What does the bank branch of the future look like? Do we even need them?

I was interviewed by a global financial innovation think-tank for a research piece on the future of bank branches. Here’s what I told them.

First, the context. Branch traffic was falling pre-pandemic. Post-pandemic, it’s decreasing even more rapidly. Apple Pay and fintech apps like Venmo are commonplace. Consumers are increasingly comfortable with digital banking.

So, I told the think-tank that there’s no reason for bank branches…

…unless high-touch, in-person financial service is part of your overall strategy.

Here’s why. There is no longer anything that we have to do at a physical branch. Nothing that can’t be done online or in an app.

And branches are expensive. I was talking to the CEO of a credit union who pointed out that staffed transactions are far more expensive than digital.

So, just close all your physical locations and move your customer transactions online, right?

Not so fast. There are at least two problems with that approach.

First, removing human connection commoditizes yourself. The digital banking marketplace is global and if your digital experience is significantly inferior to the competition, it’s only a matter of time before your customers jump ship.

Second, digital might provide the financial service that your customers want, but not the experience they crave.

Through Netflix, pay-at-the-pump gas, grocery self-checkout lanes, Amazon, ATMs, and more, we’ve been steadily removing human connection from commerce. The result is that one out of every three of your customers are statistically likely to be seriously lonely.

That’s why you see innovative banks using their branches to make customer connections that have little or nothing to do with financial transactions.

Capital One has Capital One Cafes. Umpqua Bank calls their branches “stores” and they host yoga classes and other public events to build community. One banking client of mine has a Apple-like genius bar in their branches where customers can do their digital banking with or without the assistance of the on-site employee.

I wrote a lot more about this in my book, Experience Uncommon, which you can download for free.

In the end, it comes back to your strategy. A frequent mistake is to try to navigate down the middle and divide limited resources between the digital and the branch experience.

You’re far better off determining the experience your customers want and committing to that approach. That’s how you prepare for the future, whether you’re in finance or not.