With the advent of online and mobile banking, one might imagine the bank branch to be the next victim of technological disruption, taking its place alongside albums and movies. Of course, the industry is at a crossroads. S&P Global estimates that banks have closed about 20,000 US branches in the past decade alone.
However, there are a number of unique factors that may affect the future of bank branches more than you think. Based on data showing that younger generations of customers prefer face-to-face interactions, banks are looking at ways to redefine branch operations with smaller footprints and new, diverse branch equipment.
The challenge facing bank marketers is the same as that facing retailers in today's digital, omnichannel world: how to modernize brick-and-mortar stores to make them an important addition to, rather than the center of, the customer -experience to make?
For marketers of all stripes, finding a better way forward is at the heart of a niche industry led by Quad and others that uses analytics, store design and consumer psychology to transform retail and maximize customer loyalty. At Quad, we work with banks and credit unions, as well as hundreds of other types of national and regional retailers (and thousands of brands in total), all of whom share a common mission: to reinvent the shopping experience in the context of modern. marketing. mixing.
The task of revamping a bank branch is more difficult than most. A look at how banks are handling the growing role of branches provides a broader perspective on modernizing physical retail as part of an omnichannel strategy.
Heir to a bank branch
According to McKinsey & Co. until recently, banks only grew as large as their branch networks allowed. The opening of new branches served as a tool to attract customers, brought new deposits and opportunities to offer additional services. Branches also provide a sense of trust and security. Relationships with customers are not only built here, but also maintained. Deposits increased as banks opened branches in strategic locations.
The relationship has been in turmoil for the past 10 years. According to McKinsey, deposits at the largest US banks have doubled, while the number of their branches has decreased. In total, American Banker estimates that there will be approximately 79,000 branches in the US in 2022, up from 100,000 in 2009.
This development is of course closely related to the digitization of the banking sector. Simply put: More and more people are transacting with their bank through a smartphone, laptop, tablet or computer. But it's too easy to dismiss the branches as just another piece of a disappearing America.
While the atmosphere in bank branches has changed little over the past few decades (teller lines and deposit slips still exist, and ATMs remain iconic digital innovations), customers rely on the bank's physical presence for their intangible assets. Important objects for the overall perception of the brand. Branches symbolize stability, security and trust, and proximity to customers remains very important.
As a result of these and other generational factors, banks and credit unions now view branches less as transaction centers and more as opportunities to provide unique brand experiences and customer service, including fostering good financial relationships. According to the Banking Administrative Institute (BAI), Gen Z visited a branch or counter an average of six times a month in 2022. That's more than Baby Boomers, who visited the office an average of 1.7 times a month.
The ability to provide customers with knowledge and a sense of security can bring significant profits in the long run. As McKinsey notes, “highly satisfied customers are two and a half times more likely to open new accounts/products with their existing bank than those who are merely satisfied; They are also less price sensitive and generate positive word of mouth.
Bank decision
In our work at Quad with financial services companies, we have seen a number of consistent strategies for responding to these trends:
- Create smaller branches : Industry data shows that the average size of a new bank branch is about 3,100 square feet, about six times smaller than in the 1990s.
- Change the format: Some banks have decided to install stand-alone iTMs (interactive teller machines) in the car parks of major shopping centers to provide remote access to tellers.
- Adoption of the hub and spoke model. Some banks open large flagship branches in the central business district, as well as smaller suburban branches, or iTMs, in rural areas that focus on specific customer needs.
- Shared space: Banks are also experimenting with mixed-use formats for their larger branches, offering co-working spaces and/or cafes (eg Capital One Cafés).
At Quad, we follow trends in financial services, retail and more, and through our work with nearly 3,000 brands, we bring extensive experience in creating compelling retail experiences for today's consumers. Our main goal is to increase engagement by using a comprehensive set of attractive tools to control and organize work in the store/branch. It contains:
- Strict control over the content and location of signs . We realized that the best way to solve this problem was to use a data-driven strategy. That's why we use advanced technologies (eye tracking, facial coding, EEG, etc.) to measure how and when consumers react to signage.
- Explore interactivity . This involves understanding the needs and differentiated experiences of different customers as they navigate their individual in-store experiences.
- Make sure it fits the broader goal . In-store messaging should not only encourage calls to action (from educating consumers to interacting with a product and considering purchase), but should always consistently communicate and support the customer's specific brand values.
Takeaway: Even in the digital age, the in-store or branch experience remains important. And with a holistic omnichannel approach that adapts the IRL experience to current consumer needs, this may become more important than ever.
