Bye Bye Bank Branches? Not So Fast

By Ruth Razook

With the recent and continuous boom of digital banking, a popular belief among consumers and industry professionals alike is that physical bank branches will soon go the way of Blockbuster video stores. Just as renting VHS tapes went out of style with the introduction of Netflix, will handling banking transactions in person soon become extinct? The answer may surprise you.

Customers want branches.       

According to a 2015 American Bankers Association survey, bank branches were the preferred banking method of 17% of people—second only to internet—beating ATM, mobile, mail, and telephone. Even with digital banking, and perhaps sometimes because of it, branch use remains strong. Customers still crave a personal branch experience. However, digital banking is not going anywhere. So, in order to keep branches a necessity for customers, banks must update and modernize according to the times.

The first way that banks can improve their branch locations is by increasing the collaboration between digital and human banking. The bottom line is that people like options and banks need to provide them. When customers attempt and fail to make a deposit or open an account online, they need to have the option of calling the bank or even walking into the branch.

In a 2014 survey conducted by Glory Global Solutions, nine out of ten people reported feeling frustrated with self-service technology, and preferred speaking directly to another human. Banks must realize that the answer to surviving the digital banking boom is to create a fusion of new technology along with the traditional bank format. Technology should not be a replacement for human bankers, but rather a complement to them, and vice versa. It is important for banks to establish proper internal training for employees in order to develop skill sets that embrace technology, and act as a lifeline should it fail to operate correctly.

Along those lines, top notch personnel are another way that banks can improve their branches. If employees are not delivering exceptional customer service, customers will not want to return. Exceptional customer service in today’s world includes having the ability to multi-task, as well as understanding and embracing technology. Even if a customer plans on completing a transaction online, many people like the added reassurance of a human advisor when it comes to interpreting terms and conditions. Bank employees must understand the automated system enough to answer any questions and provide last minute guidance if needed.

Money is not often thought of as an emotional subject.

But it is just that. Banks are dealing with people who are buying their first car, first home, setting up a business and more. These are people who do not want to experience important milestones with only a computer by their side. They want an intelligent, experienced professional to guide and advise them throughout the process.

An example of where knowledgeable personnel can add to their technical counterparts is in the Apple store. Obviously, Apple has a great online presence and customers can do everything from buy new products to update software online. However, Apple stores are constantly flooded with customers looking to speak to personnel about issues and advice. This is a powerful selling point for Apple as a brand; a technology company with a successful, physical store.

It’s time for a makeover.

In that regard, the third way that banks can improve their branches is by updating the physical appearance of their buildings. Most branches cannot, and should not, stay the way they are now. Many are outdated, with unappealing décor and poor use of space resulting in long lines for customers.

Again, Apple has managed to turn what could have been an uninviting room full of computers and mobile phones into an aesthetically pleasing destination with a sleek look, welcoming vibe and friendly employees. The products and services are displayed nicely, there are chairs and tables for customers and the company has come up with an answer to long customer lines with a combination of a technical organizing system and approachable personnel available to speak directly to customers.

Branch locations must appeal to customers on an emotional level.

They should be a showcase for bank services, offer advice and troubleshooting for digital platforms and overall, exude a welcoming and helpful vibe.

In short, banks must reinvent their branches in order to stay competitive in the current and future market. Of course, large banks with over five or six thousand branches may actually need to reduce the number of their physical locations. However, community banks depend on the branch mentality and need to continue to offer that service to their customers. For many community bank customers, the branch is the reason that they have not switched to a larger financial institution.

If banks focus on collaboration between human and digital banking, hiring and training top notch personnel and updating the physical appearance of their buildings, they will ensure that their digital presence is tied into the human needs of customers, and branches will remain attractive methods of conducting business.


Ruth Razook is founder and chief executive officer of RLR Management Consulting, a consulting firm servicing community banks nationwide in four primary categories: Technology, Regulations/Compliance, Operations and M&A. RLR’s clientele includes community and regional banks of all sizes. RLR has offices in both Reno, Nev. and Palm Desert, Calif. LinkedIn. Twitter.