Banking branch transformation: security and openness combined
While dematerialisation of processes is one of the top priorities of banks – with a view to internal efficiency and greater accessibility to services for customers – and an increasing number of customers are using ‘remote’ banking services such as ATMs, internet and mobile banking, there’s an assumption that the physical bank branch will disappear.
In reality, however, this is unlikely to be the case, as bank branches still serve an essential and important role in not only the delivery of banking services themselves, but in a positive customer experience. What will change is the nature of the bank branch to a human-centred one, rather than one defined by security, and technology will play a vital role in its delivery.
It’s perhaps useful to look at three key eras of evolution in relation to bank branches:
- The expansionary period, at the end of the 1970s, during which banks, or at least the major banks, opened branches on every street corner to stay close to their customers and acquire new ones.
- The advent of the home banking, in the mid-1990s, and the subsequent development of mobile applications: the period of converting to digital banking had begun. The convenience of accessing their accounts from home took customers to a new dimension where, as a result, they only went to the bank for specific matters or ones strictly linked to financial products which were hard to manage via home banking.
- The phenomenon of branch closures and the onset of their transformation. This trend highlights how, from 2004 onwards, and in the following decade in the euro area, the number of physical bank branches fell by around 15%. This also happened in other continents, except for the Americas where the number of branches stayed the same or even rose slightly.
A survey conducted by ABI (Italian Banking Association), showed that the drive towards dematerialization is pursued through back-office simplification projects, followed by compliance regulations, improvements in data and communication networks, plus various aspects of cyber and physical security.
According to the ABI, 95% of customers now use ATM, Internet and Mobile Banking, and 17% use them exclusively, to the extent that in 2016, customer visits to banks dropped by 3%. This intense use of mobile services conjures up a vision of a digital bank, void of material existence, to the detriment of the physical branch, yet despite this trend we are experiencing, I personally believe that the branch office will not die out. The main reason behind this is that to open an account or for carry out specific investments, we still need and want the interaction with our peer at the bank or even need to go to the bank and sign with a pen on paper.
The bank branch as a point for customer interaction
Despite the global banking crisis, banks still retain a “legacy of trust”: expertise, experience, and security which is still of paramount importance. The branch will therefore retain a strategic role for the sale of those products and services for which personal interaction is required, such as managing savings, mortgages, and loans for private individuals, as well as small and medium-sized businesses.
Consequently, the branch will remain a point of contact, service and customer loyalty. However, bank branches themselves need to transform, delivery the security required but in an environment that’s welcoming, comfortable and accessible for consumers who have become used to accessing banking services in their own homes and on mobile devices. Banks will have to fulfil the experience that customers expect by taking a human-centred approach.
The bank branch of the future will be “open”, without barriers or security doors that may act as a visible deterrent for criminals, but which also, by their very nature, represent an element that restricts openness and accessibility for customers. They are also likely to be smaller, and situated in busy commercial locations. In many ways, bank branches will be indistinguishable from other modern retail outlets.
But banks do, of course, require heightened levels of security, and the use of modern security technology will be central to the delivery of the new model bank branch. Video surveillance will be one such technology. Network video cameras and increasingly effective analytical methods can ascertain with a high degree of reliability, for instance, if the person entering the bank has an unrecognisable face (i.e. covered) which would then cause their entry to be denied, or identify suspicious behaviour before entering or within the branch.
Video analytics can contribute towards improving customer experience, for example, by ensuring cash withdrawal is safer. A video camera, monitoring what is happening behind the person using the ATM, would ensure privacy and signal the encroachment of the area near the machine by a potential wrong-doer through an acoustic alarm.
The bank branch of the future will be a quiet, comfortable, safe place for customers, watched over by discreet eyes, which can be efficiently and continually managed, even remotely. A place where customers will not only access banking services as efficiently as if they were at home, but which will allow the bank to deepen relationships and create even greater loyalty.
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