Branches Aren't Dead and BBVA Compass Is Using Them to Drive Digital Banking
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Critics have long been tolling the death knell for the brick and mortar bank branch. As more and more banking functions are carried out online - there are around 57 million online banking users in the US alone - and the number of reasons a customer has to set foot in a physical branch diminishes, banks finding themselves being forced to reduce the number and footprint of their traditional locations.
However, some innovative brands, such as BBVA Compass are refusing to go quietly into that good night and are instead thinking of ways they can use their physical branches to augment the customer experience for their digitally savvy clientele.
BBVA Compass's attitude toward digital and physical banking starts with a simple philosophy - the two facets of banking aren't disparate and irreconcilable, but rather two sides of the same coin. It's only by seeing the two elements in this way, BBVA Compass believes, you can truly leverage the best customer experiences and profitability from both.
"What we are seeing, in all segments, is that regardless of how digital and self-service our customers become, the human touch is always needed," said Head of Business Development at BBVA Compass, Pepe Olalla. "ten years ago, I would have predicted the demise of branches in favor of digital services. And I would have been wrong."
BBVA Compass understands that digital and physical can complement one another instead of competing with one another. Digital offers a level of convenience which a physical branch cannot, and brick-and-mortar can give the human touch which is (currently) lacking from online banking - although with the development of AI technology that may not be the case for long.
People are the key to the continued survival and success of the physical branch according to BBVA Compass. There's plenty of evidence customers still want to feel they have a personal relationship with their banking institutions, just like they did in the past. Obviously, the kind of first-name-basis relationship people once had with their bank managers is just not possible or practical in the modern world. This is due mainly to the increased number of customers the bank must serve. But that doesn't mean banks should stop trying to connect on a more personal level.
"At BBVA Compass branches are considered an increasingly important part of the bank's adoption of digital techniques," added Olalla. "It comes down to consumer education and face-to-face sales. Branches are where many customers adapt to and adopt growing digital services. The branch is the hinge, the bank's internal research revealed that most digital customers that BBVA Compass gains come from a radius of five miles from a branch and that markets with more of the bank's branches tend to produce more digital sales."
A Hub and Spoke Model
BBVA Compass is seeing itself as adopting more of a hub and spoke business model in the future. Smaller branches - some as small as 200 square feet - will form much of the physical location network. Customers can visit these locations to complete their banking business in a face-to-face and personal fashion if they wish, with all activity being fed to a central hub which more closely resembles a traditional branch.
The number of staff working in these branches will naturally be fewer than in a larger location, but they'll be multi-skilled and more knowledgeable than ever before. They'll be able to handle simple teller interaction such as deposits and withdrawals, alongside more complex enquires such as mortgage applications and new account requests.
Service aside, there's also the impact a strong physical presence can have on brand awareness.
"Customers who are closer to a branch more likely to sign up for digital services," said Olalla. "However, more important to the results, is brand awareness. There really is something to the branch as billboard ability to penetrate consumer consciousness in an increasingly noisy environment. For people who are searching online, brand is still relevant, and we don't have huge brand awareness, we don't run huge campaigns. As a result, having seen a branch locally makes a connection for the online customer."
Omnichannel banking offers perhaps the best chance for the ongoing survival of the physical branch. However, there's certainly something to be said for the local branch acting as a brand awareness billboard as well.
Omnichannel banking is set to be a hot topic atFuture Branches Boston, taking place in July.
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