We had a discussion last night about branchless banking, with two retail bank leaders telling me I was wrong about the idea.
The argument was not actually about the concept of branchless banking, but less branch banking. Even so, these retail bankers feel adamantly that the average human being wants a branch to bank.
I argued that mobile, internet, call centres and such like would eradicate the need for most branches.
I said that the idea of walking into a branch and queuing for a transaction was ridiculous in the 21st century.
I argued that a teller who is paid under $20,000 asking me if I wanted mortgage advice was not something I would even contemplate discussing.
I argued that the cost of having transaction centres was an unsustainable overhead when far more efficient systems were in play.
Their core argument is that the average customer in most countries wants to touch someone, talk with someone, visit somewhere and be with people.
They like branches, branch people, talking with people about money and being assured they are doing the right thing.
They argued that the average person is afraid of money; they don’t like thinking about it; they want someone to tell them they are doing the right thing and to give them support and help.
They argued that I am not the atypical customer; that I am far more educated and assured in my dealings with money and technology; that I am not the typical person in a branch and that branches are there to provide advice and support.
Interestingly, there was an outspoken discussion about how banks got it so wrong in the 2000s, that branches were referred to as ‘stores’, that banks became retailers and that this was wrong.
Banks are not retailers, they are advisers.
They shouldn’t sell credit, but they should provide credit where credit is due.
If loans and mortgages are affordable they should be available to that customer, but they shouldn’t be pushed like a drug on every person whether they can afford such credit or not.
The latter part we all agreed with; the former we didn’t.
I disagree that every human wants human contact and service for banking.
That human contact and service for banking should be available is important, but not on every high street corner.
That most people are happy to use technology for self-serving and don’t need to go to a human for transaction processing.
This last piece was the most debatable point of all for me, as the retail bankers argued that technology can never replace human service for more complex processing.
Like the idea of doing investment services on an ATM, it just won’t work.
That last comment is where these guys shot themselves in the foot.
My argument is nothing to do with mixing transactions with advice; self-service with service; administration with sales.
Transactions and administration is where self-service is key.
Customers – whether educated or not – will perform the majority of their transactions and administration through self-service in the near future.
Like the ATM got rid of cash dispensing tellers, the mobile internet will get rid of the transactional branch.
That leaves advice and sales, where service with humans is required.
Complex products like mortgages and investment services will still be serviced by humans in branches.
Just, as I’ve argued for a long time, the non-transactional sales branch of the future will demand far less of a footprint than today’s transactional administration branch.
That’s the point.
The future branch will be limited in number – about a tenth of today's number – but unlimited in comfort, branding, service and advice.
And it will avoid having humans employed to do administration of customer's transactions.
Will they ever get it?