How will the retail bank of the future look like?

Will bank branches totally become a thing of the past?

If declining footfall in branches is anything to go by, the answer may be yes. We've already seen Asian banks shut down some of their physical branches as more customers shift to digital banking for most of their transactions.

“Traffic in our branches is down 50% in the last five years – while in the same time period digital transactions are up over 100%,” says Felimy Greene, Citi’s regional head of digital banking.

Citi in Asia draws some 20 million visits to its online properties every month and 95% of all transactions already happen outside a branch. “One out of every five new credit card accounts acquired comes from digital sources and over 50% of our clients are actively using digital banking channels – up from 30% three years ago,” says Greene.

With less customers going to the branch, banks are forced to think of ways to 'bring the branch' to the customer and meet their demands. “We already have a relatively light footprint of smart branches in high impact urban locations and we are continuously optimising this through a mix of iconic city locations, transit hubs, retail malls etc. They blend the best digital capabilities with Citi’s signature high touch service and advice for more complex client needs,” he adds.

Standard Chartered even went as far as having a corporate alliance with Shinsegae Group, a top retailer group in Korea, which allows the bank to deploy upscale, fully digitised branch outlets at Shinsegae shops so clients can have easy access to their services.

Bankers and finance experts have long claimed that despite the rise in digital banking, clients still demand the presence of brick and mortar branches for high value activities. “To a large extent, banking revolves around trust and relationships. While digital banking can help to speed up customers’ mundane and repetitive transactions, the human touch is still critical for engaging customers and developing trust,” says Choong Wai Hong, head of community financial services, Maybank Singapore.

Yes, retail bank branches might be here to stay for good despite the great push for digitisation across the region. But with the nature of branch interactions changing at the speed of innovation, how will the retail bank of the future look like?

“The branch of the future is possibly a fraction of what it currently is, both in terms of physical space as well as manpower size. The reduction is not just in response to the trend towards more digitisation, but also a function of increasing land and labour costs,” says Choong.

“I see more digital capabilities being integrated in the branch, for instance video technology on the ATMs, video conferencing meeting/interview rooms where customers can talk to relationship managers or product or wealth specialists,” reckons Kariuki Ngari, global head, distribution network at Standard Chartered.

“Physical branches will still remain relevant but must adapt to serve a very different purpose and form. As most clients will prefer the convenience of digital channels, the branches will mainly support the delivery of more complex sales and advice and exception handling,” he adds. 

In photo (from left to right): Kariuki Ngari, Felimy Greene, Choong Wai Hong