Long before the pandemic hit, many banks were well on their way to rethinking their branches to better accommodate customers’ increased use of digital channels. With the net closure of nearly 3,000 branches in the U.S. last year and a similar pace in the first half of 2022, the reinvention of the branch has taken on even more urgency.
By 2024, customers expect 61% of their banking business to be digital and 39% human-assisted, with the biggest projected increases coming from mobile and ATM, according to BAI Banking Outlook research identifying the top banking trends and challenges for 2022. But branch networks still have a place, the report says: “Branches are still critical for many customers today and (are) the preferred method for opening deposits by Gen X and Boomers.”
Bank customers continue to want conveniently accessible physical branches, but the definition of “convenient” has changed noticeably over the past decade, says Dave Martin, founder of consulting firm Bankmechanics in Sugar Land, Texas. If customers need to visit branches less frequently, the distance they’re willing to travel to the closest branch increases, thereby expanding the viable service area of each location.
Most of the branch reductions are actually large banks “rightsizing” their networks as they tweak the remaining branches, he says. “Branches remain the center of the banking universe for the majority of banks and the growth engines for these operations.”
Prior to the pandemic, the $1.7 billion-asset IncredibleBank in Wausau, Wisconsin, had been working to create the “branch of the future,” complete with teller pods, cash recyclers and headsets for staff to help them move more freely around the branch and service drive-thru customers.
“The pandemic has most certainty expedited the transformation of our branches,” says Todd Nagel, the bank’s CEO. To create a better experience for customers in vehicles, IncredibleBank improved drive-thru audio and lighting and introduced video. Cash tubes are now adjustable, easing access for customers in vehicles of all sizes.
With branches are handling fewer transactions, staff are more focused on consulting with customers, Nagel says. Seventy percent of consultations have focused on helping customers learn how to use the mobile app. “This has also caused a major shift in the type of employees we recruit—we’re now looking for much more tech-savvy people.”
While IncredibleBank has always had a sales culture, Nagel believes customers have become more proactive in asking about other products and services. “It’s the sentiment that, ‘I’m coming into this building now, what else do you have that I should be looking at?’”
Wells Fargo, the $1.8 trillion-asset bank headquartered in San Francisco, has reduced its total branch count as customer preferences and transaction patterns have shifted more to digital channels, says Shaun McDougall, growth and branch administration leader. However, there are still opportunities to consolidate existing branches and/or open new branches “as customers engage in financial checkups with bankers to create and fine-tune long-term financial plans.”
“Every day customers walk into a branch to talk to a banker about a complex financial need or a life milestone like home buying,” McDougall says. “Our branches continue to be a place where customers can sit down with a banker and have a meaningful financial conversation to help them reach their goals.”
Wells Fargo is enhancing the tools its bankers use, he says. For example, the bank’s “customer engagement engine” uses artificial intelligence to help staff better understand and anticipate customers’ needs and then have “relevant and personal conversations to determine what’s right for their individual financial circumstances.”
Consulting firm Accenture predicts the branch network of the future will revolve around “experience stores”—the centerpiece of “an agile, integrated network of environments that are multi-format, geographically tailored and digitally enabled.”
In Accenture’s vision, laid out in a pre-pandemic report, experience stores will showcase products and provide complex advice; empower staff with simple mobile technology; and operate as an integrated component of the overall channel strategy. Branch networks in each market will feature an “experience hub” augmented by satellite branches.
Accenture’s recommended model is “one that’s led … by the vital importance of meeting customers’ changing expectations and providing them with an experience that they’ll come back for.”
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