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“To Branch Or Not To Branch” is the wrong debate

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MBank loan1

Over the weekend, the Chief Executive of the British Banker’s Association, Anthony Browne, announced that the traditional bank branch is dead.

Writing in The Sunday Telegraph, Browne states that the halcyon days of olden banking is a misnomer.  It was far more difficult to deal with banks pre the digital era, as you were restricted to times and appointments, and were forced to physically go visit the branch and your manager.

When people say to me – as they often do – that “we need a return to Captain Mainwaring-style banking”, I think “really?”

The reality is that compared to the supposed golden age of banking, the way we bank now is far easier and faster.

In the pre-cash machine age, branches would not even open every day of the week, let alone at weekends. Counters would close at 3.30pm sharp. You could only find out your balance by visiting your branch and getting a cashier to write it down on a slip of paper. Now we can get access to our money 24 hours a day, 365 days a year.

Today millions of us can check our balances, make payments and apply for credit with the help of mobile phone apps whenever and wherever we please. We can talk to our bank whenever we want, by phone, email or social media. Although I do think Mainwaring on Twitter would have been special.

I agree with all the above.   He goes on …

Digital banking has transformed speed of service. In the Seventies even arranging an appointment to discuss a mortgage could take months. HSBC recently had a home loan application completed online in 24 minutes.

I suspect when people laud Mainwaring-style service they mean they would like to see a return to more branch-based banking. But this seems out of kilter with what millions of customers want.

Most of our major banks are seeing a 10pc fall in branch transactions each year.

I agree again.

Now, I’m not going to get into the usual branch debate and the branchless future, as I’ve aired opinions on that subject too often, but I did want to get into another debate: the digital versus non-digital future.

As we digitise everything, are we going to lose something?

Will the lack of human contact wipe out a core value in banking?

Does the removal of face-to-face eradicate a critical element in banking?

I think it might and, as a result, we will see a two-tier banking system.

The tier one banking system will be all digital.

All transactions will be remote, and most financial needs will be satisfied by a screen-based process.

This was well illustrated to me by mBank in Poland, who wanted to compete with payday lenders (Wonga has recently entered the Polish markets), and so they have created a loan in less than a minute within their app.

mBank’s loans allow customers to get funds in their accounts within 30 seconds of making the request.

How is that achieved?


Every mBank customer is analysed in real-time and given a maximum loan setting.

That means that when and if a customer wants a loan, they are pre-approved.

Hence, you load the app and request a loan.

The app shows you the maximum loan you are being offered.

You then choose the actual amount you want to borrow and over what period of time, and the app shows you the total monthly payments including all interest and charges.

MBank loan1

Once you say yes please, that’s it.  The money will be in your account within 30 seconds.

That beats payday lenders at their own game – Wonga’s secret sauce is all about the real-time analytics – and shows how banks can leverage their digital assets (RBS has announced they are doing the mBank loan-in-a-minute model today).

But then what we’ve lost is that human element.

The human element is the ability to see the leeway between real risk and real need.

The old branch manager relationship was an important one in working out whether the customer was good for the money.

The old branch relationship is still an important one for complex dialogue too, where corporate clients need to go for in-depth discussions of trade finance needs.

And the old branch structure is critical in bringing humanity to the digital experience.

mBank and others would claim this is not so – you can service customers easily through a screen with a Skype connection – but I’m not convinced.

That is why there will be a two-tier bank system.

For those who are 100% comfortable with screen-to-screen they will be dedicated to branchless banks who offer amazingly intuitive friction free digital service.  Banks such as mBank.

For those who are looking for less self-service, more dialogue and greater decision-making based upon circumstances and needs rather than profile and credit score, they will continue to rely upon banks with physical contact through a branch or, more likely, through a human visiting their office or home.

And that is where I see the future: not a branch-based one, but one where there is humanity.

  • human contact in the bank’s offices;
  • human contact in my office;
  • human contact through my devices; or
  • human contact embedded in my net-based life.

That is where the battleground lies: connecting humans to the net and humanizing the digital relationship.

It’s not a clear-cut branch or no-branch, all digital versus some digital future, but a multi-layered structure of competition with some getting it more right than others.

A future of challenge for those not digitising fast enough and equally of challenge for those who don’t rationalise their physical distribution structures fast enough.

As Antony Jenkins, CEO of Barclays Bank, made clear:

“Digital channels offer customers fundamental advantages of quality of service and convenience … and, at Barclays, we can see the impact across all of our businesses.”

The Times, June 2014 


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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