Mixing up the branch network for future banking services (Part1)

The impact of digital banking, artificial intelligence, machine learning and changing customer preferences is prompting banks to change.

Mixing up the branch network for future banking services (Part1)

Digital services have transformed both customer experiences and expectations and it’s important that the future branch network does the same. Increasingly, banks are being forced to make strategic choices about branch locations and formats as they look to provide a more compelling proposition whilst continually driving operational efficiency and profit.

Deciding how to compete in this new world is a complex issue that involves many different factors. However when re-assessing the branch network, defining the role the future branch will play in the bank’s brand value proposition and competitive positioning is key to establishing what the future branch network should look like.

The role of the branch

Branches have traditionally been the cornerstone of physical contact between banks and their customers. But after many years of adhering to the golden rule “the more branches, the bigger the market share”, the way banks manage their distribution networks has had to change. Driven by significant pressure on cost income ratios and the shift to cheaper distribution channels, the number of branches has been in decline for years.

However simply reducing the number of branches isn’t the answer. Understanding customer needs and expectations from a branch and creating the right mix of locations and services is key – as well as integrating new technology to create enhanced and more relevant customer journeys. Whilst this sounds simple enough, it is a challenge that shouldn’t be underestimated.