Digital Transformation Fintech

How digital is changing the role of bank branches

Banking is one of the most digitalized sectors so far in Europe.

Most European consumers already consult their accounts or make transfers via online channels. The rise of online banks shakes up retail banks. Recently, Hello Bank, Fortuneo, BforBank are joining the rows of Boursorama, ING and other pure players.

The number of visitors in bank branches is falling and margins of these banks are threatened by the rise of online banks that bypass their models.

This phenomenon of « digitalization » accelerates which requires rapid adaptation of customer behaviour. There is an intensification of contacts, in fact 80% of incoming contacts in banks were digital in 2014, representing a multiplication by three in only five years. Also, the main channel is becoming the mobile with a number of monthly connections also multiplied by three in five years.

The change in customer behaviour, particularly the digitalisation of client-bank interaction, logically leads to a decline in number of visits in agencies: the percentage of customers visiting a branch – at least once per month –  was of 57% in 2007 and it dropped to 47% in 2015. In fact, consumers have now new expectations like immediateness which is one of the key points of digital. Consumers require to benefit from the service of their bank in real time and in all places. This behaviour makes obsolete the concept of branch which is subject to opening hours.

According to Les Echos, only 17% of customers go to their counter more than once per month in 2014 while they were 62% five years ago. One more time, these figures illustrate the decline of the number of visits in bank branches.

The responsibility of branch closures is charged to online banking, traditional banks themselves and “Fintech” and Gafa (Google Apple Facebook Amazon).

To summarize, there are two concomitant phenomena: the intensification of customer interactions via digital channels (especially mobile) which creates a drop in attendance of the physical points.

 

The response of traditional banks is to use digital in order to create traffic and business in branches rather than close them.

They develop digital tools to bring people in branches. These tools enable to create sale opportunities for bank branches. For example, Credit Agricole, via the website or the mobile app enables clients to make an appointment with a bank advisor. We observe below that the app informs the customer of the first available time slot and the exact position of the branch.

 

a

 

But overall, banks develop digital tools inside the branch in order to familiarize the customer with digital. These are visual and interactive tools. For example, “La Caisse d’Epargne” has set up interactive displays without contacts (visual and voice recognition) in front of its branches (see below). These displays invite customer to be comfortable with digital and new technologies.

b

Bank branches equip themselves with more and more interactive kiosks always in order to familiarize the customer with digital. Often an advisor is available to explain and advise the user if he is not comfortable with this technology. This is an e-learning tool incorporated directly into the branch.

c

Interactive kiosk in a bank branch

 

Also, bank branches are sometimes equipped with the latest technology for two reasons, first and foremost in this perspective to familiarize the customer with the digital environment but also to show to its most “digitalized customers” that a traditional bank is able to compete with online banks or “Fintech” in terms of digitalization.

In this double objective, “La Caisse d’Epargne” has equipped some of its bank branches with interactive tables.

 

This digitalization in the bank branches enables banks to try new branches concepts:

There is the self-service branch, fully digital, often opens 24/24 where the customer interacts with digital tools.

Also, the store front branch: a showcase of the innovative capacity of the bank, these branches are highly digitalized. These technologies are not only modern controllers. More exclusive, they allow to offer new services, test new interactive and fun customer experience. BNP led the way with “le 2 opera” (2010), accompanied by La Banque Postale and its branch “Paris Cherche Midi”. Credit Agricole has followed with “CA store” in Grenoble.

Digital has changed the banking sector and particularly the role of bank branches. They are more and more digitalized that imply a modification of there operating. Thus, the profession of bank advisor and the role of the bank branches are evolving.

About the author

Lucas SALVADORI