Current customer experience research shows that (whenever asked) consumers state that they like bank branches and prefer banks with branches.  Yet the evidence of their behaviour and mobile adoption rates suggests otherwise.

Obviously, there’s a parallel here with this month’s UK general election, where the result predicted by the polls did not match what happened. The gap between what pollsters understood to be voters intentions and their actual behaviour was uge. (For overseas readers, the BBC has good analysis HERE and HERE of why the UK polling industry predicted the result of the national electionso wrongly).   Is something similar happening in banking? Do we either have shy customers who won’t confess their love of branches? Or do we have the opposite, that the research is overstating a preference for branch when in fact consumers only use branches through lack of other alternatives?

Last month’s Finextra story: “Digital challengers face tough times as consumers cling to branches” is evidence that significant numbers of consumers still see significant value in branch.  Mobile technology, especially smartphones, is driving change but at the same time there are still consumer demographics that have both loyalty and need for a branch.

Furthermore, many of the bankers that I speak to are very conscious that branches are one defence against the disintermediation that comparison sites have brought to the insurance industry. The world of enabled UK current account switching and PSD2 is one where banks are losing many traditional control points. The more strategic banks have seen what comparison sites have done to the UK insurance industry and they don’t want to be left with the costs of back-end systems while more agile new entrants cut them off from their customers.  I’ve blogged about this in the past on Finextra (see “Aviva, offshore and the threat of the web comparators” ) and since I wrote that if anything the risks for the banks have increased.

Meanwhile, despite the clear risks, the banks are struggling to get decent data on what channels customers truly prefer and will prefer in the future.  My suspicion is that some of this is due to the way consumers perceive channels and some is due to the way in which onsumers are surveyed (…much like the polling problems in UK politics!).

Contact centre (for example) is often seen as unglamorous, the home of gruesome IVR menu queues (“press 1 for a longer wait…”, etc….) and causing customer frustration.  When asked about “contact centre” that experience is what many consumers think of.

Yet remote service to complex issues, provided 24hrs a day and initiated by an interaction on a mobile device is almost certainly the future for many parts of financial services, not just banking.  Looking at this week’s Nunwood customer satisfaction figures for UK brands,  it is striking that it is First Direct, a contact centre led banking brand that has come first.  

In a piece of consumer psychology work I’ve done, I've found that consumers associate “contact centre” with their more gruesome customer experiences. Yet when asked to describe an outstanding piece of customer service, they often choose an experience that is service by a contact centre  – they just don’t tightly associate that excellent service with the channel through which it was delivered!

Similarly, while a bad branch experience in the UK can be pretty awful that doesn't mean branches are bad or that mobile replaces them. The figures produced by Halifax Bank of Scotland last week may show that 2/3rds of on-line banking is now done via a mobile device, yet Halifax is still very cautious that branch still has a major role to play and customers want branches. The crucial distinction they make is that while mobile may be “the channel of convenience”, customers want branches for high-value interactions.  The new TSB bank feels similarly.  In February they produced a very public and very robust defence of branches in their document “Why branches matter in a digital age”. This well researched 12 page document is very clear that for many consumers, face to face advice is what they look for before purchasing complex products. Nationwide Building Society has taken a similar view (see “Nationwide extends video banking to a further 100 branches” on Finextra), and is rolling out Cisco video technology to ensure it can provide expertise in branch when customers walk-in. Branches matter to these organisation and they see the branch as a competitive differentiator.

I short, I think customers do want branches where they get the experience they expect and for where they have complex interactions. The challenge for surveys is that customers file that under “good service” and then put the long queue at the teller counter under the heading “branch”.  This doesn’t meant that mobile isn’t the future for many interactions (the Halifax figures are very clear), but it doesn’t mean branch is redundant either.