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Building a case for branch transformation: Part 1

banker looking out window

In order to stay relevant, the banking industry needs to continually reinvent, adapt and reimagine the products and services it offers. This is a tall order for an industry rooted in tradition but it’s necessary. With branches looking to reopen and banks looking into a post COVID-19 future, breaking with tradition may just be the answer to branch transformation.

Read on to learn why and how branches need to start building a case for transformation in the first of this three-part blog series.

As banks begin to look forward, post-pandemic, the evolution of customer needs is at the forefront.

Customers are expecting more

Even before the pandemic, customer expectations were beginning to change the way branches operated. More and more customers were opting for digital experiences rather than waiting in line at the nearest branch.

In fact, Yes Marketing’s Inside the Lifecycle of the Financial Services Consumer report says 42% of Gen Z consumers and 37% of Millennials say that the ability to manage services via mobile app is among the top three factors they consider in a banking provider. People are used to running their lives from the palms of their hands. There is an app for everything, and if there isn’t, it will exist tomorrow. Customers expect mobile shopping experiences and the ability to get what they want, when they want it.

No longer are financial institutions competing only amongst themselves; consumer expectations are now shaped by the likes of Apple, Google and Amazon. Customers are used to these tech giants not only meeting their needs but anticipating them. These companies have mastered using complicated data analytics to personalize experiences and recommending offerings that are right for individual customers at just the right time. This has created a change in behavior and has people thinking: “Amazon and Netflix recommend products I might like. Why doesn’t my bank do that?”

So, how important is meeting those heightened expectations? According to the 2019 Retail Banking Trends and Predictions report from Digital Banking Report, it’s job number one and the priority increases each year. From 2018 to 2019, the priority for improving the digital experience for customers increased from 72% to 84% in one year. Improving the customer journey and providing a positive customer experience is a top strategic priority for global banking organizations today.

Change is a constant

It’s no secret that banking has already been witnessing changes. The COVID-19 pandemic, the rise of fintech providers and advanced technology have permanently changed the game.  According to PYMNTS.com’s Digital First Banking Tracker, banks saw more than a 200% increase in online account openings during the start of the pandemic, followed by an 85% increase in all mobile banking traffic. This data proves that digital banking is on the rise and is not slowing down anytime soon. Banks that act now, transforming their branches to align with changes in customer behavior, will successfully navigate the transition. The ones that don’t may be left behind.

By adding the many shifts from new pandemic protocols with the rapid evolution of technology, banking is at the very top of the list of industries poised to see seismic change. Now, with the addition of the banking customer’s evolving needs and expectations, this equation solidifies a case for branch reinvention.

Customers can, and do, cherry-pick any number of financial products and services that used to be handled exclusively by their banks.  In an interview with PYMNTS.com, Simon Powley said the industry is likely to see shifts toward a hybrid experience between digital solutions and brick-and-mortar visits—especially, post COVID-19. As a result, transactions are becoming less important at banks, and the value of consultation and problem solving is growing.

employee looking at laptop

Building a solid case

Many factors build the case for branch transformation. In 2020 alone, the global pandemic has turned the world upside down and has challenged more traditional industries to operate in new ways. Since banking has always used a more traditional model to meet customer needs, the move towards true reinvention has idled. And branches are taking a hit from it.

To keep pace with evolving customer needs, bank branches have a chance to break tradition and pave a different path in the new normal. In a study done for The Ultimate Guide to the Future of Banking, 82% of consumers have stepped into a branch in the last six months versus the 18% who’ve moved fully digital. 

The same survey group still believe (93%) that branches will play a vital role in the future of banking. Inevitably, branches are not going anywhere anytime soon—banks can create an elevated customer experience that meets both the digital world and brick-and-mortar head on. And why not use a global pandemic as a catalyst for change?

If banks don’t have mobile and online banking right now, it might be too late. But digital banking solutions are not enough. Not on their own. This only addresses one part of a bank’s challenge.

The other part is how the branch plays into the new game of banking. Will they continue to exist or become a convenience of the past? Stay tuned for Part 2 of this series when we explore the journey of financial institutions to break tradition and build the case for branch transformation in the new normal.

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