For many years we have had discussions about bank branches and a branchless future. I personally don’t believe in a branchless future, but many do. And yes, there are many branches disappearing, much to the annoyance of those who lose that physical store.
For example, America still has a large number of branches (32 per 100,000 people) and remaining fairly steady, whilst Europe has seen a near 20% reduction in bank branches from 2009 to 2015 (238,467 in 2009 falling 49,616 to 188,851 in 2015). That’s still a lot of branches.
What is the outlook for the future?
In my view, there is always a role for a branch in banking, but not the branch as we knew it. The old branch was all about transactions. Pay in, pay out, cash a cheque, deposit some coins and so on. All of that is going or has gone. But there are two to three elements to a branch.
One, it supports a community and specifically the business community in the area. Businesses have different needs to consumers, and do often need access to a human. People forget that.
Two, money is not the same as a Facebook update. If you lose a post saying what a nice time you’re having, it’s not the same as losing a deposit of $10,000. In fact, I often state that if you woke up today and find you’re bank app confirms the balance you expected, then you’re happy. But what do you feel if the balance is -$10,000 short of what you expected? You’re just going to sit and ignore it? Of course not, you’ll call the bank or go to the branch to eyeball someone. That is because money is different. It is far more emotional than other parts of our life, because it is the controlling factor in our lives.
Three, I think a lot of pundits forget what it’s like to get your first job, first relationship, first car, and first home. These are big moments in a young person’s life and to imagine they would all be dealt with through an app is a little bit strange. I always hark back to Deutsche Bank who opened an amazing branch in Berlin for their high net worth clients. Along with the mandatory café and shop areas, they designed two rooms nicknamed the iPod room and the Senator room. The iPod room was designed for their young customers and was all white plastic and hip; the Senator room was for their wealthy clients and was all oak and red leather, like a library. When the branch opened, they were therefore surprised when all their young customers wanted meetings in the Senator room whilst their old customers wanted to meet in the iPod room. Think about it. Old people want to be young and hip again, whilst young people felt that money was serious and important and demanded a serious and important room to talk about it in.
