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How Omnichannel Is Saving The Bank Branch

By Pete Rizzo, Editor (@pete_rizzo_)

“With transactions dropping and staffing levels remaining the same, the inevitable outcome is costly overstaffing in the branch environment.”

W. Michael Scott, president and CEO of Financial Management Solutions Inc, issued this statement on May 24 in response to research that revealed U.S. bank transaction volumes have declined by 45 percent over the past decade. This was hardly the first time a report sounded death bells for the bank branch. A similar trend has been observed internationally – Nottingham University indicated in August that the U.K. has lost 40 percent of its bank branches since 1989.

However, a new report from eMarketer makes the case for a competing vision of the future for the bank branch: One where branches take their place in an omnichannel banking experience that caters to the demands of consumers with increased speed and specialization.

“An omnichannel approach – serving and engaging with customers in an ‘anytime, anywhere’ fashion – is being touted as a way to give banks of all types and sizes more flexibility to meet consumers’ constantly evolving preferences,” eMarketer wrote on September 4.

The report provided ample support for a new conclusion, citing studies that indicate consumers aren’t yet ready to part with branch banking services. In this PYMNTS.com Report, we’ll break down eMarketer’s key findings to examine how the bank branch will fit into omnichannel banking.

Internet Users Still Use Bank Branches

EMarketer’s most notable finding may have been that the majority of Internet users still visit bank branches. Citing past research from the Federal Reserve Board, eMarketer noted that 85 percent of these Americans have visited a bank branch in the last year: A figure that was higher than the number of respondents who had used other options such as ATMs and online banking.

Likewise, it noted that branch banking is no longer the primary banking channel used by today’s Internet users. Sixty-one percent of online seniors now utilize online banking as their primary banking method.

Still, research from Market Rates Insight shows a sizable minority still prefer branch banking, and that this minority is consistent across generational lines.

In-Person Banking Remains A Top Way To Access Banking Information

EMarketer also cited an April study by Harris Interactive that named in-person banking the second-most used method of accessing banking information, with 65 percent of bank account holders reporting this response.

This finding was consistent with reports that have demonstrated that in-person banking is the preferred consumer option for large deposits and complicated transactions. For example, Mercator Advisory Group found in July that 59 percent of millennial consumers believe tellers are the most trustworthy way to deposit $1,000 checks with banks.

How Banks Are Embracing Omnichannel

In light of this new data, some banks are already beginning to change the way they view bank branches. Warren Taylor, the president of Pennsylvania-based Customers Bank, says he has implemented a “high-tech, high-touch” – and sometimes unconventional – approach to banking that has evolved to ensure bank branches will still be there for those who need them.

“Every week, it seems we hear a new report about how the big banks continue to pare down their huge branch networks. Those closings will no doubt continue, and that’s not necessarily a bad thing,” Taylor told PYMNTS.com. “Essentially, the banks that are instituting these widespread closures are trying to devolve their extended infrastructure into something that is more efficient, less costly to operate and more responsive to their customer’s needs.”

Taylor said his bank now has just five full-time team members per branch, and that it its median deposit size is three times that of the largest 100 banks in the country.

“We can staff in this manner due to the use of our technology offerings of our customers. This efficiency allows our branches to be more profitable, even though we offer higher deposit rates and lower fees,” Taylor said.

For more insights and data from eMarketer, click to read the full report here.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Digital Fraud Tracker Report

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