There’s no denying that mobile banking and the use of other innovative online tools is expanding and changing the way people bank. But as financial firms move to build new technology, they shouldn’t forget the value of well-located bank branches.
Inconvenient branch or ATM locations was the second most cited reason that consumers change banks, with 21% of people giving that as the reason, according to a 2014 JD Power and Associates study on retail banking. It followed poor customer service, with 28% of people saying that’s why they changed banking relationships.
When asked what they value most in financial institutions, consumers said easy access to locations and ATMs as well as high quality online banking features were their top picks, according to Ernst & Young’s 2014 Global Consumer Banking Study.
As online and mobile banking increase, it might be easy to overlook branches and the value they bring to customers. Dave Martin, executive vice president and chief training consultant at SunTrust’s NCBS subsidiary, wrote in a 2013 American Banker article that while many people bank online, they often come into branches to check out products or have questions answered.
“While face-to-face interactions may be nowhere near the most common banking transaction these days, they continue to have an inordinate influence on how customers think and feel about a bank,” Martin wrote. “Strive to make any interaction with one of your bankers the friendliest and most professional contact a customer has with any service provider today.”
For some banks, keeping branches that make little or no profit open as a customer service might not be practical. But there are some things that banks can do to offset branch costs.
John W. Smith, CEO of banking consulting firm DBSI Inc. in Chandler, Ariz., said that offering better service often means that a branch will become smaller. Banks are shifting to micro branches located closer to clients and turning them into education centers. For example, customers who are less technology savvy may want to come into a branch for a quick tutorial on how to use the mobile banking app or check deposit. Smaller branches are also less costly to run.
So what can be done with larger spaces when selling them isn’t an option? Smith said many locations are moving to partner with other retailers in shared tenancy agreements. Banks can subdivide the space with another business that also brings in foot traffic such as the U.S. Postal Service, professional services or shipping locations.
Because customers still value branches that are conveniently located, banks will need to find creative and innovative ways to keep the doors open. They’ll also need to make sure that consumers can get the service they need in branches, whether that’s help with a loan or a mobile banking app. It might make the difference when working to keep existing customers.