The bank branch of the future will do less but better

RETAIL banks face a daunting challenge: providing profitable personal banking in a climate of cost cutting and digital disruption. A popular strategy is to focus branch staff on selling high value products and services, such as mortgages, while nudging other customers into self-service, online or mobile channels. In theory, this makes branches more profitable with fewer staff, although there is also a clear risk of customers resenting the loss of personal service.

There is a more practical challenge in this strategy, too: it forces branches to try and create two quite contradictory environments within the banking hall. You may have noticed this split personality in your own branch, with the space combining a people-focused “expert advice” environment for bigger financial decisions with a technology-enabled self-service environment for day-to-day banking needs. It’s a confusing mix, and customers are shepherded from zone to zone in an effort to encourage self-service.

It is time to think more radically. If customers don’t need banking advice for simple transactions, why do they need to visit the bank at all? Today, a machine can print statements, pay in cheques, pay bills, print new cards, transfer money and much more. Customers want these services to be as quick and convenient as popping out for milk, so why not make it that easy? Banks could partner with local supermarket chains and roll out smart ATMs across the store network, drawing lower-value traffic out of branches while keeping customers happy.

Bank branches are then free to create a welcoming environment where customers can book appointments and meet with staff to discuss their financial needs. This physical separation of services makes the distinction much easier for customers as well: if you need to do something, such as a payment, pop to the local shop; if you need to know something, like which product is right for you, book an appointment in a branch.

Customers are adopting new online and self-service channels at an astonishing rate. In the UK, the number of smartphone users accessing their bank account via their device rose 86 per cent in the past year, while there was a 44 per cent increase in smartphone ownership in the EU5 (UK, France, Germany, Italy and Spain) in 2011. Quite rightly, banks are furiously building their online and mobile banking services to meet this demand. However, aging IT infrastructure means it is difficult to compete with internet-centric banks like FirstDirect or new innovative business models such as Simple in the US. The high-street banks have to use their existing infrastructure better, not just encourage the use of digital channels. Now is the time to provide a profitable and customer-focused service in branch while allowing customers convenient banking services on their doorstep.

Alison Kay is a senior consultant at transformation consultancy Moorhouse