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Can we stop the branch versus no-branch debate purleeze?

The branch discussion is a perennial favourite I know, but there’s one thing that is rarely discussed by the ‘no branch’ proponents: culture, demographics, psychographics and geographics.  It’s like they say: “there will be no branches in the future, make it so”.  I guess that’s because the anti-branch community are (a) over 35, (b) digital first, (c) anti anything last century and (d) fintech.

The last three points are all related and boil down to a single reality: if you are 100% digital, then anything physical is terrible.   The branch is a physical representation of a bank, and so it’s terrible.

But here’s the thing, if you look at the reality, the culture, demographics, psychographics and geographics often call for a branch operation, whether a bank likes it or not.

Take my example of CheBanca! yesterday or the comments of Craig Donaldson, CEO of Metro Bank, that branches are for service and brand and trust.  Then take the comment by Mark Mullen, former CEO of First Direct and co-Founder of a new digital first bank in the UK called Atom Bank, that their target customers are not millennials.  After extensive analysis, they’ve found that their ideal customers are over 35, and financially competent and confident.  Fidor Bank, the German digital bank, tells me the same.  Their ideal customer target is over 35.  In fact, more than half of their customers are over 40.

This leads me to a perspective that (a) under 35s like the idea of a physical bank touch point as a reassurance and (b) over 35s hate their banks if they get digital and would rather self-serve.

But even these two points can be refuted as there is no one rule for all.  We cannot say that banks will all get rid of branches or that all customers hate banks or bank branches.

For example, in France, the remote banking experience is derided.  In India, a visit to a bank branch is a social occasion for all the family.  In the USA, whilst checks are everywhere, getting rid of the branch is unlikely in the near term.  In Spain, customers expect a bank branch on every corner and local, personal service.  In Iceland, the idea of visiting a bank branch is about as likely as an elephant walking into your living room.

Meanwhile, the fact that you can actually go to a branch to see the money is still an important psychological factor for many, which is why CheBanca! say that’s where the trust resides.  In other words, there are no generalisations here.  Every market is different; every country is different; and every person is different.

So what is the most likely branch versus no-branch scenario is that some banks will offer digital only plays; some will offer digital first plays, with access to physical if needed; and some will offer physical first plays, with digital augmentation supporting the physical experience.

Some customers will use digital only; some will use digital only and be reassured that physical is there; and some will use physical access, but be reassured that digital’s there.

Some countries will see a decimation of the bank branch network (already seeing it in the Nordic region); some will see a trimming (Spain); whilst some will see branch services expand (some Asian markets).

Can we therefore get rid of the there’s no need for branch anymore discussion, and move on to why some banks and some customers need branches and some do not?



About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, 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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