Diane, my old friend and college roommate, is a Luddite—a surprising revelation.
She is well-informed and a quick learner, and she completed her school assignments with the assistance of a computer.
She is capable of understanding and navigating technological implements and services. She simply refuses.
Her small tirade all started with a random observation I made about blogs.
“Oh, I hate that word, blog!” She exclaimed.
“Why?” I quizzed.
“It’s all that technology! Facebook, Twitter, blogs, Internet—ugh!! I can’t stand any of it!”
Stunned by her heated comments, I meekly responded. “Well, gee, Diane… I tweet sometimes.”
“I won’t!” she proclaimed.
Change is hard, and consumers are not the only ones struggling with technology’s impact.
Consider branch banking. Do you know what members want as technology affects traditional brick and mortar branches? Do you know how you might strategize to meet quickly changing service channel preferences?
This week: trends in branch banking.
‘I cried all the way to the bank.’—Liberace
Liberace would have a harder time finding a bank branch to visit these days as “Bank Branches Slowly Fading Away in Neighborhoods,” says CNBC. “Bank branch closures are heading for a record year as the industry trims down and services get increasingly electronic.”
In 2014, 2,599 branches closed their doors compared to 1,137 openings—a loss of 1,462 and not far from the record 1,487 closed in 2013, according to data from SNL Financial.
This equates to a decline of 1.5%, or a current 94,752 branches in the U.S.
Reasons for closures are many: increasing mergers, transition to online banking, and “the economics of a low-interest-rate, narrow-yield-curve environment that makes it less profitable to be spread out.”
Fans of branches say they provide critical services to communities that, with their extinction, “opens the door to… predatory lenders.”
Some believe closures are “overblown.” One expert notes, “When banks are trying to collect deposits because the yield curve is steep and you’re able to make a reasonable return on deposits, you open up branches.”
Thus, branch closures are the result of flatter yield curves.
Big and small institutions alike are cutting branches, notes an article in The Wall Street Journal. “Catering to changing customer behavior, banks also save money when customers transact business over their phones or laptops.”
Sentiment is, however, that “anybody closing branches since the end of the recession when the value of money has been zero is overlooking the need to value the branches and deposits they generate over a longer cycle,” comments a U.S. Bancorp executive.
Bank of America claims 85% of financial product purchases occur in branches. In response, the bank offers ATMs with live tellers available through chat, and it further intends to “deploy videoconferencing technology in about 500 branches.”
Indeed, “Big Decisions Still Happen in the Branch,” concurs Truebridge Financial Marketing. Here noted, branches are in transition with technological innovation, but “the branch should be used in service of important events” (such as mortgages).
Meanwhile, “day-to-day, low-impact decisions should move to digital spaces while big decisions continue to happen face-to-face.”
Further, providers should reconfigure brand image to focus on “technology, passionate people and appointments.”
Technology facilitates convenience, but branch appointments should be a priority as a “refined human element” is expected at the branch and “passion drives positive branch experiences.”
‘I was a bank teller and terrible at it.’—Will Ferrell
Yet, there is no denying that technology makes an impact at branches. “Makeovers Turn Out Smaller, Sleeker, Smarter Branches,” says American Banker. Branch updates include smaller footprint and technological conveniences like Wi-Fi and tablet devices.
Providers know changes must be made to accommodate changing consumer preferences, but branches remain vital to the system as they “still generate more sales than any other channel.”
Many possible solutions exist to respond appropriately to consumers; it is a matter of determining what fits best.
Some potential enhancements are cash recyclers, image-enabled ATMs, and video tellers.
Some of these changes will shift the branch purpose more toward a sales venue and away from a transaction venue.
“Tablets Changing Banking—and the Branch Experience,” claims Fiserv. Half of people who own tablets use them for online banking, but they are also “becoming a mainstay in the branch as a sales and service tool, and even making inroads in helping branch staff streamline back office processes.”
Tablet portability is an advantage and “this new channel has the power to transform the branch, engaging customers as never before.”
“The high-tech branch requires new approaches to layout, personnel skill, and consumer education,” says American Banker.
Trends toward “universal bankers,” or staff members who assist in endeavors ranging from technology demonstrations to loan originations, will require new branch layouts to facilitate interactions as employees “roam around.”
This change could be initially confusing for the consumer, and “bankers front and center” will help with new interactions.
‘I always knew I’d accomplish something special—like robbing a bank.’—Mickey Rourke
It is important to know “Why Security Strategies Must Adapt to the Retail Banking Revolution,” says Banking Technology. As banking adapts to technology and consequently alters branch design “the changing use of space in-store means surveillance and alarm systems must also evolve in tandem.”
Thieves will adjust to new architecture and “security teams must invest in video analytics, superior surveillance technology, and wireless systems in order to safeguard their customers, employees and assets in the changing world of retail banking.” Financial institutions must remain vigilant.
Technology alters our perceptions of convenience, speed, and even accessibility as service providers make it easier for consumers to embrace cost-saving technological advances with incorporation of new techno-tools and evolving branch design.
Diane will be delighted that branches remain a service channel for personal contact. But, like service providers, she too will need to adapt to the advent of technology.
LORA BRAY is an information research analyst for CUNA’s economics and statistics department. Follow her on Twitter via @Bray_Lora, and visit the CUNA blog, “The Research Roundup: Economic Perspectives.”