With "never go to a bank" Millennials becoming a bigger and bigger market force, compounded by pandemic lock-downs that have encouraged even formerly tech-averse people to use online banking tools, one might think the reign of the bank and credit union physical, walk-in branch system is coming to a close.
Not so fast...
"Interesting thing we saw during the pandemic -- there were long lines at drive-up banks. So people are still going to the branch," he pointed out.
However, many branches are from a different era. "There's a statistic out there that says 80% of the branches are over 20 years old," Caliendo says. That means big vaults, marble, large structures. That symbolized "strength" and "trust" in a different era, but now does not resonate with modern sensibilities.
The answer, he says, is on the design side. Caliendo's primary targets for successful branches are:
- Smaller footprint
- More collaboration - - spaces for discussion
- More use of brand/marketing colors
Closing Branches: Perception vs. Reality
Are branches closing? They are, Caliendo says, but the numbers are skewed by merger and acquisition rates. Branches still remain popular, and the key seems to be assessing a branch with these yardsticks:
- The market
- The financial performance of the branch
- The physical plant and the site
Then, there are three primary actions to consider:
- Invest in the branch and make it better in order to further penetrate the market
- Consolidate it with another branch in a 3-mile area
- Close the branch
Caliendo points out that Bank of America and Chase are having success with the approach above because they also make a priority of introducing technology into the branches, and making sure all branch employees are capable of making their customers comfortable with that tech.
The Art of Transactions
Another important factor that keeps branches viable -- and actually growing in popularity -- is the "human touch" in transactions. For this reason, Caliendo says it is vital to create a "universal banker" employee model, so as many employees as possible are skilled in products and services across the breadth of consumer needs.
During the session "Evolving the Community Bank Operating Model" at the recent BankWorld Conference, speaker Sunil Sachdev, SVP & GM of Community Banks for Fiserv, spoke at length about the need for banks - particularly community banks and credit unions - to change the how their businesses are currently operating and establish a new identity as commerce hubs creating more value for both the bank and its customers.
The Future of Branches
For those looking for a deeper dive into the subject, BAI has made available a repost called What's in store for bank branches?
Branch volume has made a comeback from 2020, and OrboGraph expects branch traffic to actually pick up in 2021. We agree with Mr. Caliendo's observation that as we catch up with updating physical locations and integrating technology as much as possible, we'll see more and more people paying a visit to their local bank and/or credit union.
It will be important for banks to ensure that their customers have a consistent experience via whichever service channel they choose to utilize - from mobile to branch. Having technologies like OrboAnywhere with the ability to deploy throughout the omnichannel while providing unparalleled accuracy and superior fraud detection will enhance the banks relationship with their customers.