“Here we go again,” says anyone who follows the long-running debate about the future of the bank branch. The arguments by now are familiar:
“We don’t need the traditional brick-and-mortar branch.”
“We will never get rid of the branch.”
“Let’s just revolutionize the branch with the latest and greatest technology.”
It seems as if the future should be here by now.
Maybe it is.
Back in the mid-’80s when I was sent to a conference on the “branch of the future,” I walked into an exhibition hall with booths set up claiming that someday, customers will select products just like they order fast food at McDonalds.
Now, here we are today and banks are still trying to figure out what the branch should be. Various models have been tested—meanwhile, the average visit to a branch has declined from 27 times per year to less than three.
A friend of mine who is a community bank CEO told me that he was once asked whether he thought his children would eventually bank with his institution. He was shocked by his own answer, which was: “Never.”
What can be done about these lost bank interactions?
Let customers “Uber” your business bank
The answer comes in two segments: retail and business banking.
• In retail banking, online and mobile channels can and will suffice for 99% of interaction required by the bank. Portal development, more sophisticated websites, and electronic handling of documents and signatures will contribute to this.
Therefore, the branch footprint can shrink significantly.
• In business banking, the “banker on demand” concept comes into play. High net-worth small-business or business-lending customers represent significant value to the bank. Those relationships are critical.
Rather than pushing these customers toward interaction in the branch, why not drive around town and visit them in their place of business, home, or at a coffee shop?
Instead of having a network of physical branches that (most) customers loathe visiting, why not provide them an app they can open on a tablet and see where bank cars—coded for different specialties—are in their area, and then simply request one?
Why can’t we integrate this ease-of-use concept into banking? If customers need a banker to sign a document; need a wealth manager; need to take out a business loan; or to deposit a large amounts of cash—why not order a banker or cash collection service, much like we call upon Uber? That company is evolving the way the world moves by seamlessly connecting riders to drivers—and now services—through its platform.
Years ago, doctors would come into homes and the milk man delivered to our doorsteps. That is, until they were replaced by lower cost models of distribution and more generic service. Eliminating branches and incorporating banking-on-demand is the new lower-cost distribution that recreates the personalized relationship.
Get ahead of the trend
Here is my challenge to the marketplace: Start planning today for a new wholesale and retail strategy.
Your retail strategy needs to start maximizing electronic interaction and transparency across the omnichannel and ensure millennials want to bank with you, because they are tomorrow’s customers.
For your wholesale strategy, think about the best way to provide your customers with personal services—commercial lending, wealth management, and cash collections—that are available at the tip of their fingers.
Banks need to return to the days of the “doctor on call,” ensuring they are able to meet with customers on an as-needed basis. And do this in the 21st century way that leverages technology to make the service more efficient, cost effective, and convenient for the bank and its customers.
Those who choose to embrace this “banker on demand” concept will give themselves a true competitive advantage.
About the author
Pierre Naudé is CEO of nCino. He has more than 35 years experience in the financial technology industry. Prior to nCino, Pierre served as divisional president of Community Financial for S1 Corporation until its acquisition by ACI Worldwide. nCino leverages the Salesforce.com platform to deliver a cloud-based banking solution to institutions ranging in size from $150 million to $200 billion.