Are bank and credit union branches a thing of the past?

Even before COVID-19 started making headlines, industry experts and analysts agreed that the future of traditional bank and credit union branches looked bleak.

Not to be all doom and gloom, but over the past decade, bank branches have been declining at a 2% clip per year. In 2019 alone, there were 3,164 branch closures. Credit unions, on the other hand, have been enjoying fairly stable numbers.

But that was before COVID-19.

Since the pandemic hit, there’ve been widespread temporary closures, from JPMorgan Chase shuttering 20% of their U.S. branches, to Capital One halting ops at 120 New York-based locations. In fact, as of August 2020, 70% of all bank staff worked remotely.

The question begs: Is COVID-19 the straw that broke the camel’s back for branch banking, or is it here to stay?

The next step in the branch-based experience

Mary Mack, CEO of Wells Fargo’s consumer banking operation is confident that branches are here to stay. In a recent edition of The Financial Brand, she noted that, despite the pandemic, over a million customers are visiting Wells Fargo branches every day. Branches, she asserts, won’t be gone anytime soon—but they will fundamentally change.

Mack’s position reflects what industry analysts have been saying for years. Specifically, that branches are transforming into advisory centers or, as Accenture puts it: experience centers. So, what are these banking “experience centers”?

These new branches will be experience-led and empower the front line with convenient technology. They’ll also emphasise the human touch that customers still demand at key financial moments, by complementing the technology with empathy.

Experience centers will serve territories, and the new generation of front-line staff who work in them will be empowered with data and digital technology to enable true customer centricity, with an emphasis on advisory services and digital and financial education. The omnichannel experience will be central to these centers. In other words, customers will be able to engage seamlessly across online and offline channels without gaps in service.

Customers look to physical channels for expert advice - Graphic

If you’re anything like me, this somewhat utopian vision of tomorrow sounds pretty swell. But it’s still a long way off. Which brings us to our next point…

How to build tomorrow’s branch today

To realize the branch’s bright, if transformed future, banks and credit unions need to act now. Financial institutions were already experimenting with new approaches to the branch experience before COVID-19 hit, and that innovation promises to continue long after it passes.

Virgin Money, for instance, launched boutique lounges. Beyond providing community space, they reimagined the customer experience—and added a 200% uplift in sales to nearby branches. Meanwhile, SoFi hosts networking and “pay off” events designed specifically for their millennial customers. But this is just the tip of the iceberg.

To truly enable your branches to deliver more value, here are some steps you can take today, even with the uncertainty surrounding COVID-19.

Improve data management

It’s no surprise that banks and credit unions are still trying to fix data quality issues. The problem is a big one. But it’s a critical first-step if banks are to deliver a truly omnichannel experience. That’s why external help can go a long way.

Data alliances are one approach. Another, is to bring in vendors who can work with you to unlock your data’s full value. Beyond that, having one system of record for all customer interactions is absolutely critical.

Improvements to data infrastructure won’t just accelerate your digital transformation—they’ll empower front-line staff with the insights they need to deliver a better in-branch experience.

Increase digital investment and adoption

This comes with a HUGE caveat.

Banks have already thrown $1 trillion at digital, though results have been, erm… mixed. That’s why we’re big advocates of taking a tactical approach.

Focus resources where you can generate big wins now. Mobile is a great place to start, given the technology’s widespread adoption. By using your app for transactional exchanges, like moving money or resetting customer passwords, and financial literacy, you can empower frontline staff to think strategically, instead of just tactically. By doing this, you can elevate your quality of service and transform employees into true advisors.

Research shows that customers prefer people channels for emotional episodes and digital channels for transactional episodes. Shifting demand away from transactional in-branch experiences is especially important given the current crisis and lack of resources. Today, some customers are waiting up to three hours just to speak with their bank’s customer service team. That simply isn’t good enough.

Customers prefer digital channels for routine episodes - Graphic

Rethink your branch strategy

If the term “phygital” is new to you, get ready to start hearing it a lot more. Banks and credit unions that are already fixing the data problem and looking at quick ways to operationalize digital will have a massive advantage enabling branches in a post-COVID-19 world. They’ll be able to deliver a holistic experience that blends offline and online channels and addresses real customer needs in real time.

The bank and credit union branch isn’t going the way of the dinosaur, despite what you’ve heard, though it is undergoing a radical transformation—and for the better, we believe.

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