The bank has a rich history, which traces back some 400 years at least. Neighborhood branches have long been valued staples of the community, helping us protect our money and plan for our financial futures with a personal, relationship-based touch.
Like many other industries and institutions, banks are facing major disruption and transformation, challenging them to look inward and chart a new path forward. Digitalization trends and online banking already had plenty of traction even before the pandemic hit, but along with ease and convenience, they bring their own drawbacks in terms of financial inclusion and cash access.
In a recent article for Forbes, Alan Mcyntire notes that this difficult time presents a moment of truth: “This is banks’ opportunity to re-imagine the digital experience to incorporate a human touch and ultimately reinvent the main purpose of their branch networks.”
There’s little doubt that the bank branch of tomorrow will look different than it does today. Just what innovations and enhancements might come along to rejuvenate the conventional banking experience. How can branches maintain their standing as indispensable community fixtures for the long-term?
No fortune teller could clairvoyantly predict what’s to come for the bank teller, but we did have a chance to speak with Alex Jimenez, who’s as well-positioned as anyone to lend insight on the future of banking. Currently the Chief Strategy officer at Extractable, Alex is a long-time veteran of the financial services industry, and was named this year by Onalytica as a Top 100 influencer in Fintech. He has served as a member of the American Bankers Association’s Fintech Committee, and Chair of the Consumer Bankers Association’s Digital Channel Committee.
We asked Alex how physical bank branches can use technology to augment their strengths, how “challenger banks” are changing the playing field, and which qualities will define most successful bank branches in the years to come.
Alex Jimenez Shares His Thoughts on the Path Forward for Bank Branches
What do you view as some of the most important innovations in banking over the past several years, and how will they shape the industry’s future?
Big Tech and Fintech have impacted banking but not in the way that is commonly framed. The true innovation is in changing the focus in organizations from channels, products, or services to the customer experience. Technology allows ways to change the customer experience, but it should not be the focus. Bankers have focused on customers leaving branches behind and adopting mobile. The story they tell is that mobile changed the game. In actuality, mobile offered convenience experiences that changed the game.
As many banking activities go digital and move online, how can physical bank branches stay essential for customers?
Bankers need to face the reality that the physical branch is forever changed. We are never going back to some imagined gold age of banking. Customers didn’t like queuing up to do their banking. Very few people looked forward to sitting down with a pile of bills and their checkbook once a month. The same disciplines that are being adopted to iterate digital experiences should be applied to the physical experiences. Design Thinking and Jobs To Be Done (JTBD) can and should be used to evolve branches. The consensus in the industry is that many customers are likely to go to a branch for complicated issues, like getting financial planning advice. However, we aren’t staffing branches with advisors. If we apply these methodologies, we can define how we can build the right experiences at the branch. Further, digital technology can facilitate these discussions by augmenting advisors’ knowledge.
What are some qualities that will differentiate tomorrow’s most successful bank branches, in your opinion?
Defining the right customer experiences and providing the right resources to meet customers’ expectations should drive all activities in all channels. For the branch, that means having the right type of staffing and the appropriate technology to support them. I see branches that are staffed by underpaid, overworked team members that lack the appropriate tools and yet are serving customers well. Customers forgive the friction because the team members are empathetic and do their best. Imagine if they had the proper tools and were compensated fairly.
You’ve written recently about the emergence of the “challenger bank”; can you summarize what that means, and what the pros and cons are for this model?
Challenger banks are nothing new. Back in the early aughts we saw internet banks rolling out. With the bust of the internet boom, many of them disappeared. A new batch of challenger banks started to appear with the increased adoption of smartphones 10-12 years ago. These banking apps are mobile-first experiences. In the U.S., we had Simple and Moven. Simple was acquired by BBVA several years ago. Moven recently pivoted to be a banking vendor. In the meantime, in Europe we have seen banks like Starling, Revolut, and Monzo, actually challenging the large UK and European banks. In the U.S., Chime is probably the leader of the current pack but due to the size and fragmentation of the market, we haven’t yet seen them truly challenge most banks. That is changing, however.
As far as pros and cons for challenger banks, the biggest challenge is that they lack the trust that an old storied brand has had. On the positive side, the cost of servicing an account is significantly less than a bank with legacy infrastructure.
In which ways can digital tools, services, and capabilities support and complement the physical banking experience?
There are two major types of digital approaches to branches. The first one is to augment the branch staff with digital technology. Case management, knowledge bases, and AI-powered sales support are examples of tools that can help the branch team provide excellent customer support. The second is having true omni-channel platforms. One easy example is account opening platforms that are the same regardless of channel. It’s unconscionable that banks optimize the digital account opening process but leave badly managed core-front ends as the platform to open an account at the branch.
Branching Out for a Bold Future
At GardaWorld, we’re paying close attention to the future of bank branches – not just because we work with so many of them, but because we fundamentally relate to their core purpose: keeping customers’ most valued assets reliably safe and secure, and differentiating themselves with a trusted consultative approach in an increasingly impersonal world.