Australian bank ANZ has recently released a report on efforts the company is making to improve along environmental, social and governance metrics. Within this report the section covering changes made with regard to the company’s branches there were two interesting developments. For one the company has started to introduce new branches designed specifically by its architects to be carbon neutral. For another, ANZ has developed technology that will allow its branch infrastructure to be disassembled, relocated and reused. Both of these developments are distinctive but constitute part of a wider effort by the banking sector across the globe to reconsider the use, design and purpose of branches.
ANZ has been steadily closing down branches across Australia over the past couple of years, which makes the move to invest in updating the bank’s network with an eco-spin somewhat puzzling. There are, however, several reasons why updating branches – especially with an ESG orientation – is a good idea right now. The most obvious is the ability to wave around one’s ESG credentials.
Even though a small proportion of ANZ’s total branches are designed to be carbon neutral, the effort to move towards carbon neutrality signals to investors that the company is committed to improving its environmental impact. A longer-term justification for this investment is that it hedges against the risk of future governments clamping down on carbon emissions as the climate crisis worsens. A move to carbon neutrality at some point is nigh inevitable, ANZ is just getting ahead of the curve.
ANZ ‘Breathe’ concept branches: innovative and sustainable
However, the second less newsworthy change is perhaps the change that deserves more attention from the banking sector. The ability to disassemble, relocate and reuse branch infrastructure is a smart move in the face of a banking sector that is changing at a rapid pace. This is bolstered by the fact that the “Breathe” branches themselves are constructed using LEGO piece like components that are held together by adhesive free joinery. Almost all of the branch can be reconstructed or deconstructed as desired. Despite receiving relatively little press, this change could prove one of the smartest moves made in the recent wave of branch transformations.
The pandemic proved that the majority of people were capable and willing to conduct their banking online. The rapid closures of bank branches is a symptom of the wider trend of digitisation of banking. However, despite using them less consumer actually value branch access more now than they did prior to banks rushing to close down their branches. Squaring the circle of consumers decreased use of branches and strengthened preference for branch access has been the factor driving much of the innovation underlying the transformation of branches over the past few years.
ANZ’s deconstructable branches don’t provide banks with a solution to this contradiction but they do allow the bank to adapt more easily to the uncertainty. If the conversion into cafes is the way forward for bank branches then ANZ have the freedom to redesign their branches to suit such needs with far greater ease then competitors. If, on the other hand, small self service branches become the primary means by which people access their finances then downscaling is easy. Other banks should take note, the recyclability of bank branches may prove to be the most effective hedge a bank can make against the uncertainty digitisation has brought about regarding the future of branch banking.
Ciaran Yates is a financial services analyst at GlobalData