New Datamonitor research has shown UK banks have closed more than 1,000 branches since 1999.
The dot.com boom and the emergence of Internet banking in the late 1990s were seen by many as the death of high street bank branches. Yet despite the rationalization of the high street network, customers have been reluctant to use the new electronic distribution channels to conduct complex operations like obtaining a mortgage. Face-to-face interaction is still regarded more highly and as more trustworthy by the consumer.
Banks are now refocusing their attention on the branch, reinventing them as advice centers for affluent customers or financial shops for mass-market customers. Branch numbers in the UK will continue to fall, but at a lower rate, from 11,565 in 2003 to 11,054 in 2008.
There has been a notable increase in ebanking, but not to the extent expected. Over 50 million consumers bank online in Western Europe, and 11.5 million in the UK alone. While the Internet channel has certainly become an important distribution channel, and the number of people banking online will increase, it has not ousted the branch entirely as a contact point for customers and is unlikely to do so in the foreseeable future.
With the branch remaining the leading channel for sales generation, particularly for high-value products and services, they are being reshaped into financial shops to maximize sales generation. Branches will increasingly move toward open plan layouts, with branch advisors moving freely amongst customers or sitting at open desk spaces that are accessible to customers. Banks are migrating the simplest customer transactions and inquiries, such as cash withdrawal or balance statement enquiries, into self-service machines, thus freeing sales staff to handle product sales for example.
To increase the quality of advice in branches it will be crucial for banks to seamlessly integrate branches within multi-channel delivery systems, giving advisors access to all customer and product information across all channels. In doing so, they will enable branch advisors to provide the optimal, personalized service across the whole spectrum of financial products and thereby drive customer lifetime value.
