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Why we still need bank branches

As our infographic showed, and as we see frequently in the press, bank branches are closing at a steady rate in the UK, and elsewhere in the world. As banks cut costs, will customers lose out?

While we are massive advocates of a superb digital customer journey (something we help our clients monitor and achieve), banks have struggled to go completely digital in all scenarios, as there are still a large number of people who desire and require face-to-face banking. However, it’s possible many of them can be won over with outstanding and useful digital offerings.

The Access to Banking Protocol launched in 2015 by the BBA aimed to mitigate the impact of branch closures; banks have argued that it didn’t put in place any sort of consultation process around branch closures, it simply offered alternative measures – ways that banks could continue to provide banking services to affected customers (usually those in rural areas). Digital account servicing was one of those routes.

As RBS announces another 150 branch closures, an FT article last week argued that the provision of digital alternatives simply wasn’t good enough, echoing a new report from the House of Lords’ select committee on financial exclusion.

Who is excluded?

The group most at risk of exclusion due to bank branch closures, it seems, is the elderly – a huge and growing proportion of the UK population. Older banking customers are most likely to rely on local branches (i.e. more likely to live in the rural areas where branches keep closing down), and the least likely to bank online.

(We asked a small focus group of Gen X and Baby Boomers to talk to us about digital banking recently, and found that while desktop banking was used by some, most of the group was highly unlikely to ever switch to mobile banking.)

A letter to the Belfast Telegraph last week from an 86-year-old from a rural area highlights the issue faced by those who no longer have a local branch – internet banking access. There are nearly 4m UK households without any internet access, and 12m people living in rural areas with poor internet access. And 4.5m over-65s are not online, for whatever reason. Even where someone is keen to try desktop or mobile banking applications, not being able to get online reliably will throw a spanner in the works.

There is also a big problem for the disabled, both those who can’t travel to a further away branch, and those who struggle with the accessibility of other services. For example, deaf customers who are being contacted by telephone, and blind customers who can’t get a PIN sent to them in Braille.

We’ve seen some movement in the digital space to accommodate those living with a disability – video, BSL translation tools, and ‘positive friction’  – but this is little use to those who don’t have internet access or awareness of these options.

What can be done?

As Claer Barrett points out in the FT, the Post Office offers banking services, but few consumers seem to know about this. Indeed, the Select Committee thinks more needs to be done to promote this service – and Barrett suggests that banks who close branches should fork out for the publicity campaign. (She also notes that Post Office branches are also under the threat of closure.)

Similarly, it could be argued that there is still a lack of awareness around the alternatives – including online banking.

Of course, there are huge numbers of people who simply want to speak to a qualified bank representative, in a branch that is easy for them to access and familiar when they arrive. Where branches haven’t closed, they’ve used technology to replace staff (sometimes entirely) and arduous processes, but this can be met with chagrin. Greeters with iPads can be irritating; one teller on duty is frustrating on the (supposedly rare) occasions when branches get busy; self-service terminals are still alien to many, and an ‘assisted’ experience can feel unwieldy for all parties. (If, for example, you’re unsure of the process for manually paying in a cheque it can take much longer to complete the process using an in-branch machine than to go to the teller.)

Lloyds micro bank branches

But there is still an opportunity for those banks who really nail the digital experience to convince some customers that they don’t need to rely on a branch for quality service or to handle complex queries. We know that 72% of under-30s still prefer to use a branch when it comes to big and complex financial decisions, but we’re seeing digital developments that may move that forward.

Much of it rests with internal change (embracing a customer-centric vision) but new technology will play a massive role. As the BBC reports, Artificial Intelligence will help us move beyond automation and towards personalisation. Smart devices like Amazon’s Alexa could be a more natural way for customers to ‘talk to’ their bank and get tasks done – without having to sit at a computer or own a smartphone.

Some of the processes that previously required a branch, or at least a person – mortgage applications, account onboarding and soon cheque clearing, to name a few – can feasibly be done online. Not many banks offer ‘end-to-end’ digital application forms, and those who do often don’t tie them up properly with other systems, to ensure someone can step in and help if the tech fails.

The Telegraph recently published a list of upcoming bank branch closures, stating that people are moving to ‘online-only providers including Charter Savings Bank and Atom Bank’ – but it is actually newcomers Starling (see below) and Revolut who have launched accounts that customers could feasibly switch their banking to.

Starling app

 

 

Even if banks iron out the niggles in their chatbots, application processes and app accessibility, and apply new technology across more banking tasks, there will be exclusion if bank branches are totally phased out. Until internet access and adoption is completely universal, banks need to ensure they meet customers where they are.

Jess Morley, Research Manager at Mapa Research, comments, ‘As UX is a term that is associated with digital platforms, there is sometimes a troubling misconception that the only way to provide a great customer experience is by going all-out digital. However, this is not the case: Digital solutions are only widely adopted by customers when they enhance or improve an existing way of doing things. Mobile wallet payments, for example, have been relatively slow to take off because they currently offer no added value to payments made with contactless cards.

‘This is much the same of the branch experience – for many, the additions of digital solutions in branch detract from the overall experience and negatively impact customer satisfaction rather than improving it. By all means banks should focus on prioritising journeys where going completely digital makes sense, but they should also remember that what really makes a great customer experience, and one that makes customers want to stick around, is choice over how and when to manage their money.’  

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