Branch still relevant as digital complement

Retail bankers in the U.S. can take heart from the fact that their overseas counterparts—those in Western Europe, at least—have been wrestling with the same issues about the value and role of branches as they have.

And the Europeans are coming to many of the same conclusions.

Here’s one example: More branches across Europe are being refurbished than shut down. Branch networks everywhere are being refreshed and modernized, reflecting the continued value that banks place in them. There is far more variety in branch size and format these days, with mobile branches, kiosks, and coffee shops replacing the traditional layout.

That’s a summary of one finding from a recent study of banks in Western Europe by IDC Financial Insights. In short, the IDC research concludes that the branch needs to support other channels where appropriate and deploy its unique asset of face-to-face contact at every opportunity, according to the recent study.

Other findings:

• Enterprise mobility technology is enabling branches to move away from transaction processing centers and toward value-adding sales and advisory channels. Tellers behind glass barriers are being transformed into roving sales people equipped with tablets, allowing more customer information to be captured by the bank and providing a more interactive customer experience.

• As fewer people visit branches, banks need to ensure that they extract maximum revenue from every visit. Branches need to move away from passive transaction processing activities and toward high-value sales, marketing, and relationship building. If a bank is successful here, it should be able to put its branch network on a sustainable footing for years to come.

Tech is both threat and key to relevance

"There has been much debate around whether the branch is 'dead': this is an interesting theoretical discussion, but it has little bearing on reality. Also, it is useless for banks that are grappling with how to make the most of existing networks," says Lawrence Freeborn, senior research analyst, IDC Financial Insights. "Just as the rise of new technology has threatened the branch in the past few years, it also holds the key to their continued relevance. By implementing the right solutions, a bank can ensure that its branches are cost-effective and play their role in offering excellent customer experience."

"Branches are here to stay for decades and will continue to offer a major competitive edge over digital-only financial services," says Andrei Charniauski, head of Europe, IDC Financial Insights. "This does not mean that banks can simply rest on their past successes—the branch must evolve consistently with other channels to continue delivering its unique value. Introducing innovative technology solutions will enable branch employees to serve clients in branches according to modern customer experience demands."