Despite the accelerating pace of mobile adoption, bank branches have a critical role to play in customer engagement.
BY KATIE KUEHNER-HEBERT
Long before the pandemic hit, many banks were well on their way to rethinking their branches to better accommodate customers’ increased use of digital channels. Now, in them wake of shutdowns forcing more people to bank online, adopt mobile apps or visit ATMs—and with net closures of nearly 3,000 branches in the U.S. in 2021—the reinvention of the branch has taken on even more urgency. By 2024, customers expect 61% of their banking business to be digital and 39% human-assisted, with the biggest projected increases coming from mobile and
ATM, according to BAI Banking Outlook research identifying the top banking trends and challenges for
It’s little surprise that mobile-native members of Generation Z showed the highest preference for opening deposit accounts via their cell phone. But branch networks still have a place, the report’s authors write: “Branches are still critical for many customers today and (are) the preferred method for opening deposits by Gen X and Boomers+.”
Bank customers continue to want their financial institutions to have conveniently accessible physical branches, but the definition of “convenient” has changed noticeably over the past decade, says Dave Martin, founder of consulting firm bankmechanics in Sugar Land, Texas. If customers need to visit branches less frequently, the distance they’re willing to travel to the closest branch increases, thereby expanding the viable service area of each location.
“This is actually good news for smaller banks without large networks,” Martin says. “Larger banks remain as committed to physical branches as ever—they just see that it requires fewer branches in a market to achieve acceptable access to customers.”
Most of the branch reductions are actually large banks “rightsizing” their networks as they tweak the remaining branches, he says. “Branches remain the center of the banking universe for the majority of banks and the growth engines for these operations.”
CREATING ‘THE BRANCH OF THE FUTURE’
Prior to the pandemic, the $1.7 billion-asset IncredibleBank in Wausau, Wisconsin, had been working to create the “branch of the future,” complete with teller pods, cash recyclers and headsets for staff to help them move more freely around the branch and service drive-thru customers.
“The pandemic has most certainty expedited the transformation of our branches,” says Todd Nagel, the bank’s CEO and president. “It also changed the plan a bit, as we realized we needed to put more emphasis on the drive-thru lanes as people began to use them much more.”
To create a better experience for customers in vehicles, IncredibleBank improved drive-thru audio and lighting and introduced video to enable more interaction with tellers. In addition, cash tubes are now adjustable, easing access for customers in vehicles of all sizes. The pandemic also accelerated customer adoption of the bank’s mobile app.
With branches handling fewer transactions, staff are more focused on consulting with customers, Nagel says. Seventy percent of consultations have focused on helping customers learn how to use the mobile app including making deposits by phone, finding ATMs and using payment services. “This has also caused a major shift in the type of employees we recruit—we’re now looking for much more tech-savvy people.”
While IncredibleBank has always had a sales culture, Nagel believes customers have become more proactive in asking about other products and services. “It’s the sentiment that, ‘I’m coming into this building now, what else do you have that I should be looking at?’”
IncredibleBank is set to open more branches in Wisconsin, as consolidation has created opportunities to grow, and some in Florida, following people from the Midwest who spend the winter there.
“I think the branch is here to stay for a long time— smaller community banks in particular should look for opportunities to expand,” Nagel says.
TAKING LOCATION CUES FROM CUSTOMERS
Wells Fargo, the $1.8 trillion-asset bank headquartered in San Francisco, has reduced its total branch count as customer preferences and transaction patterns have shifted more to digital channels, says Shaun McDougall, growth and branch administration leader.
However, there are still opportunities to consolidate existing branches and/or open new branches “as customers engage in financial checkups with bankers to create and fine-tune long-term financial plans.”
“Every day customers walk into a branch to talk to a banker about a complex financial need or a life milestone like home buying,” McDougall says. “Our branches continue to be a place where customers can sit down with a banker and have a meaningful financial conversation to help them reach their goals.”
Wells Fargo is enhancing the tools its bankers use, he says. For example, the bank’s “customer engagement engine” uses artificial intelligence to help staff better understand and anticipate customers’ needs and then have “relevant and personal conversations to determine what’s right for their individual financial circumstances.”
At the same time, digital will become a bigger part of the branch experience in terms of new customer financial wellness tools, banker-assisted mobile transactions and mobile account opening, McDougall says.
Consulting firm Accenture predicts the branch network of the future will revolve around “experience stores”—the centerpiece of “an agile, integrated network of environments that are multi-format, geographically tailored and digitally enabled.”
In Accenture’s vision, laid out in a pre-pandemic report, experience stores will showcase products and provide
complex advice; empower staff with simple mobile technology; emphasize the human touch, with staff “complementing technology with empathy”; and operate as an integrated component of the overall channel strategy. Branch networks in each market will feature an “experience hub” augmented by satellite branches, while the exact mix could differ among geographies.
Accenture’s recommended model is “one that’s led not by the need to house transactional activities in a particular location, but by the vital importance of meeting customers’ changing expectations and providing them with an experience that they’ll come back for.”
However branches get reinvented, networks are here to stay for the conceivable future.