Movements towards open and digital banking have become the priority for retail banks globally, with ever-improving technological advances being made. Banks have seen the advantages that experience-based branches can bring and should look to capitalise.

While banks have gone deep into trying to differentiate their branches, there exists three main styles of modern branches.

Some banks have started to operate fully digital branches, with only ‘meet-and-greeter’ staff present. They are looking to optimise branch usage and are focused more on cost efficiencies than customer relationships.

Banca Carige rolled out its first digital branches in 2021, with each branch containing four technology areas. 24×7 area: advanced self-service ATMs that are always accessible to carry out transactions. Reception area: directing users to branch stations via digital kiosks. Internal self-service area: reserved self-service workstations for advanced transactional operations, and cash desks. Remote banking area: new channel providing operational and advisory activities for products through a remote banking operator.

‘Smart branches’ are another branch style introduced by some banks. These smaller formatted branches do not have bank tellers, but instead have ‘wireless’ staff, allowing them free movement around the branch to offer increased assistance to customers.

Bank of Montreal (BMO) and BBVA are the main players who have adopted this style of branch. BMO piloted its smart branch in 2015, with more introduced in 2018, but since 2019, there has been minimal expansion. This highlights a problem for BMO with its branch innovation not being as successful as first forecasted, but this could be due to the effects of the pandemic and its acquisition of Bank of the West in 2021, which doubled its current branch network.

Dual and multi-use branches are more relaxed, community-based branches that offer other services such as cafés or exercise classes. Customers, especially younger, are more likely to sign up and visit the branches with tangible benefits and other uses than just banking.

Capital One is offering fast and free Wi-Fi in its ‘Banking Café’ as well as discounted food and drinks to account holders. Umpqua has opened a similar open-style bank, a relaxed space for people to meet and socialize while serving as a banking branch. Capital One opened its first café-style branch in 2015, with the total number growing to 50 by 2022.

Capital One has experienced success in its new branch ventures, with its key focus aimed at building relationships with its customers, giving them the best branch experience available. This is perhaps due to its previous digital-only nature allowing it to cater for its user base, highlighting that branch banking is not dying but needs to be tailored.

BMO’s struggles could be due to it trying to offer too much assistance to customers in ways that they do not require in order to maximize gain for itself rather than focusing on customers’ specific needs. The question remains whether Banca Carige customers will embrace the full digital bank, with the same technologies being offered online as in branch.

The success of relationship-focused branches, such as Capital One’s Café, highlights how banks should look to innovate their branches. Banks should look to offer a more open and relaxed branch experience to build customer relationships in the future in order to increase usage and bring more efficiency to a currently costly practice.