Digital Banking’s COVID Boom Drives Branch Transformation

As consumers venture forth again, and companies sort out returning to the office versus work from home, the role of bank and credit union branches will continue their ongoing evolution to become community-oriented centers for consultation and people-to-people interaction.

The pandemic and its aftermath caused disruption that will further lead to the end of branches being about products and generic services. Instead, as vaccines and more take hold, branches will be about tapping into the potential to use physical spaces as venues, catering to what matters most in people’s lives. Convenience has pretty much gone digital, so branches will be about person-to-person.

Branches are the ideal setting to use financial education to help consumers build confidence in managing their finances. The pandemic has caused financial and economic shock for many, and recovery will require extended support and flexibility from banks and credit unions. People will expect financial institutions to take an active role in such societal issues.

While this will be a major shift for many institutions, many people still prefer visiting branches for help setting up mortgages, personal loans and checking accounts. The reassurance provided by great face-to-face support remains, whether it’s offering assistance to those who have yet to move online or resolving complex financial problems. This is why many online providers will ultimately seek the perfect blend that the addition of physical spaces can deliver. Amazon has already been showing the way, in this regard.

The branch is also the face of the financial institution, and as and when normality returns, there will be no better place for financial institutions to regain their position within communities.

The Evolving Community:

As part of the transformation due to working from home, the role of communities is changing dramatically. Once-forgotten neighborhoods are getting a revitalizing boost, due to people co-working and homeworking.

With more people living where they work, financial institutions will play a key role within this shift by providing vibrant places for people to interact, connect, celebrate and learn.

Though it will come in a different way, financial institutions can once again become the nerve center of their communities.

What Does Lifestyle Banking Look Like Today?

In seeking examples of brands following this approach, it’s interesting that three of the best are from digital brands venturing into the physical world. The lack of legacy restrictions has allowed these brands to start from scratch.

ImaginCafe in Barcelona is one of the best examples of applying “life-led” thinking to a physical space. Although CaixaBank backs the concept, it draws its inspiration from the bank’s digital brand ImaginBank, a one-stop-shop for creativity, innovation and music, right in the heart of Barcelona.

The facility is designed to encourage local emerging talent, through collaboration and learning. Crucially, this free-to-use space is designed to fulfill the needs of the local, young, creative community. It includes features such as a flexible event venue for pop-up retail, a projection room for film nights, and a multimedia lab and art exhibitions.

B Works is another example of a digital brand innovatively conceiving how a physical space could support a digitally led strategy. B Works was launched by CYBG in the U.K. and represented the thinking of its digital brand B. It is a shared environment in Manchester that facilitates collaborative communal learning, co-working and banking.

This is a free facility for local people, where new ideas can be generated and shared. It includes co-working spaces, seminar areas, a yoga studio, an events venue and a media room for digital production.

Frank by OCBC in Singapore as well as mBank from Poland, which are known for mobile and digital banking, respectively, have effectively balanced an online and offline presence. Albeit online banks they understand the value of physical spaces to build relationships with customers.

Both banks aim at the youth market, and research suggests that Millennials prefer to start their banking relationship within bricks and mortar. Frank by OCBC is well known for creating stylish spaces designed for customers to take the time to browse and ask questions. mBank’s network combines light branches with larger advisory centers.

Both of these institutions have created optimized concepts to suit the shopping mall environment and high consumer traffic hubs, where this generation typically spends time. Their successful strategy allows an agile relationship with consumers as they understand the interaction and connection between physical and online banking.

Read More: Trimming Branch Networks? Why Many Banks Find It Tough

Examining The Philosophy Behind The Spaces

When we look at the themes present within the models covered above, we see that they share an approach that is insight-led and grounded in the needs of a community.

Why This Is Important:

This new lens will enable financial institutions to rebuild relationships. They can establish greater trust with consumers by providing a personalized experience that matches their life needs.

This new lens will enable financial institutions to rebuild relationships. More importantly, it will allow them to move closer to the center of the consumer’s circle of trust by providing a personalized experience that matches their life needs.

Financial institutions will also have to consider cross-sector collaborations and partnerships to expand their offerings and services to connect with people’s lifestyles appropriately.

The similarities between the examples highlighted are not a coincidence. In my opinion, they represent the future of physical spaces in the banking industry. The days of so-called “digital branches” and smaller transaction-focused branch formats are numbered. The effects of the pandemic combined with the advancement of mobile banking mean that the need to visit physical locations purely to transact is disappearing fast.

The upcoming focus for physical spaces will be about people, not machinery. These will be vibrant spaces that encourage conversation, stimulate learning and support the brands’ online features.

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