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Do Banks Need Branches in the Digital Age?

As banking becomes increasingly digital, one question continues to plague retail financial institutions: Do we still need branches? Here are 24 different experts in the banking industry who say yes... at least for the time being.

“Some argue that because technology and innovation is revolutionizing the way in which customers interact with their bank and money that’s the only way to compete, and that emerging digital-only providers – be they from the banking industry or elsewhere – will make branches redundant. The steady flow of bank branch closures by the major established banks over recent years has given that theory an air of credibility. TSB Bank thinks differently. TSB believes the future of banking lies in branches and technology – enabling customers to bank where they want, how they want and when they want. Yes, customers are adopting mobile and digital banking at a pace we’ve never seen before. But the importance of having a branch in a convenient location is as important as ever for consumers.”
— Paul Pester, CEO of TSB Bank

“We still have one million people coming to our branches every day, and they need that channel. Some need it to transact, but a lot of them come in for advice and we want them to do that. So we need a certain footprint of financial centers.
— Paul Donofrio, CFO at Bank of America

“Fact of the matter is that we can opine for everything digital, but there is still a strong role for physical and always will be.”

— Chris Skinner, Chairman of the Financial Services Club

“There are customer segments who value the customer experience associated with familiar faces and working with people you know. While certain banking products lend themselves to automation, other products such as those pertaining to commercial banking and wealth management perform best with the deeper level of interaction found in branch banking relationships.”
— Connor Crawford, President of The Southern Bank in Birmingham

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“Branches are incredibly important and we think they will continue to be. Most customers deal with us across many channels including digital — there are very few who would skew to branch-only or digital-only.”
— Teri Currie, Group Head of Canadian Personal Banking at TD Bank Canada

“This thesis that we have mobile banking and high-tech banking, therefore branch offices are dinosaurs and going away appears to be substantially overstated.”

— Richard Brown, Chief Economist at the FDIC

“Consumers continue to see the value of branches for the “human factor.” Although 24 percent of consumers 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 consumers believe that the branch is the single most important channel. 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.”
— Adrien Kirschfink, Managing Director at Accenture Financial Services

“There are many reasons for the continued necessity of branches, including concerns over internet security, simplicity of use and a lack of knowledge surrounding the capabilities of online and mobile banking. However, the most powerful force that will keep physical branches alive and well for many years to come is the instinctual human desire to meet the people they are entrusting with their money. There is no technological substitute for the trust building that occurs when you can meet with someone face to face and shake his or her hand.”
— Vince Harris, Senior Account Supervisor at re:group

“Bank branches become points of contact for when mobile banking cannot provide its services. But bankers are predicting that this will change over time with the progression of mobile and online banking.”
— Baron Laudermilk, ‎Asia Editor at Euromoney Institutional Investor

“In a world where most paychecks are direct deposited overnight and you can pay back a friend for the dinner check instantly with an app, bank branches can seem like the financial equivalent of a neighborhood Blockbuster Video. But don’t consign the branch to obsolescence quite yet. There are some tasks that bank customers still prefer to do in a branch — dealing with serious account problems, opening new accounts, and making big transactions.”
— Claes Bell, Mobile Editor for Bankrate.com

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“Branches continue to be very important, especially for seniors and even a lot of Millennials with money. Even if they don’t go into them a lot, they want to know that they’re there.”
— Dr. Ken Thomas, Principal at BranchLocation.com

“Whether in a new form or the old, bank branches are here to stay regardless of desires of financial institutions to cut the costs of maintaining them in face of fierce neobank competition. Nonetheless, the decline in the network of bank branches is mistakenly seen as the beginning of the dusk of physical branches. Bank executives believe the closure of bank branches may hurt revenue more than help reduce costs. Branches remain crucial for acquiring new customers and doing more business with existing ones.”
— Editorial Staff at LetsTalkPayments.com

“Our customers still want to visit us They’re still coming to our stores and our ATMs at pretty consistent rates.”

