I’m not quite sure if my bank wants me hanging around anymore.
Actually, I’m not sure if my bank knows if it wants me hanging around anymore.
On one hand, online and smartphone banking appear to be killing off brick-and-mortar branches. On the other, banks appear to be simultaneously investing in technology that brings the best of those digital services into the real world to preserve their physical presence.
Could it be that the physical banks of the future will be populated entirely by customers, with no actual tellers or bank employees in sight?
There has been a rise in automated smart ATMs and mini-branches that direct customers toward video conference banking and even the incorporation of online dating elements to encourage us to step inside the four walls of a branded building. The advent of safer video conferencing connections, such as supposedly “unhackable” internet communication and blockchain video conferencing, should only make secure banking via video conference more feasible.
Could it be that the physical banks of the future will be populated entirely by customers, with no actual tellers or bank employees in sight? Or are we experiencing the final phase of a transition from in-person to wholly digital banking that will accelerate as younger, more tech-trusting generations emerge?
Video Conference Banking and Tinder for Tellers
If you’re a customer of Umpqua Bank in Portland, Oregon, you can select your personal banker Tinder-style. The bank recently launched a new app that lets customers peruse a selection of staff profiles online before they enter a branch. The profiles include photos, a professional history, areas of expertise, location, and a little background on the interests of the bank employees. The digital profiling is intended to introduce a human element to the online banking world.
This novel app is an example of the balancing act banks are currently engaged in. In this case, are they adding the digital element as a way of introducing customers to a person the bank wants us to eventually come in and meet in person, or are they trying to flesh out an online service to reassure us that humans are still the ones making decisions about our finances, even if we never shake their hand?
Bank of America is blurring the lines even further. It is retaining its branches, albeit in a reduced size, but is getting rid of tellers and filling the branches with tablets and video conferencing equipment. In Italy, the bank CheBanca! has introduced Inventia’s video conference banking kiosks to create minimalist bank branches in which most interaction is via a video conference connection with a teller:
Again, it is not clear whether the big bank wants us to come in and then act like we’re at home on our computer or whether they’re just catering to a crowd that’s accustomed to and reassured by a physical building. The one constant is that the number of both branches and tellers is shrinking.
Millennials Don’t Like Physical Banks
A significant portion of people in the U.S. still visit their local branch to do their banking. But there just don’t seem to be enough of them to warrant banks retaining a retail presence. Bank of America alone hosts more than one million walk-in customers every day. Despite that volume, the giant has closed more than 1500 branches over the past six years.
Big banks are already tailoring their offerings to suit a younger crowd.
The answer to the riddle of declining in-person bank visits is the taste of the emerging, internet-savvy generations. A recent survey found that people aged 18-35 are twice as likely to be already using digital banking as their elders. That age range includes a mix of the Millennial and Gen Z cohorts that will become the dominant component of the U.S. workforce over the next decade and will take control of a $30 trillion inheritance from their parents in little more than 20 years.
Big banks are already tailoring their offerings to suit this younger crowd. JP Morgan, for instance, just launched a new app called Finn specifically designed for people who don’t need branches. Its defining feature is the fact that you can open an account online, one of the main reasons many of us would venture into a bank branch. It streamlines everything into a handheld operation, even allowing customers to set up automated savings based on expenditure–spend $20, for example, and $2 is put away for a rainy day.
It can be argued that this sort of low-maintenance digital banking is what lies in store once the bank’s interest shifts from the Baby Boomers to their more financially attractive descendants.
Your Bank Doesn’t Want You Hanging Around
This shift to digital banking brings with it a new threat for the big banks. While physical real estate may be prohibitively expensive for financial start-up companies, the digital world is flat and cheap. Analytics company FICO recently reported that more than 50% of people in that 18-35 age bracket are already using non-traditional banking services, such as Paypal and Venmo.
The current banking balancing act between digital and in-store seems to be only a fleeting transition phase.
More worryingly for the major banks, that group also includes some serious tech heavyweights. Apple Pay and Google Wallet are increasing in popularity, and they bring with them the resources and range of products to match the old guard. If the banks are forced to compete for customers against a platform like Google, which dominates global advertising (it is expected they’ll soon account for half the world spend alongside Facebook) and which also has built-in communication apps like Hangouts, there will probably be little incentive for them to keep shelling out for retail space.
Under those pressures, the current banking balancing act between digital and in-store seems to be only a fleeting transition phase. You could consider the personal touch of a branch an advantage that the tech companies can’t match, but when your customers want to be left alone to take care of things on their phone, there’s little reason to persist.
The truth is, my bank–and your bank, too–don’t want us hanging around. They just don’t have the courage to totally admit it yet.