Bank Branch Role Shifting From Transactions to Experiences

As the attachment to traditional branches in banking continues to drop, a new method of network planning is required that revolves around building an enhanced customer experience.

By Jim Marous, Publisher, Retail Banking Strategies for The Financial Brand and Publisher of the Digital Banking Report.

It comes as no surprise that banking customers are continuing to migrate routine transactions and interactions to digital channels. At the same time, there has been a rapid shift in online shopping that has altered the marketing and sales funnels for banks and credit unions.

Despite this shift, there is still a segment of consumers committed to the traditional branch for certain activities. According to the Novantas Multi-Channel Preferences Study, the more that the growth of digital adoption and functionality changes channel usage across sales and service, the more things stay the same for some tasks and some customers.

Building on three prior editions of this study, this year’s edition shows that some trends, such as deposits leaving the branch, have accelerated, while others have flattened. The findings support that bank branches remain vital to new primary checking acquisition, but that the optimal branch count and branch experience far different from what most banks and credit unions offer today.

“Investment in technology has accelerated the shift in the consumer mindset from branch dependence to perceived branch convenience. The knowledge that a branch exists provides a necessary level of comfort, but customers prefer to transact with their bank from the comfort of their home, office or on the go,” says Chris Musto, Managing Director of Novantas. “In the coming years, virtual channels will be able to accommodate not only basic banking transactions, but also increasingly complicated service issues, and this will lead to a further drop in branch attachment.”

Branch Shopping Behavior

According to the Novantas study, shopping online is done most frequently by consumers switching primary checking accounts over the past three years, but visiting the branch is the most likely shopping method for those opening a checking account for the first time. In other words, as familiarity and confidence with banking products and services increases, there is a greater likelihood of transition to digital channels.

Across age, income and prior banking experience categories, recent checking purchasers tended to take advantage of multiple methods of shopping for an account, but Switchers were 18% more likely to have shopped online than in a branch, while the Newly Banked were 36% more likely to shop by visiting a branch. Similarly, 33% of Switchers cited online shopping as most helpful, while for the Newly Banked, the branch was cited as the most valuable method, with only 21% citing online shopping as the most helpful method.

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