Does digital disruption mean the end of branch banking?

Dec 15th, 2015 | By FCT

The psychology of customer interactions with live bank branch staff in bricks and mortar branches is, according to business intelligence giant IDC, rather more nuanced—and, for bank employees, optimistic—than you’d first think.

Why?

Because the answers regarding the relevancy for customers of live interactions with bank staff are (as you’d imagine) highly age-dependent. Elderly customers are habituated to a live banking experience; latest IDC data suggests that some 25% of millennials (the biggest cohort of human beings on the planet) have never set foot in a bank branch. Ever.

So let’s get out the crystal ball and take a hard look at what might lie ahead.

The real bump for most bank customers isn’t the digital experience—which is largely information gathering—or the live experience—which is largely about trust-building and sharing stories about family, life experiences and the like to establish value connections.

No. It’s the hand-off between the digital and the live user experience (UX).

People have been going to banks for an exceedingly long time; the first merchant banks, in northern Italy circa 1350 were decidedly formal affairs, not open to the general population: they funded wars and merchant sailing projects.

Fast forward to Q4, 2014, when Barclays in the UK closed 98 branches; and to this past year when smartphone transactions have skyrocketed, literally being used anywhere and everywhere digital banking- is possible and practicable.

So imagine if video chat were possible on your smartphone for a mortgage application: why would folks come to the bank branch to transact business? Well, here IDC has identified what might be the secret to bank branch prosperity—and it’s as paradoxical as the latest data that shows paperback book sales are growing by leaps and bounds, while e-reader sales plateau and a renewed interest in vinyl LP records and turntables explodes.

In a word: contact.

Human beings like having other human beings help them with a complex piece of business. US data shows that bank branch preferences are fast overtaking web- and mobile-only preferences for complex transactions—and a mortgage definitely qualifies for ‘complex.’

Like music-lovers who want their iPhone for commuting music but a vinyl record collection for their highest-engagement listening experiences at home, bank customers are rapidly evolving a non-‘one-size-fits-all’ approach. In a phrase, they want what they want.

And that means seamless banking is the Holy Grail, not single-channel. Bricks and mortar banking will continue to evolve ever more touchpoints relevant to the live customer experience—and continue to close the many gaps between digital and live service experiences, online, mobile, branch and ATM.

The secret to great customer experience hasn’t changed: know what your customers want before they do.

Categories: Mortgage
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