For many retail banks, the bank branch is at the heart of the customer relationship. It is where customers go for information, to open an account, to cash a cheque, to make a deposit, and more. Depending on the type of branch, it can even be a place for coffee and human interaction.
When retail bank branches began to close in response to the COVID-19 pandemic, customers were cut off from this relationship. Although many banks maintained drive-up windows and provided service by appointment, others had to inform customers that their branches were completely closed.
To maintain the customer relationship, banks directed customers to their digital channels. As countries reopen, what will be the future of the retail bank branch?
Given the general consensus that nearly all branches will reopen at least for now, there are four courses of action for retail banks to consider:
Give customers a reason to stay home.
Banks around the world have doubled-down on digital to make it easier for customers to access the information and services they need from home. For many customers, digital has now become the default path for interacting with their bank, especially with the bank simplifying that interaction.
Think of the branch as the new office.
In April, Barclays CEO Jes Staley said that having thousands of bankers in city offices “may be a thing of the past” in light of the worldwide trend away from placing bank staff in expensive city centres. Once branches reopen and staff are no longer working from home, allowing them to use available office space within the branch would reduce reliance on corporate office space while minimising staff commutes and better connecting staff with their communities.
Retail branch staff.
Although many countries are resuming more normal levels of activity, branch foot traffic, which was already on the decline, has yet to reach pre-pandemic levels. This creates the opportunity for branch staff to provide services to other parts of the bank, such as answering customer service calls, aiding in collections efforts, or acting as service agents for government programmes like the Paycheck Protection Program.
Rethink the branch concept altogether.
Given the disruption in the industry and the greater emphasis on digital channels, the branch could become an online-initiated destination for more detailed information, building upon the appointment-only model some branches used during the pandemic.
Although it is too soon to tell what branch traffic will look like post pandemic, changes in products and services, business models and even branch layouts are a given.
Rapidly identifying and adapting to the in-person needs of the post-pandemic branch customer will enable banks to cascade changes across the branch network more quickly.
In addition, it will enable them to quickly develop or acquire the products and services needed to preserve customer loyalty, a measure that has been in decline in recent years.
Schmidt is a former banker and industry analyst with more than 25 years of financial services experience as a banker at Bank of America, a consultant at Ernst & Young and an analyst at Gartner, guiding key business and technology decisions.