translate to them being financially savvy,” Garner says. “Maybe the role of the branch banker is to help customers understand their options and offer strategies for saving more, for example. That’s where branches have value-added capability.”

Millennials love their mobile and digital tools, to be sure. But in banking, “I don’t think humans are going away,” says Tom McDermott, co-founder and managing partner of Inver Consulting Group.

“When it comes to big financial decisions, regardless of the customer’s age, research shows that 80 percent of all accounts are still opened up at the branch,” says McDermott, who will co-present with Garner. “And while they’re there, you can better identify their needs, give them advice and counsel and recommendations—and add more value.”

Ben Hopper, head of retail delivery and strategy at First Horizon National Corporation, agrees. “The customer still wants a personal connection in some form or fashion,” he points out.

Branch networks will continue to play an essential role in attracting new customers, says Hopper, who will co-present “Future-Proofing the Branch.” “Even in the digital world, the branch could become a differentiator if the in-lobby experience meets the expectations of that customer who walks through the door. Those human interactions, while fewer and fewer, will be super important for establishing relationships with customers and moving them closer to their ideal of financial well-being.”

Linda Morris, executive vice president and head of retail branch banking at PNC, says banks need to determine a view of what customers will want to use branches for in the future. That’s a nuanced view that far better gets to the heart of things than, say, “Branches are closing—better call Amazon.”

“Most of the research and trends indicate that customers still want to have face-to-face advisory discussions for important life-events such as buying your first home, saving for retirement or education, or when a new family is on the way,” says Morris, who will co-present the future-proofing branches session with Hopper. “We still believe they’ll want to seek out the advice we can deliver through the branch network.”

Now all this said, it can’t be denied that bank branches continue to close. By June 2017, the number of branches in the U.S. had shrunk by more than 1,700 over the previous 12 months. And as Fortune reported in August, total U.S. branches have fallen steadily since the 2008 financial crisis. From a peak of around 97,000 in 2007, there were an estimated 89,300 as of last year.

 “I think it’s fair to assume we’re going to have smaller branches in the future and less of them,” McDermott says.  

But certainly, not zero or even close. JLL projects that by 2027, branch numbers could drop another 20 percent to 71,500. But that would still mean a substantial number left, even if nowhere close to the pre-digital days.

Nor is this a digital-versus-branch contest. To adapt and survive, financial services organizations must better integrate digital and physical elements, McDermott says. Even as money saved from branch closures is invested in digital features, physical and digital banking channels aren’t necessarily supporting each other.

“A lot of banks are not prepared for this integration,” McDermott says. He credits retailers such as Target and Walmart for weaving physical and digital channels together effectively. For example, they allow customers to shop online (digital) and then pick up their purchases in a nearby store (physical).

“In our session we’ll try to help bankers think differently and get prepared for this next wave of integration, which is bringing the physical and digital channels together,” he says.

Tear down those walls

To encourage human interaction with customers in branches, “We’ve been asking our folks to move beyond the barriers that have been part of banking for years and years,” Hopper says. “When a banker interacts with a customer in a financial-well-being discussion, both parties win. But none of that happens without a banker and a customer engaged together in a good conversation, without all the barriers that have traditionally been there.”

Improving the physical environment is part of optimizing branch networks, Morris says. To make the atmosphere more conducive to advisory conversations, “We’re looking at changing the interior experience: fewer walls, fewer straight edges, and more mobile technology within the branch, replacing desks and greeter stations with more comfortable seating and round tables.”

To thrive in the future, branches will also need well-trained employees, Morris says. “As we anticipate the need for advisory skills to increase over the next few years, we have to start getting a workforce that’s prepared to deliver on that.” She says recruitment, “career-pathing” and training-and-development programs are all “important now to get the workforce ready for that future state of what we believe our customers will still value”—which includes making sure staff get tech-savvy.

As McDermott puts it, “If you don’t educate your branch teams today about all the tools available, you’re going to be behind the curve.”

And in terms of catching up, to borrow from the well-known ad campaign of another digital giant, there’s no app for that.


Hear Garner, McDermott, Hopper and Morris speak at BAI Beacon, taking place Oct. 9-11 in Orlando, Florida. To register, click here.

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Greg Beaubien is a Chicago-based writer and editor. The author of three books including a novel, he has written for the Chicago Tribune, Los Angeles Times, Travel + Leisure, Yahoo Travel and for the petroleum company BP.

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