U.S. banks continue to follow a trend of closing branches as the introduction of innovative technologies are making branches less relevant among consumers. According to a 2015 Accenture report on the future of banking, which surveyed over 4,000 American consumers in the US and Canada, only 19 percent of the respondents said they would switch banks if their local branch was shuttered, compared with 48 percent in a survey taken two years earlier.
The Accenture survey also found that digital-savvy Millennials showed less loyalty to branch banking that was nearly double the average of other age groups, ostensibly reflecting a trend among Millennials seeking the speed and convenience of digital banking rather than making visits to bank branches. Eighteen percent of Millennials, between the ages of 18 and 34, switched banks within the past 12 months, compared with 10 percent of customers between the ages of 35 and 54 and 3 percent of those 55 years or older, the survey said.
Automation also is being used by banks as a cost-cutting tool, putting bank branches on the chopping block. Former Barclays CEO Anthony Jenkins was quoted in a speech last fall that the global banking industry will slash employment and branches by 20 percent to 50 percent over the next decade. Jenkins’ forecast was supported by a Citi research report that the number of US bank branches would be eliminated by more than one-third within this decade.
But traditional banks shouldnot simply close branches as automation reduces the need for brick-and-mortar facilities, according to the Business Process Outsourcer, Intelenet Global Services. Instead, they must consider ways to maximize their adviser networks, utilizing next-generation technologies to transform the nature of the branch instead of eliminating them.
One of these innovations is Radius, an Uber-like scheduling tool that is now being used in the banking sector. The technology enables companies to allocate mobile teams to nearby appointments, creating the potential to transform the banking business model for face-to-face interaction.
Bhupender Singh, CEO of Intelenet Global Services, says: “We are excited about the possibilities that Radius offers to modernize the branch banking model. Empowering banks to connect roaming advisers to nearby customers when and where they are needed, the tool would ensure the ongoing provision of an in-person service. With just the help of a simple mobile app, the costly outlay of a branch network could be sidestepped without reducing customer service.
Singh added: “In general, the past years have seen the explosion of online banking services, many of which are completed without any human interaction. Unfortunately, some customer segments are being left behind by this shift, and the majority of consumers, ranging across demographics, still crave a face-to-face service when making major financial decisions. Some challenger banks are bucking the trend, finding success by combining technology which improves the speed of their service, with efforts to build a branch network. One of our projects with amajor mortgage provider resulted in a reduction in mortgage approval time from 11 days to 48 hours. This has enabled them to make the back-office savings which can be redirected to the front-end of customer service.”