If you want to get a glimpse of what the future of banking looks like, travel to Shanghai’s Art K11 shopping mall. There, Standard Chartered, a UK bank, recently opened a branch in which the tellers and desks that have been a feature of banking for such a long time have been replaced by cutting-edge interactive technology that lets visitors play virtual reality games. If you go to the second floor, the bank offers services that do not require cash, according to a recent article in Shanghai Daily, a Chinese newspaper.
Standard Chartered also uses its branches to offer services it can not provide online, such as family events where parents can take their kids to play Lego games. The idea is to integrate lifestyle activities into its lineup of more traditional financial services. This is just one of several strategies that banks are following to come up with the right branch to meet the needs of their 21st century clients.
Banks must turn their branches into advice centers, according to a recent study from Efma, a financial sector organization, and Synechron, a consultancy. Banks should stop thinking about their branches as places to make transactions and start using technology and well-trained employees to offer users a great experience.
Banks are turning their attention to how their employees interact with branches and customers while, at the same time, introducing self-service technology and digital interactive experiences, according to the report. There’s no time to waste. Over half of banking transactions, 52% to be exact, are already done online, according to a recent study conducted by Swiss banking giant UBS in 19 countries. Two years ago, only 33% of banking transactions were performed online. On the other hand, transactions done on branches have plummeted to 34%, compared to 48% two years ago.
What should modern bank branches do when most of banking activity is done on the web? New branches should not limit themselves to offer the same services that can be done online and should try to provide a connection with customers that goes beyond digital. They should offer advice that adds value to complex products and services, Efma recommends.
Of course, this does not spell the end of brick and mortar branches. The banking industry’s distribution model has not been through many changes since the time of the legendary Medici family in 15th century Italy, global consultancy McKinsey says in a report. After all, bank branches help build a brand and generate trust, it says.
However, branches are expensive to maintain and make up about half the operating costs of some banks. The challenge, then, is to come up with multi-channel offerings that combine the surge of digital services with the traditional virtues physical branches provide.
For now, no bank has found the right formula.