News of branch closures seems to be inevitable as more and more people are turning to other channels for their banking activities resulting in less branch footfall.
I've noticed that this type of news mostly comes from Europe and the US. In Asia, branches are still relevant. A report by McKinsey & Company offers three reasons why branches are staying put (source: Digital Banking in Asia: What Do Consumers Really Want?).
The first is regulatory necessity. Many countries have strict rules to prevent money laundering and criminal or terrorist financing. In the Philippines for example, I'm required to go to the bank to open a new account even if I'm already a customer. Only
in some countries in APAC, like Singapore, can face-to-face sometimes be replaced by digital. For example you can open an account at OCBC without going to the branch via online or mobile.
The second is sealing the deal. Customers look up products online and, for complex products such as mortgages, investments and the like, they then go to a branch to seek advice prior to making a purchase. Many customers in Asia still want to have a human
interaction before they have the trust to make their purchase.
The last is a sense of security. There's nothing like a physical location and a number of branches to reassure customers that their money is with a reputable and safe institution. Online-only banks will take some time to prove that they are not fly-by-night
and are managed correctly. There are also many customers who still do not have access to alternative channels. These customers effectively are forced to use branches for their banking needs.
What does this mean? It is likely that in Asia branches are staying put and networks will expand for the time being. On the road towards digitization, it is equally important that banks invest on their branches to continue to attract offline customers who
will eventually migrate online. Branches won’t thrive by staying the same.
The types of improvements needed are:
#1 - A single view of the customer that staff can use to understand a customer in one glance and offer relevant products that customers actually need and fit their lifestyle.
#2 - A roaming teller using a tablet in the banking hall who can triage non-cash transactions and ease teller traffic.
#3 - A simple queueing system so that customers can input their transactions online. Location services in their mobile will notify the bank when they have arrived in branch and automatically call them to the appropriate teller.
#4 - Incorporating biometrics in the branch strengthens the bank's image as a bastion of security – and makes service more efficient.
In Asia, branches are here to stay, at least for the medium term. Today’s customers expect more, but should branches respond by offering more of the same?