U.S. banks have been shrinking their physical footprints for a decade now, as the industry consolidates and remaining players seek to save costs and serve customers more efficiently on digital platforms. But even as they close branches, banks are opening new ones that are smaller, more differentiated and outfitted with the technology and staff to put customers first.
Like retailers before them, banks are starting to embrace the idea of an omnichannel approach — where customer touchpoints include a variety of digital and social media sources as well as brick-and-mortar locations.
In Retail Banking 2020: The Future of the Retail Banking Industry, PwC surveyed more than 500 C-level banking executives and found their three top priorities were developing a customer-centric business model, optimizing distribution and simplifying business and operating models.
Each of these priorities will shape the future of the bank branch.
Visualizing the Future of the Bank Branch
According to PwC, future bank branches will look and function quite differently. “The value of a branch will need to be redefined,” the report says. “There will be different models, tailored to specific purposes.”
Specifically, the report authors envision flagship branches will offer information and host educational and social events, in addition to providing regular bank services. Other branches will be more community-focused, and still others would function as “expanded ATMs.” All branches would offer advisers and product specialists either in person or by video call.
“Transaction processing will be almost entirely digital — though many transactions will continue to be ‘in store,’ just conducted through smart ATMs, tellerless kiosks and touchscreens,” according to PwC.
Tech Is at the Heart of Redesigned Bank Branches
Banks and credit unions are already embracing these tech trends — and getting it right.
For example, BMO Harris bank opened several Smart Branches in the Midwest — branches with a smaller physical footprint, but with advanced ATMs and video conference capabilities for a more open feel. Bank of America is testing tellerless branches and PNC has premiered pop-up branches since 2014. Smaller banks are adding branches that focus on the local community. Consulting firm McKinsey says innovations like these can result in a “60 to 70 percent improvement in branch effectiveness, as measured by cost savings and increased sales.”
This redesign leverages new technology that’s both customer-facing and on the back end. Many banks remodeling their branches opt for digital signage solutions and video walls such as those offered by like Black Box, LG and other brands. Tablets, such as those from Apple or Microsoft, are also common.
Banks face major challenges in designing a customer experience that’s personal and seamless, but also produces efficiencies for the bank.
“Perhaps the biggest hurdle facing banks as they tighten their focus on customers’ needs is consolidating IT support from their many technology vendors,” says Dominic Ciccone, global business line executive, financial services at IBM Global Technology Services (GTS), in a blog post for IBM’s IT Biz Advisor.
In a whitepaper on the future of bank branch technology, IBM foresees reduced costs for banks due to fewer vendors, increased use of as-a-service business models, task automation and even augmented reality applications for technical repairs.
On the sales side, banks can incorporate data analytics and digital sales tools to customize outreach and communication, while advanced management dashboards help keep efforts organized and track key metrics. With better-trained sales staff leveraging these tools, McKinsey estimates banks could increase revenues by 30 percent.
The technology available for retail banking is set to improve both the sector and the customer experience. With so many options, banks are being forced to innovate and overhaul their technology – and they’re headed in the right direction.