We used to live in an age when banking was unbundled. Some services you did online, and some necessitated a visit to the branch.
Doug Brown, president at NCR, told Karen Webster that we’re now in the age of the banking re-bundle, with a seismic shift in how banks envision the branch — and how customers use it. At the bank or the credit union, the branch can now be the hub, reinforcing the trust that 87 percent of consumers, as surveyed by PYMNTS, have placed in those institutions.
And the consumers? Well, they want to stay connected to the financial ecosystem, with an eye on controlling certain aspects of the experience, on-demand and on their device.
At first glance, the banks themselves — at least the brick-and-mortar component — would seem to be under siege.
Brown said there are marked changes in account openings and onboarding (it’s done digitally, of course) and even in how people choose their banks (social media can be influential, he said).
The challenger banks — such as Revolut (with a $33 billion market cap), Monzo and Starling — have been eating retail banking’s lunch. At least that’s the conventional wisdom. But those lofty valuations, said Brown, are a bit like bitcoin, where speculative attention is the order of the day. To be fair, he said, the challengers have alleviated at least some pain points in the process, transforming buy now, pay later (BNPL) options and, for example, early payment options on earned wages.
The Branch, Reimagined
At least some numbers bear out the competitive pressures — but they hint toward rebirth for the banks, not death.
The conversation between Brown and Webster came against the backdrop where major banks have shut down as much as 5 percent of their holdings due to digital banking. As Brown said, the physical branch is in a state of continued transformation. And the branches still have a relevant place in delivering experiences to consumers, especially on the part of banks and credit unions.
The very structure of the bank itself is changing, contended Brown. “It’s being built to form and to purpose,” he said. The very locations of the branches are being shifted, to locations in healthcare centers or college dormitories. By and large, the branch footprints themselves are smaller.
But drill down a bit, and within those smaller branch footprints, the continuum of interactions is being reimagined. The branch visit is more akin to a visit to the Apple store, Brown said. Consumers still want to interact in person, with engagement on money issues, planning and advice.
Though the visits may have decreased in frequency, the value is still there — and delivering that value in omnichannel settings within the branch can help financial institutions (FIs) cement relationships with their end customers. When the relationship with the customer is more holistic, he said, consumers tend to be multi-channel users.
As Brown notes, the multi-channel consumers, who engage with in-branch high-tech services — and particularly self-service options, like interactive teller machines and mobile check capture — are “orders in magnitude more valuable and profitable than just digital-only customers.” ITMs, he remarked, also can help banks extend service hours (and thus revenues).
That continuum means the digital transformation cannot exist just on the front end (that’s just a “band-aid” approach, he said), but necessitates a transformation of the back office as well. Combining all those digital initiatives across channels, said Brown, is streamlined by shared technology layers in the banking platform and an API-driven set of services that allows banks to choose.
On the consumer-facing side of the equation, if the customer does start down the path and gets frustrated with trying to create a wire for somebody, that’s when they can either invoke a virtual assistant to help facilitate the transaction or get right to the banker who can help them.
“The banker knows what the customer was doing, so they can jump right into context and help them complete what they wanted to do,” he explained. The helping hands of real people can assist consumers when things go wrong, when they want refunds on their purchases or when they need to build credit.
To get there, the FIs can take a page from the digital-only players and learn to harness consumer data more proactively and from a broader range of sources (Brown pointed to NCR’s recent partnership with Google Cloud as an example).
The combination of the trust factor, the technologies and the omnichannel options are proving sticky so that consumers’ attention does not drift elsewhere, said Brown. Zelle serves as a case study here, as the demand for faster, direct payments can be served by banks’ own innovations rather than unnecessarily ceding ground to the challengers.
Banks know their customers, he said — and the drive toward personalized services and financial wellness (such as helping with budgeting day-to-day expenses) can get a boost in the branch, too.
“Technology is making all of this more practical for consumers, and more fulfilling, giving consumers the ability to feel that they are in control, and that they can save money, pay their bills and spend wisely,” Brown said.