The branch is dead – long live the branch. Twenty years ago, most banks regarded branches as costs to be eliminated. Customers weren’t too keen, but their shareholders (apparently) were. But now things have changed. The medium-term downsides of branch closures are recognized as rather more significant than the one-off income benefits recorded on the now-fading balance sheets of the last century. Banks now embrace the retail metric of sales per square foot with evangelical enthusiasm, and the branch is definitely on the way back.
This article identifies some of the key drivers by analysing the latest Finalta/EFMA Multi-channel survey on European retail banking. This compares the branch management experiences of more than a
hundred banks across thirty-four countries and across four customer groups – massmarket, affluent, student/youth and SME.
One key indicator is that although branch sales volumes across the survey are expected to fall from 79% to just 66% over the next three years, the value of those sales will still account for about 80% of bank revenues. This suggests that the remote sales channels suffer from either the lack of an adviser (Internet and mail) or the impersonality of engaging with a customer over the telephone.
There are some significant differences in progress and experience across Europe (for example, remote channels already account for more than a third of sales in the Nordic countries) and across channels. Not surprisingly, youth and student customers are keenest on the Internet; less obviously, SMEs seem quite reluctant to embrace the latest technology.
Wilson draws out many other key lessons from the survey, and hint that the way forward should be a mutual symbiosis between the old and the new, rather than a struggle for supremacy in one channel or another.
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