Long before the U.S. felt the first real impacts of COVID-19 a year ago this month, the role of branch operations for banks and credit unions were in a state of flux. Digital banking was already ascendant in 2019. The pandemic merely accelerated that trajectory, largely out of necessity.
Many banks have announced plans to reduce their physical footprint—those plans, however, are more about trimming than slashing. It’s hard to argue against digital banking’s central role in the future of financial services organizations, but the branch has a future, too.
In our lead article, contributing writer Lauri Giesen cites research showing that branch traffic fell by as much as half as a result of COVID-related lockdowns in early 2020, but that most of that traffic returned when the economy reopened later in the year.
Despite that rebound, the lasting legacy of COVID-19 will change the way branches look and operate going forward. Our collective experience in dealing with the virus has fundamentally shifted the way we shop, work, access healthcare and more. Given that these broad, society-wide changes are likely here to stay, one expert told her, “Banks cannot open branches that are identical to the way they were pre-pandemic.”
So, what sort of changes might we anticipate? Where do branches stand to offer the most value for customers? Contributing writer Amy George took those questions to Toronto-based brand visionary Jean-Pierre Lacroix and, no surprise, she got back some insightful answers.
Lacroix sees us as being on the cusp of what he calls “Banking 4.0.” The first three iterations—which played out over the past century or so—focused on building trust, creating convenience and using tech advances to develop cost-saving digital capabilities.
The fourth update for banking’s core operating system, he says, will result in true customer-centricity: financial services providers evolving past transactions and product offerings to establish deep, personalized relationships with their customers.
Face-to-face interactions at the branch can play a vital role in cementing that position as valued advisors. This can be done via recasting branches as centers for financial education, advice and specialty services, where banks and credit unions can distinguish themselves in an ever more competitive landscape.
While digital banking adoption continues to grow, particularly among younger Americans, BAI research makes clear that the future of the branch is multigenerational.
Karl Dahlgren, BAI’s managing director for research, writes about a surprising finding from the 2021 BAI Banking Outlook: Generation Z and millennials, the youngest generations of adult Americans, are just as likely as baby boomers to visit a branch to learn about a bank’s products and services.
This could reflect the financial needs of the younger generations growing more complex as they progress in their careers and have families. To identify and exploit the various opportunities that could arise from this and other emerging trends, he writes, financial services organizations should mine their vast repositories of customer data.
The other articles in this Executive Report include:
Chris Savio from LogMeIn on the importance of providing customers a range of service options that blend human interactions with advanced self-service technology. Each comes with strengths that complement the other, he writes, and together they can deliver the high level of customer experience that is expected.
Michael Hafer from Cardtronics on what financial services providers should have learned from the COVID-19 pandemic when it comes to the value of their ATM networks in supporting branch operations and their brands. If nothing else, he writes, the industry should be thinking of ATMs as more than just cash dispensers.
And Nicole Machado from Harland-Clarke on an instant crowd-pleaser that branches can add to their list of services: immediate card issuance or replacement. As she writes, “Consumers in today’s on-demand economy don’t expect to wait for much of anything, especially for access to their money.”
The bottom-line takeaway from this month’s articles is that those who foresee the imminent demise of bank branches are out over their skis. Branches will remain important assets for financial services providers for a couple of basic reasons—customers want them and they will use them.
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