Other parts of this series:
- Digital Transformation: Are Branches Still Relevant in a Digital World?
- Digital Transformation: 21st Century Consumers Still Expect a Human Touch
- Digital Transformation: A Digitally Enabled Network Still Holds Significant Value
- Digital Transformation: Manage your Branch Network through a Kit of Parts
- Digital Transformation: Empowering the Front Line to Deliver Distinctive Interactions
- Embracing a “Phygital” Bank Experience
Over the past decade, the banking industry has experienced a major shift. What was once an asset – a large branch network – is now a potential burden. As digital channels increase in popularity, branches have become a bank’s costliest service channel, up to five times the cost of mobile. For a typical bank, the branch network accounts for 55 percent of the overall cost structure.
At the same time, customer behaviors and expectations are increasingly influenced by experiences outside of the financial services industry. 88 percent of customers now use at least one online channel when searching for information. In a GAFA (Google, Apple, Facebook and Amazon) world, customers expect an “always-on, customer-first” mentality—causing a paradigm shift from a Business to Consumer (B2C) interaction model to a Consumer to Business (C2B) model. When evaluating financial services providers, customers say that speed and convenience are key and demand more digital interactions with their banks.
Yet customers continue to see the value of branches for the “human factor.” Although 24 percent of customers say they would consider a branchless bank, nearly 90% of customers believe that they will continue to use their branches, and an increasing number of customers believe that the branch is the single most important channel to invest in for the future (19% in 2016 vs 14% in 2015, based on the Accenture Banking Consumer Survey).
To transform the branch network and remain digitally relevant, banks need to:
- Present the branch as the “human face” of the bank, and seamlessly integrate the branch into the bank’s broader distribution model (alongside the contact center and digital/mobile) by enabling in-branch digital technologies
- Provide a differentiated offering by focusing on products and services that are complex, risky, or require assistance from an advisor. Commodity transactions, which are faster and easier online, should not be the focus of the modern branch network
- Ensure that each branch has a clear role by moving away from a “one size fits all” branch network and creating segmented branch types – service focused, sales and advisory focused, or full service – that clearly fulfill a customer need
- Drive revenue growth by pivoting branches to provide advice, assistance for complex transactions, and real-time problem solving
In the future, branches can be a key enabler of a bank’s hybrid physical-digital (phygital) strategy. To do that, banks will need to enhance staff capabilities, hire based on mindset and behaviors rather than competencies, and make employees part of a truly reshaped experience.
The key to success will be to create a new mission for branches—moving away from simply serving customers—to adding tangible value for customers by educating them through digital tools, assisting them through problem solving and enabling them to make their own financial decisions with thoughtful and well-timed advice. By taking advantage of the unique skills their staff have to offer, banks can breathe new life into their branches.