Is this the end of the branch experience? Year in, year out this question proves to be the ultimate rhetorical question. This year is no different.

Yes, Covid-19 is having a dramatic impact on the retail banking experience. Yes, many banks temporarily reduced their branch footprint during lockdown. Yes, the pandemic has accelerated FinTech and other digital adoption trends. Yes, customer behavioural change has been so profound that banks need to rethink their branch models to enrich CX. But don’t underestimate the power of the branch as banks start to recalibrate their future.

In a post-pandemic world, the continuing shift from transactional to experiential banking will still have the same transformational power for banks as experiential retail will have for high street stores. Legacy brands that invest heavily in their digital capability will have a head start over their competitors. But, banks that keep investing in remodelling their branch network will keep their biggest competitive advantage over digital challengers – human interaction.

Customers still want personalised face-to-face interactions and help with more complex financial decision making. Banks can’t close branches altogether because customers will not let them. Best-in-class banks recognise that branch innovation sits at the crossroads where the physical is fused with digital to create a seamless, differentiated experience in the new normal.

Banks have been rethinking format, purpose and location for years to transform the branch experience and make their CX easy, convenient, relevant and personalised. The pandemic and forced customer behavioural change is accelerating these shifts away from transactional models to a more complex, high value branch operation. The bricks and mortar is staying but the purpose will change.

Branches will be built on empathy and support

Customers are seeking a safe financial harbour

Grey economic skies mean that customers are seeking financial security and safety from their most trusted provider. Banks with a branch network have an opportunity to build trust by providing assurance and showing empathy. When customers make financial decisions that are complex, they are steeped in emotion. Their buyer journey may typically start digitally as they do their research and seek recommendations and advice. The customer will then turn to the channel they most trust to speak with a real person. If their most trusted channel is their branch then banks need to cater for that empathetic need for individual care.

As McKinsey says, ‘personalization – and the empathy and connection that go with it – are more critical than ever’. Customers will be looking for these trust signals in the way branch staff interact and how their bank responds to meet their immediate and evolving needs. The quality of the branch experience for customers who are seeking a safe financial harbour could impact how the bank is seen for years.

Bank associates will need to play a more strategic role in the customer journey

Pre-Covid, the automation of routine and low-value tasks meant the role of bank staff was already becoming more advisory. The crisis has accelerated this shift in branch purpose. Redeploying, retraining and retooling staff to support customers and provide advice on higher value services and products is a top priority.

Introducing new services and products

New offerings from banks will increasingly come from additional products and services most of which do not exist today. These will enrich customers’ lives. They will help customers in financial distress as the economic impact of the pandemic continues to bite deep. But, banks already have a poor reputation on this.

‘The challenge is that even in normal times, banks are not well-equipped to help customers discover and apply for new products and services’ – McKinsey

In fact, pre-pandemic, ‘shopping’ for products was the single least satisfying banking journey, according to the consulting firm. There is an experence gap because banks tend to focus on the ‘what’ in terms of products, while customers tend to make judgements based on ‘how’ these products are delivered. The ‘how’ is about service. Do I trust you? Do you treat me as an individual? Are you empathetic? Responsive? Reliable?

As Accenture reports, the 20 largest global banks have paid more than $327 billion in fines for mis-selling financial products since 2012. If the answer to just one of the questions above is no, then banks need to think about new in-branch relationship models to fix things.

Using customer-facing ecosystems to rebuild trust

Customer-facing ecosystems are seen by some banks as a possible model to rebuild trust, according to Accenture. When you think that 89% of bank leaders see this model as the main driver of value creation in their industry, it should be on most CX roadmaps right now. Before we go on to explore the reasons why, let’s first define what we mean by an ecosystem.

What is an ecosystem?

An ecosystem is essentially a customer-centred network through which products and services are delivered by interlinked companies.

‘Banks that offer these integrated, contextualized experiences … support their customers, not just in getting financing to buy a house, but in the whole journey to move in, becoming hyper-relevant in their customer’s everyday life.’ – Accenture