By Brian Holden, Director, Financial Services at SAS UK & Ireland
The idea that branch banking is on its way out is nothing new. In fact, banks have been working to supplement traditional customer service channels with digital equivalents for years now – spurred on by the idea that younger generations prefer to do most things online.
The pandemic has brought the focus on digital banking to the forefront, with TSB announcing the closure of a third of its branches last month. Our research made it clear that Covid-19 has brought in irreversible changes to the way we act, even among those previously considered less tech-savvy – 10% of respondents began using digital apps and services for the first time during lockdown, of which three-fifths (58%) plan to continue using them permanently
Put simply, a visit to the local branch has become synonymous with paper-based processes which are often slow and inefficient. But that is not to say the end is here for high street branches – instead, the pandemic has caused banks to reassess their value.
Banking as a people business
Over the past few months, COVID-19 has confronted many people with a prospect of financial distress that they could never have imagined at the start of this year. And despite all the investment in call centres, online banking websites and mobile apps, the digital infrastructure that banks have built over the past decade hasn’t been the panacea that everyone expected.
Banks are realising that customers don’t want to do everything online after all. When their livelihoods and businesses are threatened, they don’t want to wait on hold with the call centre—they go to their local branch because they know they’ll get an answer. And when they’re really worried about money, they want personal advice and face-to-face support from a real human, not just a set of recommendations on a website.
As a result, the crisis has shown the branch in a completely different light: it’s not on the periphery, but at the heart of the banking community.
That’s not to say that digital banking has failed, or that digital investments have been wasted—it’s just that the crisis has highlighted something that should have been obvious all along. Banking isn’t just about processing financial transactions; it’s about helping people live the lives they want to live. It’s about making banking simple, safe and rewarding. Nothing is more personal or more emotive than a small business owner’s dreams or a family’s financial security.
We live in a network society, that’s true—but the network is fundamentally built on human relationships, not technology. Bank branches are critical nodes in that network. You can’t extract those nodes and expect everything to function in the same way. So instead of trying to invent some new means of personal banking interaction online, why not use the ecosystems and talent we already have, and give the branch its due as a trusted focal point for the local community?
A new future for the local branch
At the same time, those city skyscrapers no longer seem to be gleaming quite so brightly. Although security and regulatory compliance considerations have historically made many banks resistant to the idea of allowing employees to work from home, the pandemic is forcing them to push those boundaries.
With the ongoing risk of contagion, people are no longer willing to spend several hours a day packed like sardines into a tube carriage just to get to the office—and this is a situation that may continue indefinitely.
Under these circumstances, the branch begins to look like an attractive option not only for traditional branch-based functions, but as a decentralised workplace. By providing a secure location where employees can access bank systems, it eliminates the compliance concerns of working from home, while ensuring that staff aren’t obliged to commute into central offices unless they really need to. Moreover, with the cost of a desk in Canary Wharf estimated at around £100,000 per year, there could be significant cost savings from moving to a more branch-based model.
This isn’t just blue-sky thinking—it’s something that major banks are already actively exploring. Jes Staley, Group Chief Executive of Barclays, has gone on the record about rethinking the balance between central and local, potentially enabling investment banking and call centre teams to work from retail branches. With around 70,000 Barclays staff currently working from home due to lockdown, he told the BBC: “There will be a long-term adjustment to our location strategy. The notion of putting 7,000 people in a building may be a thing of the past.”
Striking a balance with automation
However, if we do see a shift towards more of a hub-and-spoke model, with more responsibility shifting from central office to the branch network, branches can’t stay locked in the past. The in-branch experience needs to be just as simple, fast and seamless as the web or mobile experience should be. Customers won’t tolerate queues, paperwork and manual processes, and they’ll expect consistent service regardless of how they choose to interact with their bank.
Offering the right advice and support to each customer across all channels is a challenge that can only be solved with the right combination of people, processes and technology. Essentially, you need to find a way to make the right information available to make the right decisions at the right time and embed those decision support mechanisms into all your customer-facing business processes.
Clear value in intelligent decision-making
Data-driven technologies enabled by artificial intelligence equip banks with the tools required to help support their personnel support their customers better through the current turmoil. By implementing solutions to enable intelligent decision-making, banks are empowered to fine-grain their approach to customer support through real-time insights at an individual level, no matter where their client engages.
Under current circumstances, it is essential for banks to bring the personal touch of banking to complex cases where human expertise is required. Here, the local branch will likely remain a critical bridge between banks and their customers, helping them navigate their way through the crisis.