The way we handle money has changed radically since the introduction of online and telephone banking. Most transactions can be done quickly and conveniently on the go, and basic account inquiries can even be answered by chatbots.
As a result, around 60 bank branches in the UK are closing every month, with almost 2,900 lost in total over the past three years.
Consume group Which?, which carried out the research, called the trend “alarming” and said it had left many customers without access to services. In some places whole towns have lost multiple branches and customers must travel miles to the nearest bank.
Which? money expert Gareth Shaw urged banks to reconsider future closures: “While the decision is clearly a commercial one for a bank to take, it is also crucial that banks do recognise the needs of their customers and the communities they serve, before simply shutting their doors – and their customers out.”
A spokesperson for RBS – which closed the most branches according to the Which? study – defended the closures, and said change was driven by customer needs: “Since 2014 the number of customers using our branches across the UK has fallen by 40% and mobile transactions have increased by 73% over the same period.
“As customers continue to change the way they bank with us, we must change the way we serve them, so we are investing in our branches and re-shaping our network, replacing traditional bricks and mortar branches with alternative ways to bank.”
However, until all customer transactions can be done online, bank branches will continue to have a presence on the high street, and banks have begun to look at ways to make them cost effective through enhancing the customer services they offer.
The hybrid model focuses on leveraging technology to deliver an improved customer service experience in branches, beyond what an app on a phone can do. Sophisticated self-service technology allows customers to carry out straight-forward, lower value transactions including cash deposits and withdrawals, without having to wait in line for a staff member to do it. In the mean time staff are freed up to deal with high value or more complex transactions in-person. All parties benefit from reducing wait times and greater convenience.
While this technology in its basic form is already a feature of many big bank branches, the hybrid model takes it a step further. The staff who remain in their positions advising customers should have access to useful customer information via specific data-driven tools which enable staff to dispense highly personalised and relevant financial advice based on the individual customer’s needs.
The concept of using AI and machine learning to personalise money management got closer to becoming an everyday reality once the biggest banks opened up their data to third parties in 2018 under new open banking rules.
Since then, fintech companies including banks have been busy developing new apps that gather customer information from multiple banks and financial institutions into one place for useful, big-picture analysis.
In future, bank staff will be able to sit down with a customer in-branch and understand their financial situation in a matter of minutes, much like a local bank manager would have known each of their customers back in the very early days of banking. In many ways, the 20th century explosion of cheap credit and high street banking depersonalised retail banking, and open banking technology has the potential to revive aspects of that customer relationship.
Providing useful, trustworthy financial advice may be a good enough reason for many customers to return to their branches. This may keep them open and on the high streets for now, provided most customers still feel the need to get their advice from a human member of staff than say, an AI avatar-adviser.
Some banks are finding opportunities to make branches more cost effective by creating valuable brand loyalty. To entice current customers to pay them a visit, Capital One has opened cafes at multiple branches, creating a kind of public working space people will visit regularly. It admits that half of the cafe users are not actually their customer of the bank, and says this is a good thing, as it helps people become familiar with the brand. Bank of America Corp has opened ‘technology bars’ at its branches and JPMorgan Chase & Co feature local artworks.
The closing of bank branches may appear in the headlines as another symptom of a dying high street, slain by the success of online shopping. However, banks are unlike shops in that they have a duty to provide financial services to all their customers, not only those who can get online. Instead of viewing branches as a drain on profits versus cheap technology, banks must enhance their value by looking for the potential improvements new technology can bring to existing and future customer relationships.