Many industries are facing a permanent shift in operations due to COVID-19. Possibly, none moreso than the banking industry. From revised safety protocols to the push for digital solutions, bank branches are at the precipice of transformation.
The first part of this blog series covered building the “why” for branch transformation while stepping into a post pandemic world. The second part will cover the reality for bank branches and introduce a potential solution that could increase customer engagement. Read on to learn more about what may be in store and why banks should consider needed reinvention in the new normal.
The reality for bank branches
Before the pandemic, customers could walk into any bank branch anywhere in this country and see the same thing. A lone teller handling both drive-up and lobby business. Desks are empty, and it’s obvious nobody has occupied them for a long time. Nothing much is happening.
Think about the optics of this picture for a first-time visitor or prospective customer. It doesn’t look good. But there is hope. In fact, a Deloitte Insights study concluded that branches are still a dominant channel for opening new accounts. In the United States, branches are preferred when applying for a new service or opening an account. Here’s how the Deloitte Center of Financial Services breaks down the data on customers who prefer branches:
- 65% Mortgage/mortgage refinance
- 62% Wealth management
- 58% Checking account
- 41% Credit cards
The same Deloitte study also found that preferences across generations to be surprising. The customer survey concluded 64% of boomers, 54% of Gen Xers, 48% of Millennials, and 56% of Gen Z said that they prefer to visit branches when opening a new account—especially checking.
Even though the majority of customers prefer to open accounts in-person, branch operations are still being hit with the harsh realities of the pandemic. According to a recent Kiran Analytics survey of nearly 40,000 branches, they found that branches responded to the pandemic in various ways:
- Half of banks closed 10% or less of branches and the other half closed 11% to 30%
- About 67% of open branches have reduced hours
- 80% of branches transitioned all customer interactions to drive-up windows (if possible)
Now, with branches starting to reopen, it is integral for banks to look at how they can transform the branch experience to include post-pandemic protocols as well as assessing customer needs. So how can branches truly shift from traditional norms?
The role of the branch
In the past, the main purpose of a bank branch was to handle transactions. Banks opened branches so that customers would have convenient places to come in and do their banking, in their neighborhoods, close to their offices and near their schools. COVID-19 has proven branches are not needed for deposits or withdrawals—ATMs and remote deposit capture have taken care of that.
Also, the rise in non-traditional competition continues. Branchless banks are becoming more popular. If you can apply for a loan on your smartphone and get an answer right now, why would you go into a bank and fill out paperwork? A branchless structure is just a part of why fintech startups are becoming a fierce competitor. They’re known for cutting-edge technology and agile operating models. Also, they face fewer regulations than banks do and have better rates due to rock-bottom overhead costs. Fintech innovations have created a perfect storm that has blown through the banking industry and left empty branches in its wake.
With digital competitors changing how customers interact with banks, it’s time for branches to consider a new role in the customer experience. Technology is an essential tool and can help branches transition into the new normal.
According to Accenture, one way branches can bridge brick-and-mortar with online solutions is by emphasizing the human touch with the front-line complementing technology. What does this mean? Accenture explains, “The shift to a digital-first experience store model means the stores will become a destination for customers who specifically need human support. . .” It’s up to the branch staff to create a helpful experience for customers.

The big question: Why not just close branches?
Remember, a large number of branches have closed or been open with limited hours during COVID-19. But closing branches, permanently, isn’t the answer. Even if they are empty rooms these days, the financial industry isn’t like retail or grocery or hospitality that can simply close unprofitable or underperforming stores.
A financial institution is just that, an institution. It’s the place where people have chosen to store their money. Customers trust their banks with their hard-earned dollars. Despite the rise in branchless banks, brick-and-mortar means something to customers. If a company closes several retail locations, it looks like that company is in trouble. A bank cannot signal that it’s in trouble. Customers will get nervous and pull their money out in droves.
So, the solution to the branch crisis is not to close them. The solution is to re-purpose, re-brand and re-energize. The branch needs to become something else. Transactions aren’t happening in the branches much anymore. But it is up to banks to break tradition and focus on customer engagement and experience instead.
A new branch experience
Comparing a bank branch to a retail store may sound like a stretch. But have you ever been in an Apple® store? Think back to pre-pandemic days. On any given weekday morning, the rest of the mall might have been a little sleepy, but the Apple store was guaranteed to be bustling. Why? The engagement. Here are the elements they have perfected to engage their customers:
Consultative selling. When you walk into an Apple Store®, you’re immediately greeted by someone who is roaming around with an iPad®. Looking for a new computer? The rep will ask about your needs, the intended uses, what you’re going to be doing with that computer most often. Based on your answers, they’ll ask follow-up questions that are designed to match you with the product that’s perfect for your needs. That’s consultative selling, and it makes the customer experience personal. It’s totally about asking, listening and responding to customer needs.
Education. In the middle of the store, you’ll see people taking classes and tutorials on how to use Apple products. There will be groups of boomers learning how to use their new iPads to communicate with their grandchildren, and gaggles of millennials getting the skinny on the newest features of the latest iPhone. These customers are engaged.
Problem solving. At the back of the store sits the famed Apple Genius Bar®. You go there when your computer is on the fritz or your phone can’t hold a charge or to solve any number of problems that arise with your Apple products. The geniuses who work there are experts in the technology, and they will solve your problem, if it takes five minutes or five hours.
Apple doesn’t care if you buy products in the store, but if you do, you’ll notice there are no registers. Associates have iPads and do the transaction on the fly. Or, you can download the Apple Store app, do the transaction on your phone yourself and walk out with your new computer. It’s retail, reinvented.
This is the type of reinvention bank branches need. In the age of COVID-19, banks have a solid case to change and break down the traditional models that could be holding them back from deeper customer relationships. The banking industry has been changing and shifting over the last decade and this recent pandemic has proven to be a pivot point for banks. As customers evolve into more digital natives and self-service options become a go-to, the branch doesn’t have to crumble into a convenience of the past. Branches need to be transformed into an experience that addresses customer needs.
Even during and post COVID-19, branches can start to think about how they can better engage with customers in the new normal. It may not look exactly like the Apple Store—especially with social distancing guidelines, but it is a time where banks can look at how they can use technology in the branch space and educate customers to embrace a new experience. Continue to follow this blog series and learn the final steps on building the case for branch transformation.
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