What Would Motivate Consumers to Bypass the Most Convenient Branch in the World?
Think back 11 years ago. It is the Summer of 2007 and only a select few are forecasting the fall of the financial industry. Maybe even less see that a Senator from Illinois will be our new President in 18 months. And no one knows how Steve Jobs’ brand-new invention, the iPhone, will change the world. The iPhone revolutionized consumer expectation for convenience and experience. This is especially true in banking. As the financial industry recovered from the recession, consumers had been taught that the most convenient branch in the world lives in their back pocket.
The advent of digital convenience created omni-channel banking, the triune relationship between delivery channels:
Physical Branches, Cash Automation and Virtual Branches.
What do consumers want?
In a handful of years, consumers in one voice had communicated we want multiple channels. Few consumers held on to a single-channel approach to banking; preferring multiple ways to communicate with their financial institution of choice. And by 2017, consumers had said we prefer digital channels (website plus mobile) over the physical branch for day-to-day transactions.
It’s remarkable that in less than a decade from the iPhone launch date, consumers had been reprogrammed
to understand the unique value of a digital branch.
What is so great about a digital branch?
This view (the convenience of a digital branch) is also shared by financial institutions. Thanks to some research from Bain & Co. we can quantify the real value of a mobile banking consumer. The average mobile transaction costs a bank or credit union about $0.10 for each interaction. The average teller transaction (visiting a branch or calling a person) costs at least $4. Therefore, there is tangible value in mobile banking that is unmatched by physical branches, especially for transactions.
What is so great about the branch?
However, consumers still visit branches on a regular basis. Study after study shows that over 50% of all consumers visit branches on a monthly basis, and 60% of consumers visit branches twice year. What’s more, millennials are the most likely demographic to visit branches every month.
Bringing the channels together…
So, what’s really going on? A 2018 report by Foresee brings many of the pieces together. In their study, they found that 60% of all bank and credit union new-account journeys start online. (About 35% of consumers go straight to the branch.) Probably not too shocking to hear that people shop online? What is shocking is that over 70% of all consumers end up in a branch during their journey.
The Real Gold in the Branch
Therefore, there must be something intrinsically valuable to a consumer that they would bypass the most convenient branch in the world to visit one further away than their elbow, back pocket, or purse. The ongoing dance by consumers between digital and physical branches explains why physical branches continue to transform at a rapid pace. Consumers use the branch for something they cannot get over a device – a face-to-face personal interaction. Open environments, cash automation, pods, branding, point-of-purchase imagery, and transformative experiences are in place in today’s branch to leverage the high-value opportunity of a face-to-face interaction with consumers.
In 10 years from now will we have fewer branches? Yes. Over the next decade will the branch continue to change? Yes. Will the need for a human experience diminish? No. Because the real gold in today’s branch isn’t in the vault, it is you and your team. We call this the Universal Banker.