The right way to balance digital and branch banking
Branch networks are shrinking, and banks need to get better at handling this disruptive process with empathy. One study shows that 31% of customers who switched banks did so when a branch closed. Can customer attrition be minimized with a better strategy?
Many financial institutions have simultaneously set goals of becoming “mobile-first” and reducing costs by trimming their branch systems. But there are downsides to such thinking that may not be adequately accounted for in their strategy.
They could not only be losing opportunities to broaden customer relationships, but also be making it easier for both traditional and fintech competitors to pick off consumers whose only connection to their primary financial institution is a smartphone.
“Banks need to realize that if they are going to go to a mobile-only strategy, and think they’re solving the problem of reducing costs, they’re really opening a Pandora’s box,” says Jean-Pierre Lacroix, president of Shikatani Lacroix, a strategic design firm whose specialties include banking offices. “They’re actually training their customers to leave them. They need to understand that the branch remains a pivotal element of sustaining and retaining their customers.”
Lacroix doesn’t dispute that digital banking is increasingly doing the heavy lifting of handling everyday banking transactions. But his point is that that’s not the whole game. He makes a case for rethinking how branches are used instead and, in cases when branches are closed, handling the disruptive process with more empathy for both employees and customers than is typical.
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