Banks are launching tech-centric projects to transform the brick-and-mortar experience for customers in the digital age—and not a moment too soon. In the United States, branch closures reached an all-time high of 3,023 in 2018, according to S&P Global Market Intelligence. And in the United Kingdom, banks closed more than a quarter of their branches between 2012 and 2017—a response to cost-cutting pressures and customers’ growing preference for digital channels.
Reviving branches is hardly a lost cause. More than 40 percent of bank customers visit a branch at least once a month, and most customers prefer to open a new account at a branch rather than digitally, according to a 2019 global survey by Deloitte. The survey found that the branch experience—more than mobile or online banking—has the highest influence on customer satisfaction.
“Branches are still very relevant to customers, but they are being used differently than they have in previous generations,” says Joel Kashuba, director of innovation and design, Fifth Third Bank, Cincinnati, Ohio, USA. “Today, it's about a holistic customer experience—digital and physical blending perfectly to meet customers’ needs.”
Projects that deliver so-called smart-branch facilities bridge the best of both worlds. Teams are exploring how technologies such as facial recognition, video conferencing and interactive screens can provide efficient and effective solutions for customers. For example, CaixaBank opened its first smart branch last year in Valencia, Spain, featuring five ATMs equipped with facial recognition software.
“There's a need for digitization, but there's also very much a need for the human touch within digital spaces,” says Barbara Vanhauter, global lead of human channels retail banking, ING, Amsterdam, the Netherlands.
ING completed a pilot project in 2019 to test its smart-branch design in seven countries. The team studied customer experiences at bank branches and other retail environments, such as Starbucks, to create guidelines for the new design. The bank then tested those guidelines at each of the seven branches.
The results of those tests helped the team make adjustments, such as placing ATMs so they didn't intrude on the welcoming atmosphere it sought to create—modern, light-filled spaces with open kitchens and dedicated play areas for children. Rather than facing a row of tellers behind an imposing counter, customers entering the space encounter a tablet-carrying representative and a digital desk where they can access online services—with or without human help.
“We didn't just change the look and feel of the branches, we changed the service model so that we take more time to welcome customers and sit with them in an open, transparent environment,” Ms. Vanhauter says.
Fifth Third took a similar approach with projects completed last year, following extensive feedback from customers. The bank's NextGen branches also eschew the traditional wall of teller windows. Instead, customers use tablets to access banking services while moving freely about the lobby or sitting at high-top tables, private booths or enclosed meeting rooms. Bank representatives also are available.
“We wanted to provide an experience that supports our customers’ digital experience and provides great service and advice,” says Valerie Garrett, director of workplace design, Fifth Third Bank, Cincinnati, Ohio, USA.
Smart branches are good for the bottom line, too. Fifth Third's NextGen branches create a smaller, less costly footprint. And ING's new branches are driving increased employee satisfaction, according to feedback garnered during the pilot project via online, phone and in-person surveys. ING also found improved commercial results at the participating branches—since customers now spend more time inside them.
Proportion of each generation that prefers to open a checking account at a bank branch.
Source: Global Digital Banking Consumer Survey, Deloitte, 2019
Upon arrival, customers place their phones over a near-field communications device that lets branch staff know they should be greeted.
Customers can withdraw cash from smart-branch ATMs by using a scannable QR code from their mobile device instead of a debit card.
A human-like robot allows customers to ask questions via the interactive screen in its chest, then advises them on banking products.
An artificial-intelligence-powered “digital human,” which is based on the bank's online chatbot, can roam the branch and answer simple banking questions, helping to cut down on customer wait times.