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What's going on at the bank?

September 6, 2013 by Matt Deaton — Marketing Manager, Codigo

When was the last time you stepped foot into a bank or a credit union? Today, yesterday, last week, last month? And, why? Why did you actually go into that financial institution? Did you make a deposit, withdraw, apply for a loan, open or close an account? And finally, could you have done same transaction from your computer, smartphone, or at an ATM? For a while now, financial institutions have offered multiple touchpoints to provide customers with the convenience to conduct every day transactions according to the constantly evolving consumer preferences.

One could conclude that because of the numerous, more convenient, ways to access personal banking information and conduct simple, everyday transactions that consumers would reportedly not prefer to visit physical banking centers, right? However, According to a November 2012 study from the Federal Reserve Board, bank branches were used more than any other touchpoint in the past 12 months (85 percent) — followed closely by ATMs and Online Banking (74 percent). Be that as it may, does it mean that the branch is still the preferred banking channel, or will we see that number decrease as financial institutions continue to expand their online services?

In April 2013, Market Rates Insight conducted a survey and found that almost 76 percent of millennials (ages 18-35) prefer either online or mobile banking to visiting a branch, compared to 61 percent of seniors. And, herein lies the future of the banking center! As the milliennials grow older and teach their kids their preferred way of banking, all while financial institutions offer more, complex online services, the landscape of the banking center will have to change in order to stay relevant as a bank omnichannel option. So, how do they do that?

Before I provide my hypothesis, I'd like to first explore one more recent study on why consumers decide to visit a bank branch. The Gallup Business Journal conducted a study in May 2013 on consumer interaction with banks. They found that going to a branch was still the preferred channel when consumers want to open or close an account, apply for a loan, seek financial advice, report a problem or annoyance, inquire about a fee, and to make a deposit. It's important to understand why consumers are visiting the branch in order to predict what the branch will be to consumers in the future.

In my opinion, all of the reasons why people are visiting the branch are already or could be conducted online or by telephone. However, big-ticket items such as home, auto, or business loans require a lot of paperwork, time, and a professional to ensure its done correctly an in a timely manner. In addition, I'm willing to say that most people would likely prefer a more personal, face-to-face conversation with someone they know and trust when it comes to financial advice.

Because of the personal attention needed for transactions such as loan origination and financial advice, I don't see the branch ever going away. On the contrary, I see the branch developing into a consultative information/meeting center for personal bankers to meet with customers on these larger transactions, while using technology such as Video Teller Machines and drive-thru windows to conduct simple, over-the-counter transactions like deposits and opening/closing accounts. Cross-selling and product information will be delivered to in-branch customers using digital signage and interactive kiosks. In addition, Banks also will leverage their online and telephone services for issues like reporting problems or fee inquiries. By moving to this high-tech, low overhead branch model, customers will be given the personal attention they need on those high involvement type products, yet save more on employee overhead while providing customers with the option to choose their preferred way of banking.

(This post initially appeared on Deaton's Codigo blog.)

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