Like every other industry, banking has been heavily affected by the digital revolution. Perhaps the biggest impact has been on the traditional brick and mortar bank branches – the number of visits has declined from 476 million in 2011 to 278 million in 2016, leading to the closure of 600 bank branches in the last year alone.
Why has this occurred? Primarily, because of changes in technology – notably the rise of the banking app – and the impact that this has had on banking behaviours.
Over the past eight years or so, the banking industry has rolled out around 23 million apps, resulting in around 10 million log-ins per day. Transactions which, previously, required a visit to a branch can now be handled online.
While this is good news for the customer, it provides a further challenge for the industry. Providing another distribution capability means that a further layer of cost is added to a bank’s expenses. In an era of low returns, this is a cost that few banks can afford. So, the challenge for the industry is to try and match the expenses associated with distributing and servicing products with the channels that customers actually use. The result is a reduction in the number of bank branches, as customers switch to use alternative distribution channels.
Offline still has its place
Yet while advancements in technology have caused most of the larger banks to look closely at the future size and shape of their branch networks, many customers still appreciate the physical network and continue to value face-to-face interaction.
This is particularly relevant for transactions which digital alternatives do not easily accommodate, such as depositing cheques, accessing cash services and seeking advice-based services.
At Fujitsu, we expect many of the larger UK banks to remain committed to maintaining branch networks, but promoting a different range of services in order to meet consumer demand.
So, in order to rise to the costs and service challenge within an, albeit, smaller branch network, traditional banks must continue to automate and incorporate technology where possible. Examples of equipment being deployed in branches include additional ATMs and automated deposit facilities for both cheques and cash; and, in contact centres, voice biometrics, to improve efficiency and enhance the customer experience.
Some banks are already leading the way to innovation by trialling cash withdrawals from ATMs using mobile phones, or sending receipts by text message rather than issuing paper versions.
A chance to reinvent
In today’s world, convenience will trump loyalty as technology offers growing opportunities for consumers to engage in an omni-channel experience. This doesn’t have to mean death of the brick-and-mortar, but rather a chance to reinvent.
In addition to advising numerous UK and continental European financial services organizations, Anthony has also held senior line management positions, including as Director of Strategy for a FTSE-100 bank; Deputy Managing Director of a UK commercial bank; and Managing Director of a UK asset finance company. He has also worked in central government, advising Cabinet ministers of the development and passage of company legislation.
Anthony joined Fujitsu in February 2012.