KeyBank Is strategizing for the Future of the Bank Branch Network
Even before COVID-19 became a household name, the future of the brick-and-mortar bank branch was far from certain, and since the pandemic entered our lives at the top end of 2021, that future has only grown more unstable.
Record closures have seen many parts of the US now devoid of a physical bank branch and many customers have been left with miles between them and a location at which they can carry out every day financial business.
This may not be too big of a deal for younger and more tech-savvy customers who have no issues banking online, but will pose problems for elderly people, those with little or no access to personal transport, and customers who need to cash physical wage checks – who may have to rely on other check cashing services and the often excessive fees which come with them.
KeyBank
To try and help it – and the rest of the industry – better strategize for the future of the brick-and-mortar bank branch, KeyCorp retail banking subsidiary, KeyBank has been researching how best to meet the evolving needs of customers while remaining sensitive to those who still require a physical banking presence.
According to the KeyBank 2020 Financial Resiliency Survey, 85% of Americans say they will use digital tools to complete some or all financial transactions after the pandemic. Extensive adoption of self-service digital banking is evident, and consumers appear to enjoy self-service banking as it enables them to carry out daily banking tasks such as moving money around and paying bills without having to take time out of their busy schedule to visit a branch.
However, this shouldn’t be taken to mean there is no demand for physical banking services. In fact, over half [62%] of customers have stated they would be more likely to choose a bank or credit union to do business if it had a physical presence rather than a purely digital one. A big part of the reason for this, according to KeyBank, is trust. People need a bank they can trust and are naturally more inclined to do so when a brand has a tangible footprint compared to the often ephemeral impression digital disruptors can leave one with.
"While headlines have lingered around the closing of bank branches for the past few years, the US is decades away from the bank branch becoming obsolete," said Executive Vice President and Head of Digital Banking at KeyBank, Jamie Warder "Human mixed with digital will be an important combination looking to the future. We call this "phy-gital," – a mix of physical presence and digital resources as the future consumer banking experience."
A New Era
One thing we are likely to see in the future according to KeyBank, is the rise of so-called appointment banking.
This means the vast majority of transactions – balance enquiries, money transfers, debt management, opening a new account, etc. – being carried out in the digital space, while the physical branch will be a place for those financial interactions which require more detail and the human touch.
Large transactions such as mortgages and car loans will be handled in person, while the smaller every day interactions move online, created a world where digital and physical banking can coexist with one another.
KeyBank’s research suggests that this need for a blend of physical and digital banking is even being felt by younger customers, such as those belonging to the millennial and GenZ generations, flying in the face of the notion that continuation of brick-and-mortar locations is something only older people desire.
In fact, KeyBank will even go so far as to suggest that it is physical banking services which will act as the true brand differentiator in the future.
"With so many financial transactions being handled by consumers on their own, there is a decreasing platform for banks to compete for business," adds Warder. "Banks may offer different accounts, fee structures, and benefits, but, for the general consumer, the value proposition from bank to bank is nearly the same. Americans are inundated with financial advice from all different directions, added to the financial disruption of the pandemic. Providing financial direction and personal touchpoints for consumers is the new competitive space in consumer banking."
Final Thoughts
While physical banking is certainly in trouble, it would be unwise to count the brick-and-mortar banking location out just yet. As KeyBank’s research suggests, there’s life in the old horse yet and it may even prove to be physical banking which allows brands to truly stand out from one another.
Your Ten-Year Strategic View: Planning the Future of Your Branch Network is set to be a keynote topic at Future Branches Boston 2022, taking place in July, at Westin Copley Place, Boston, MA.
Download the agenda today for more information and insights.