The digital transformation of the banking industry has streamlined the customer experience such that online or mobile banking is the preferred choice of 78% of customers. Influencing this may be the fact that, compared with 10 years ago, 73% of Americans use cash less often. In a digital world where credit is preferred, brick and mortar banks simply do not provide the same utility for all that they once did.
Yet they are not irrelevant.
Technology is a complement (not a replacement)
Many customers perceive technology as a replacement for the conventional processes of visiting local banks. However, the evolution of the banking experience has been intentional. Modern bank branches have transformed from spartan spaces to establishments with coffee shops and lounges, creating an environment where customers can comfortably complete transactions. Banks are leveraging technology, not as a survival tool, but as a means to enhance customer engagement.
Customer relationships remain a cornerstone of banking, even in the digital age. Millennials and Gen Z, often associated with digital preferences, still visit physical branches, often driven by a frustration with how difficult it is to contact a human via the digital experience. In one study, half of those who opened a checking account over the last three years visited a physical branch, while one third spoke to someone in a call center.
However, the banking landscape is not binary. Banking services can be offered digitally through mobile apps, but overlooking the broad potential of other technologies is shortsighted. The winning strategy is a fusion of technology and the personal touch of a bank. Bank visits may be on the decline, but they still matter, and business success involves adapting to the digital age without discarding the advantages held by brick and mortar locations.
Thriving with Technology in Physical Branches
Being forward-thinking is crucial. Acknowledging that banking is not solely about transactions and ATMs, understanding the demographics of the audience is crucial. While most customers prefer the tech-first approach, we have shown that many also find the need to utilize the classic banking experience. The art lies in seamlessly integrating technology into existing services to provide an added layer of comfort and attraction for customers.
Consider the integration of Artificial Intelligence (AI) into banking services. AI and automation offer unprecedented possibilities, from onboarding to identity verification and account setup. This can reduce the need for customer service visits that are made out of frustration, while improving the user experience. But there is still an enduring need for human connection, especially in financial transactions.
The key is to view technology as a complement. Whether it’s AI or other technological advancements, there will always be a force propelling banks to grow and adapt. The real question is whether banks are willing to adapt to this evolution.
Takeaways: Embracing Adaptation for Future Success
Contrary to apocalyptic narratives surrounding technology and AI in banking, the reality is that AI enhances the customer experience. Physical branches remain indispensable, and financial institutions can leverage digital channels to fortify customer interactions.
Whether customers are opening new accounts or conducting routine transactions, they seek the optimal experience. This does not entail visiting a physical branch for every banking need, nor does it entail fully embracing a process that excludes human involvement completely. Rather, the optimal customer experience is a seamless blend of the best elements. With this approach, banks can confidently assert that physical branches are essential, but to survive, they must evolve to meet the needs of a dynamic and digitally inclined clientele.