Previous

"An insightful and refreshing look at the way consumers and retailers interact in this modern age.”

Sir Stuart Rose,
Chairman of Marks & Spencer plc

All royalties to The Princes' Trust

More Info >>




Buy The Book >>

Bank Branches - The Great Pruning

A great article in last week’s Economist (9th-15th May), “The Great Pruning” once again setting out the arguments for and against cutting back on branch networks. The chief arguments remain as follows – branches are expensive places to do business typically representing 60% of a banks operating costs, with the consequence that something a teller does in branch at a cost of $4 can be done on line for 4 cents. I don't think anyone disputes the desirability of driving transactional banking into the lowest cost and most convenient channel.

 

And (the argument goes) that whilst us grey haired troglodytes are reassured by the presence of the physical branch in the high street nobody knows whether those that are young, who have grown up welded to their smart phones and iPads will need the reassurance of a lukewarm coffee delivered by a smiling personal relationship manager in a bright airy professional environment before parting with our hard earned cash for things that the bank would dearly love to sell them.

 

There’s a wonderful story that a designer from I-am Associates stood up at a conference in Asia and said, “ We do a lot of work in the restaurant trade and no one ever asks us to design a “restaurant of the future” – and yet banks do it all the time”.

 

Ironically, I think bank branches, if they are going to continue to exist, need to be more like restaurants. They have to have relevance in people’s lives today, to be a place that I want to go into now and most importantly they have to deliver something that I can’t get through my smartphone – who ever heard of a chilled glass of fine Sauvignon Blanc being delivered digitally? Troglodyte or babe in arms I’m going to do what works for me and not what’s best for the bank.

 

The fact remains that in the short term at least, banks are by and large stuck with their branch portfolios and rather than wishing them away so that they can compete on equal terms with pure play digital vendors maybe they need to seek ways to turn their considerable High Street presence to their advantage, differentiating themselves and securing market share in this ever changing omni-channel world.

 

That doesn’t mean keeping every branch or using every office in the way that it’s used today but it does mean acknowledging that banks have a role to play in the Community – in every sense of the word. Banks came into existence in order to enable Commerce - interaction between individuals and enterprise and to provide a secure way of storing wealth. In order to keep this franchise they need to re-engage at a local level with individuals and with business.

 

With a little imagination, branches can be part of that scenario. Initiatives like Victoria Arnold’s Desk Union, using redundant branch space to offer SMEs a city centre space where they can work and collaborate, is an excellent example of this.

 

The reality is that across all age groups for all transactions we know that 86% of our purchasing activity ends up in a face to face environment. As long as that slice remains significant then branches will continue to have a big role to play.