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Shaping the future of finance

Do we need bank branches? (Part One)

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For as long as I can remember, we have had a debate around whether, to be a retailer, you need stores? As a retail bank, do you need branches? The predictions from the early 2000’s have been that branches and stores will close. It’s certainly true that many have. I’ve blogged about this often and probably will do so again in the future, but it came to mind when I saw that Amazon is closing stores.

Amazon is closing eight cashierless Amazon Go locations in Seattle, New York and San Francisco, marking the e-commerce giant’s latest round of cost-cutting amid slowing sales growth. The company still has twenty stores across America and claim that they remain committed to the format, but it made me wonder. In particular, it made me wonder about companies like Amazon and Apple, who open stores as an augmentation of their digital reach. Do they need them? Do we need Genius bars? Do we need Amazon Go? Why would a digital firm launch a physical store?

Interestingly, many do and I often relay the story of my friend Roberto Ferrari, the founder of Che! Banca in Italy, a digital-first bank with branches. Launched in 2008, the bank opened branches across Italy. Why? Well, it turns out that where they have branches, they get more deposits. Roberto shared with me that the branches were therefore there not for advice or for service, but for marketing. If customers can see the bank exists, it cements the trust that the bank exists. If customers can go somewhere and say show me the money, then it reassures that there is a place that has the money.

That’s the importance of physical presence.

It is similar to the belief that I had that customer behaviours would change forever due to the pandemic. I had this idea that customers would become truly digital because they had been locked indoors for two years. Yet, unsurprisingly in some ways, people have gone back to the main street to do their shopping and banking.

Why? Because people are social. It’s nothing to do with shopping – although I personally do prefer to try on clothes before buying them – but it’s more to do with getting out and about.

I always remember talking about branches closing and being unnecessary and an Indian member of the audience pulled me up, saying: you don’t understand. I said but we don’t need branches? He said, the branch is not there for service; it’s there for families to meet.

Talking with him afterwards, he explained that some people would go to branches in India and spend the day there, gathering outside and having picnic lunches and social meetings. In other words, the branch is a meeting place, not a transactional place.

This combination of a social centre and trusted brand that can be seen and touched is a really important factor in finance, and often underestimated in its importance.

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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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