— Jonathan Velline, Head of ATM and Store Strategy at Wells Fargo

“Self-service channels have become the basis through which customers get access to their bank. Most of us use mobile and online banking for our everyday needs. In spite of this modern phenomenon, brick and mortar branches still continue to be an important part of a bank’s operation. Bank branches continue to provide vital customer service value. At the center of this are bank tellers who are often seen as the face of a bank. They are at the frontline and it is imperative that tellers are equipped with the most up to date systems and technology. This will not only help a bank to separate themselves from the competition but also enable them to demonstrate their unique services.”
— David Mitchell, President at NYMBUS

“There has been much debate around whether the branch is ‘dead’: this is an interesting theoretical discussion, but it has little bearing on reality. Just as the rise of new technology has threatened the branch in the past few years, it also holds the key to their continued relevance. By implementing the right solutions, a bank can ensure that its branches are cost-effective and play their role in offering excellent customer experience.”
— Lawrence Freeborn, Senior Research Analyst at IDC Financial Insights

“Branches are here to stay for decades, and will continue to offer a major competitive edge over digital-only financial services. This does not mean that banks can simply rest on their past successes. Branches must evolve consistently with other channels to continue delivering its unique value.”
— Andrei Charniauski, Head of Europe at IDC Financial Insights

“We’ll continue to build branches. Our customers like them. While there have been tremendous innovations around mobile banking, the branch remains the center of that relationship we have with our customers.”

— Barry Sommers, CEO/Consumer Banking at JPMorgan Chase

“One thing is clear: Bank branches are here to stay. They’re not in demand like they once were, due to the rise of digital banking. But retail branches will continue to maintain a prevalent role in acquiring, retaining and serving customers across digital and physical channels. Fewer, smaller, smarter and more open: That’s the future of retail bank branches.”
— Steve DeLaCastro, VP/Banking & Financial Services at Cognizant

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“The rapid adoption of virtual banking and self-service has led many to question the role of the bank branch and whether it is still needed today. Of course it is, but potentially in a different guise to that of the past, and even for different uses as banks still want to play an important part in helping their customers access services the way they choose to. Amazon, for example, has partnered with Barclays to use its branches as collection points, showing how bank branches are diversifying.”
— Tony Virdi, VP/Head of Banking at Cognizant

“Bank branches still matter. But do they matter because banks’ online and mobile and kiosk-based solutions are poor, or incomplete? I don’t think that’s the heart of it. The banking industry — like the airline industry — has done a pretty good job developing their self-service tools, in part because they’ve been working on it for a long time. I think when you get down to the appeal of the bank branch, at the heart of it, is the desire of human beings to get some reassurance and interaction from other knowledgeable and attentive human beings.”
— Micah Solomon, President of Four Aces Inc.

“The role of the bank branch is still essential for financial institutions and allows them to differentiate on customer experience and brand value. They’re evolving, but still very much needed by consumers.”

— Ray Wizbowski, CMO at Entrust Datacard

“When consumers want advice or discussion, branches remain as relevant as ever. As long as personal service and relationships remain important, bankers and their customers will likely continue to do business face-to-face.”
— Marion Williams, Finsia

“People don’t trust banks. The way to fix this perception isn’t by removing the one avenue they have for face-to-face interactions with their financial institution – it’s by transforming that space into somewhere people actually want to be.”
— Joe Salesky, CEO at CRMNEXT

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Comments

  1. Consumers visit branches because they “have to”, because the consumption of most products and services in their current form and processes “forces them to”… Consumers wouldn’t hesitate conducting all their banking needs remotely, even the advisory part… No one wakes up in the morning, all excited, “yey! I’m off to my bank branch!”… It is mind blowing to read some of the overly confident statements above… (+25 years in consumer banking, prior to a recent shift to disruptive financial technology)

  2. “Do Banks Need Branches?” is the wrong question. The real question is whether Banks want Branches. And I think they do because branch is where they sell best.

    http://gtm360.com/blog/2015/02/13/secret-of-survival-of-bank-branches/

  3. Chris Yaldezian says:

    It is “clicks and bricks” but as clicks continue to go up, less bricks will be needed.

  4. Many banks around the globe are closing branches without taking in account attrition rates; this is a common mistake as a result of a misleading idea of transaction migration to digital channels.

    The migration is real, however, branches are still very relevant for the two most critical parts of the customer journey (sales and problem solving), and those interactions at branch level are the ones with the highest ROI, therefore, financials institutions are losing value and customers with their branch network optimisation plans.

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