Did the mobile device kill the bank branch?
Not quite, but as the world moves increasingly toward digital rather than physical banking channels, the banking sector may have already crossed a behavioral tipping point.
“Ninety percent of what I want to do at a bank I can now do at my kitchen table,” Bryan Lewis, CEO at Intellicheck, told PYMNTS CEO Karen Webster for the series “What’s Next in Payments: What is a Bank? The Changing Landscape of Banking and Financial Services.”
“It’s convenience. That’s why you see a much higher use of digital for banking,” Lewis said.
With the ability to perform transactions 24/7, ranging from simple fund transfers to opening accounts, end users increasingly find digital channels more accessible and user-friendly than visiting physical branches.
This convenience factor has played a crucial role in the widespread adoption of digital banking services, and the intersection of convenience and personalization has helped to further scale digital banking channels.
“There’s a definite age difference in who uses digital versus who doesn’t,” Lewis said. “I think it’s brought a level of financial literacy to the younger generations … there are things that people have come to expect that didn’t exist before COVID-19.” Lewis noted that digital wallets favored by younger generations are increasingly becoming an aggregation layer for transactional activity, and that there is a rising imperative for banks to think about how their own standalone apps interact with digital wallets.
By understanding customer behaviors and preferences, banks can offer targeted services and recommendations, enhancing the overall customer experience, and Lewis noted that this level of personalization fosters stronger relationships between banks and customers, leading to increased trust and loyalty.
At the same time, despite the convenience and personalization offered by digital banking, consumers are increasingly concerned about security and privacy. With the rise in cyber threats and data breaches, ensuring robust security measures has become paramount for financial institutions.
Lewis emphasized that trust is fragile in the banking sector, with even a single security lapse risking the loss of customer trust and loyalty. As such, banks are investing heavily in advanced security technologies and authentication methods to safeguard customer data and prevent fraud.
After all, once security has been established, the opportunities are vast.
“Banks are learning a lot from retail around how to be omnichannel and make it a smooth transition from wherever I am, so I don’t have to repeat myself,” Lewis said. “We’ve all had that experience of you call up a call center and you get transferred and you have to tell your story all over again. People don’t want to do that. And I think for the branch experience to really succeed, banks need to make sure that it can tie into anything that I might’ve started at home, online.”
All that’s to say that the physical bank branch hasn’t been fully cannibalized by digital channels, despite the fact that traditional branch visits have significantly declined.
As Lewis highlighted, branches still play a vital role for certain transactions and customer interactions, particularly for complex inquiries or account management tasks.
“Banks are putting a lot into training and education of the people that work in the bank branches so that they can do more,” he said.
Looking ahead, the future of banking lies in creating frictionless digital experiences while maintaining high levels of security and trust. As technology continues to evolve, banks must prioritize customer-centric approaches and innovative solutions that streamline processes and enhance overall satisfaction, said Lewis.
Still, he stressed that “people definitely care about security” and that failing to deliver a secure banking channel is an easy, and quick, way to lose the lifetime value of a customer.
“What banks are looking to do is set up workflows so that they are onboarding more clients but stopping the fraud,” Lewis said. “The first step is always education. Make sure people understand why you’re doing these things and how it benefits the user experience.”
That’s why, by embracing digital transformation and leveraging data-driven insights, banks can stay ahead in an increasingly competitive landscape while meeting the evolving needs of customers in the digital age.
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