The cost of traditional branch models is proving unsustainable despite the fact that retaining a strong presence in communities is important for banks and consumers alike.
For financial institutions that are reluctant to give up their physical footprint, hybrid branches are emerging as the logical solution.
But that’s not to say that it’s an inferior option, embraced only because it’s more financially viable.
The truth is that there have been many exciting leaps forward in recent years with hybrid branches. We’ve seen exciting use cases emerge that are proving effective in leveraging digital to enhance the in-person experience, while also being cost-effective.
The current branch situation
The curious reality of branches is that almost everyone wants them to continue. Financial organizations such as traditional banks and credit unions enjoy having a footprint in the local community.
What’s more, physical bank branches can still be a source of incredible value for these organizations. One report found that banks with fewer branches have higher levels of deposit outflows as well as poor stock performance when compared to banks with higher branch density.
Why is this? It seems to be that banks with a digital-only service offering perform worse on customer emotion, which is a key factor in building trust and loyalty. Physical branches, on the other hand, inspire confidence in the customer base, leading to higher levels of engagement and revenue as a result.
Likewise, having visible branches inspires trust in the consumer, particularly for when something goes wrong or they are looking for more complex interactions. This is perhaps why a substantial portion of the customer base – 38% in total – claim that bank branches are essential.
Are branches still profitable?
The problem is that customers do want the convenience of online banking for their more everyday, transactional needs, leading to lower footfall in general. This means the extra value generated through trust is only sustainable in high-density areas, where there is always going to be significant footfall.
For other branches, such as regional banks, credit unions, or even rural locations of large retail banking services, the benefits of physical branches are seriously mitigated by the cost of running them. Consumer behaviors have changed too much with the advent or mobile apps or similar digital banking tools for it to be viable.
Drivers of hybrid branches
To solve the issue of high costs for local branches, many financial institutions are looking for digitally powered solutions. There are a few ways this has been materializing.
Branch automation
There has been a big push in automation initiatives, particularly in terms of smart ATMs that are powered by artificial intelligence. This technology is used in a number of ways. For example, it can help forecast the amount of cash the ATM will need or offer facial recognition capabilities to improve security.
Digital receptions for branch banking
Automation is essential to improve the efficiency, security, and reduce costs in a branch environment. But it isn’t enough to connect with customers on an emotional level and really drive loyalty.
For this, banks need to ensure that customers have access to human support whenever they need it. The issue, of course, is that having a bank employee on hand at every branch, particularly small local ones, is not always viable.
The cost of having full time branch employees is prohibitive, which is why so many local branches have such limited opening hours. What’s important to realize, however, is that customers need access to human support – but not necessarily right there in front of them.
This is where digital technology for receptions comes into its own, allowing one branch agent to service up to six or even seven locations remotely at one time.
Not only can the agent greet the customer on a large screen in the reception, but they have full control over the branch. They can authenticate identity remotely, control touchpads, print out documents, or lock and unlock private meeting rooms.
Digital Customer Interaction Solutions
The beauty of hybrid banking experiences is that they don’t fit into one box. When set up properly, they allow customers to seamlessly flow from one environment to another, picking up and dropping the journey as they see fit.
This means that having strong digital customer interaction capabilities is necessary to complement the in-person experience. It’s very common for customers to carry out the vast majority of their transactions or customer experience requests online, only going into the branch for specific issues.
Having a Digital Customer Interaction Solution (DCIS) alongside your hybrid branch offering provides customers with a variety of channels for their customer service needs. These purpose-built software solutions enhance customer interactions by providing agents and advisors with Live Chat, messaging, SMS, Co-Browsing or other channels.
The Post Netz hybrid test
One recent example of hybrid branch technology in action is the ongoing test conducted by PostNetz. The Swiss Post subsidiary has made it possible to get advice remotely from eight branches located in German- and French-speaking Switzerland.
The aim of the test is to see how likely customers are to accept remote consultations and if the positive emotional aspects of in-person support can be retained in this context.
Aside from customer acceptance, the organization is looking to see if video consultations can reduce waiting times and improve the overall customer experience.
The test is still ongoing, but if successful, plans are in place to extend the service to other locations and expand the range of remote digital services overall.
Embracing the hybrid approach
For continued success, digital transformation in the banking industry must work to bridge the gap between digital channels and in-person experiences. The hybrid model of bank branches is emerging as the next front-line digital empowerment change.
Aspects of the traditional bank branch – namely real-time support with a human touch – will always be needed, even with the rise of digital banking and mobile banking. This is why financial services institutions need to focus on hybrid experiences that serve individuals across the customer journey.
Flexibility for banks means flexibility for their customers, leading to stronger customer relationships and a greater balance between digital and in person.
Want to find out more about hybrid banking models? Watch the demo here.
Interested in finding out more?
