If you have a bank account, chances are you can move funds and manage your money either through a mobile app or over the telephone. Both have become common place for most financial institutions, as they attempt to make banking more convenient and accessible for their customers.
For consumers in rural areas, this is nothing new. Over the last few years, the closure of rural bank branches has become a topic of discussion in the US, UK, Canada, France and many other countries. Every time a new branch closes, questions are asked about access to banking – in particular for those who lack digital skills, devices or who otherwise depend on face-to-face services. But could the wider pattern of bank closures be a sign of things to come, or will society keep hold of a baseline level of retail banking locations regardless of the amount of future digitization?
Is the high-street bank dead?
Jamie Broadbent, Head of Digital & Innovation at RBS International, certainly doesn’t believe that the branch is dead. He says: “People will have seen a reduction over the past few years in terms of the number of high-street bank branches. I think that life for the branch continues, but in a form that’s very different to what it’s been previously. The reality is that far more customers now will do all of their day-to-day banking transactions themselves through digital channels – and that’s been a welcome change. I don’t think the branch is a place where people will go ‘to do banking’.
“What we’ve seen – even through Covid, as we’ve all been working remotely – is we don’t crave going into the office to do work, we crave going into the office to have social experience. I think that will be the future of branch banking as well. No one will go there to do transactions but they will become centres for communities to gather, to have experiences about financial learning and financial health, and so it will take on an entirely different role. But I don’t think it will disappear.”
Broadbent says that the feedback RBS gets from its customers supports that assumption: people want a physical place where they can go, particularly for the types of support that may not feel comfortable receiving remotely. Indeed, where large or complex transactions are involved, the physical branch is very much alive.
Earlier this year, Xerox published a survey in partnership with Forrester Consulting that it claimed showed “a gap… between financial service firms’ perception of customer preferences and what customers actually want”. Three quarters of companies surveyed believed that customers prefer to be engaged through automated digital methods, but only 38% of customers actually prefer this digital-only option.
Dan Schwab, Global Offer Lead – Financial Services & Insurance for Xerox, considers the effect of digital-only banking on vulnerable customers. “In just the UK as an example, there’s over a million people that are either underbanked or unbanked,” he says. “Some of the reasons that they give were that they don’t trust the banking system, they’re lacking technology, they don’t feel like that digital experience is what they want – so I think that a branch on the high street is going to allow them to have a place to go.
“I think that’s a global concern. How do we, as a banking community, address the needs of the underprivileged or the unbanked? There’s a lot of services that we can provide to that group of individuals that will actually benefit them in the long run – keeping branches open in low-income areas, providing technology in those branches…. I think as a group we need to continue to look at opportunities to keep those services available.”
Banking 'a social responsibility'
Ange Johnson de Wet, Head of Cloud and Technology Change Risk at Lloyds Banking Group, doesn’t believe that banks make decisions regarding the future of their branches lightly. “I do think that retail banks are very similar for example to electricity companies or water companies,” she tells MoneyNext. “We are providing a service to the community, making sure there is funding and access to money as and when it’s needed.
“I think that social responsibility is pretty well understand by the retail banks. It’s definitely understood by the regulators. I think all of the banks think very carefully before they make a decision to close a branch for any reason, because there is that… big responsibility to be servicing the community.”
And Akash Shah, Head of Strategy and Global Client Management for BNY Mellon, believes that there is a vision for retail banking where the physical and the digital coexist peacefully. “I think this whole idea that digital replaces human interaction is a dated concept,” Shah says.
“I think all of our lives are enriched by the tools and key technologies [we have access to] but we still crave human interaction, and I think in the end we still believe that the place where you entrust your money, your savings, your future… you want to know that there are real strengths and foundations behind it.”