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In my last post, I talked about how the COVID-19 crisis has impacted branch networks by accelerating the shift to digital. Many banking customers have adopted digital technologies and contactless payments faster than experts had predicted.

While we expect the downward trend of the branch footprint to continue in the post-pandemic area, we do not expect branches to disappear completely. Indeed, they will continue to play an integral role in the customer interaction model, particularly with regard to four processes: broken journeys, cash usage and small and medium-sized enterprises (SMEs), complex transactions and the brand experience. These will evolve rapidly as customer behaviours mature.

Broken journeys

Many financial institutions are still some way away from complete digital maturity in account opening and other transactions. You may have heard people say that digital banking is only one percent complete. When those digital journeys become ‘broken,’ or cannot be fulfilled online, the branch network is there to provide customer support. As banks develop more digital maturity, customers will increasingly prefer to conduct transactions online where possible.

Cash usage and SMEs

SME customers are still reliant on the ability to deposit cash regularly and efficiently. While the COVID-19 crisis has popularised digital payments and reduced the usage of cash dramatically in the first half of 2020, there is still a need for access to cash through branch and ATM networks.

Complex transactions

According to our research, 82 percent of customers want human advisors on hand for complex products such as mortgages. As customers increasingly become more comfortable with the use of technology, financial institutions can transition into utilising remote advisors for customers who remain in the branch or in their homes.

Brand experience and education

Branches will always play a part in face-to-face experiences and education. They enable banks to become part of the community and help foster greater brand engagement. As digital channels proliferate, branches can empower less digitally savvy customers in person—a powerful tool for brand advocacy.

We expect the role of the branch networks to evolve further through 2024 in four ways:

1. They will be designed with the ability to change shape and function to accommodate fast-changing customer needs intra-day as well as over time.
2. They will continue their role as bastions of the customer experience and brand ambassadors in the ‘phygital’ context, as part of seamless multichannel interactions.
3. They are likely to reduce the cost-to-serve cash infrastructure while providing complex product advice using digital tools and remote interaction.
4. They will continue playing an educational role until all their customers are comfortable using the bank’s digital channels.

It’s time for financial institutions to take advantage of the historic evolution of their branch networks, right-sizing them for a post-COVID-19 world.

Next time, I will take a look at how to future-proof the branch network.

In the meanwhile, please reach out if you’d like to share how COVID-19 has impacted your financial institution’s branch network.