The general decline of branch-based banking is often something that hits the headlines, but even with declining branch visits, have we reached a digital saturation point?
For years now, many brands have been working to streamline their branch network, not only as a cost saving exercise, but also in response to the growing customer appetite for more convenient, often digital, interactions.
The Deloitte 2019 Global Banking Outlook has shown how stark the reality of declining branch visits is, the proportion of customers visiting a branch more than once a month has now fallen to just 25%. If this is how customers want to engage, then surely it is not inconceivable that we could all be banking with branchless organisations in the not too distant future.
Hurrah for digital then? Not quite. A deeper dive shows that the real picture is more nuanced.
As customers, we have become digital narcissists, constantly craving high-tech… until the moment we want high-touch. In every customer life cycle, there will at some point be a complex or high-value purchase that triggers a need for reassurance or a difficulty that only an advisor is able to resolve. So, while only 25% use branches with any degree of semi-regularity, just 14% don't use them at all.
Of course, the ideal scenario would be that high-tech equates to high-touch. But while online journeys do exist for more important transactions today, digital has not (yet) significantly extended its reach beyond the domain of simple ‘one click’ requests, largely due to its inability to deliver the same degree of service face-to-face advisors provide.
Therefore, while on the face of it, uptake of ‘traditional’ banking services is declining, this should not be taken as a reflection of overall customer need, but rather is far more likely to be a result of the infrequency of important transactions. In fact, look at customer preference for these types of purchases specifically, and you can see digital hits a tipping point and customers revert to face-to-face:
Although your customers are not taking out multiple products on a monthly basis, banks ought not to underestimate the significance of these journeys. While customers might check their balance or make transfers online multiple times per month, their single one-off experience of making an important purchase (e.g. mortgage) is likely to leave a much longer lasting impression of your brand and be a much greater determinant of life-time loyalty than any number of ‘one click’ transactions.
So what does this research mean for banks in practice? For me, there are three conclusions to be drawn.
1. Your digital strategy is working!
Increasing customer engagement online/ via apps show that customers have an appetite for the convenient service you are offering.
2. But it’s not perfect
Focus on optimising digital journeys for high value & complex transactions- relatively low consumer uptake means that customer needs in these instances are not being fully met.
3. Focus on optimising traditional channels rather than replacing them
McKinsey report that 87% of customers are not ready for an entirely human-less bank, but that doesn’t mean that your branches should be run by manual analogue processes. Assess how you can extend your digital strategy to include traditional channels, while retaining valuable human support, to maximise efficiency and enhance the customer experience further.
