What is the Real Gold in the Branch?

By Anthony Burnett

What would motivate consumers to bypass the most convenient branch in the world?

Think back to the summer of 2007. Few had any inkling of the massive sea change that would soon hit the financial services industry. And those who did were probably not thinking about how Apple’s brand-new release, the iPhone, would change the world.

The iPhone revolutionized consumer expectation for convenience and experience. This is especially true in banking. As the financial industry recovered from the recession, consumers quickly learned that the most convenient branch in the world lives in their back pocket.

The advent of digital convenience created omni-channel banking, the triune relationship between delivery channels: physical branches, cash automation and virtual branches.

What do consumers want?

Within just a few years, consumers made it clear that they wanted multiple channels. Few consumers held on to a single-channel approach to banking, preferring multiple ways to communicate with their financial institution of choice. And by September 2018, 72 percent of consumers reported using internet or mobile as the channels they used most often to access their accounts, while only 18 percent reported their branch as their preferred channel.

Source: Morning Consult, on behalf of the American Bankers Association, conducted an online survey of 2,201 U.S. adults from September 11-12, 2018.

It’s remarkable that in less than a decade from the iPhone launch date, consumers have been reprogrammed to understand the unique value of a digital branch.

What’s so great about a digital branch?

It’s not just consumers who value the convenience of the digital branch. This view is also shared by financial institutions. Research by Bain and Co. helps quantify the real value of a mobile banking consumer. While the average mobile transaction costs a bank about ten cents per interaction, the average teller transaction (visiting a branch or interacting with a human by phone) costs at least $4. Therefore, there is tangible value in mobile banking that is unmatched by physical branches, especially for transactions.

What’s so great about the branch?

However, consumers still visit branches on regular basis. Study after study shows continued branch usage among all age groups, and customer satisfaction is highest among branch-dependent customers who also use digital channels. What’s more, the most recent J.D. Power research indicates that not only are digital-only customers the least satisfied, but also bring in the least revenue.

Bringing the channels together…

So, what’s really going on? A 2018 report by Foresee brings many of the pieces together. The study found that about 60 percent of customers start the account opening process online (roughly 35% go straight to a branch). However, more than half of those who start the process online also end up in a branch. And J.D. Power found that in 2017 over 70 percent of all bank customers visited the branch an average of 14 times over the previous year.

The real gold in the branch.

What is it that customers find so intrinsically valuable that they would bypass the most convenient branch in the world to visit one further away than their elbow, back pocket or purse? Digital channels are not perfect, and they will continue to improve. But the ongoing dance by consumers between digital and physical branches suggests that physical branches will also continue to transform at a rapid pace.

Consumers use the branch for something they cannot get over a device—a face-to-face personal interaction. Open environments, automation, pods, branding, point-of-purchase imagery, and transformative experiences are already in place in many of today’s branch. And they amplify the high-value opportunity of a face-to-face interaction with consumers.

Today it’s no easier to predict the future than it was in the summer of 2007. In 10 years from now will we have fewer branches? It seems extraordinarily likely. Over the next decade will the branch continue to change? The experts are willing to bet that it will as banks anticipate consumer needs. Will the need for human interaction diminish? No.

The real gold in today’s branch isn’t in the vault—it’s in you, the bank’s staff. The staff is the gold consumers are after because you know how to build trusted relationships and create meaningful connections with today’s consumer.

Anthony Burnett is the customer experience director for LEVEL5, Atlanta. The firm assists financial institutions in developing branch and main office locations. Email: aburnett@level5.com.

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