What is the future of in-person banking?

Traditional bank branches have been in decline for years, but they can continue to play an important role in the customer journey if they can harness the power of digital technology and workflow to improve the physical banking experience.

Today’s consumers want banks to do more than just facilitate transactions, they also want their bank to care about them as people. Merging digital and real-world experiences is key to achieving a great overall customer experience. Banks will need to embrace digital with a human touch to move from transactional relationships to digital experiences that create meaningful connections and increase customer loyalty and profitability.

Innovation in branch design can help retain and attract new hybrid consumers. McKinsey estimates that a traditional branch model devotes 70% of floor space to cashiers and 30% to self-service, while those percentages are reversed in the smart or digital branch model. Smaller, more streamlined layouts mean lower infrastructure costs. According to McKinsey research, smart branch layouts have resulted in a 60-70% improvement in branch efficiency, measured by cost savings and increased sales.

Branch banking in the digital age means embracing the power of end-to-end digital transformation to augment, personalize and accelerate the in-person experience. Instead of waiting for customers to explain their transaction needs to a cashier or personal banker, smart agencies direct customers to the best points of interaction (ATMs for withdrawals and deposits, for example, or bankers staff for loans).

Integrated customer relationship management (CRM) platforms can integrate and integrate with digital banking and back-office systems to provide instant customer insights to personalize interactions, for example, by providing a view of the client to facilitate lending product recommendations. This integration also speeds up account opening and the creation and service of new products.

This end-to-end digital transformation and the introduction of artificial intelligence has already started to pave the way for more personalized offers and advice on customers’ mobile devices or via notifications and chatbots. Now, banks and credit unions have the ability to extend this seamless service across digital and assisted channels.

For example, HSBC’s Pepper is a concierge-style humanoid meant to improve customer engagement by educating customers about product information and making self-service available. The bot determines customer needs by using AI to ask relevant questions. With a modern and integrated approach, banks can now use AI to leverage a single view of the customer based on CRM, digital and central banking platform integration and APIs, to increase both self-service and assisted experiences.

Customers are not all the same

Not all transactions are digital and not all customers want digital transactions. All-digital banks, such as Varo and Green Dot in the US, are enabling all of their products to be created online, attracting a digitally savvy clientele. Other banks target customers who are more comfortable knowing they can transact in-branch.

Effectively serving the branch user segment is an opportunity for differentiation. Some banks are leveraging their digital workflows by embracing their mobile appearance in branches and providing human hosts to guide customers through banking processes. The advantage is that once they’ve done it in an agency, they don’t have to come back. Still other banks, such as BMO, use remote video tellers to guide customers through their onboarding or transaction process, integrating smart technology with a human touch.

Banks still face many challenges in finding the right balance between digital and a more human in-branch experience. Traditionalist customers may remain an important segment of a bank’s chosen target market, and more digital branches promise to improve the customer journey.

To maximize the potential and justify the costs, banks must combine advances in digital transformation with the physical experience. In doing so, branches can remain an important added value and point of contact in the relationship with customers, providing relevant services at the right time.

The secret is to seize the opportunities presented by human engagement by effectively leveraging customer insights and digital workflow to ensure interactions deliver an enriched experience, convenience and more personalized service. With this approach, banks can maximize conversion opportunities in branch and other channels, breathing new life and purpose into the branch network.

Vincent Chamasrour is Strategic Business Advisor, Americas, at Temenos.

Find out how branch banking is evolving for the future in this executive report from BAI, “Branch banking continues its radical evolution.”