I was recently invited to participate in a panel discussion on the future of banking at the Economic Forum in Poland. The head of retail for a major retail bank predicted that within five years, his bank would not have any branches left. This was a remarkable statement, considering that in his country, 29% of banking customers still visit a branch once a month; in Warsaw, there’s a bank branch on every street corner. Across Europe, however, these numbers vary: Forrester’s recent research shows that only 7% of banking customers in the Netherlands visit a bank branch at least once a month, down from 9% in 2011, while in Spain, 49% of banking customers still visit a branch once a month.
Branches Will Not Disappear, But They Will Change.
What is going on here? Will bank branches disappear or will they transform themselves from transaction processing hubs to sales and advice centers? We think the latter because:
Branches are expensive.The elevated cost structure of branches — including their increasing staff expenses (i.e., hiring, training, and retaining them) and the security costs related to cash dispensing — is putting pressure on the cost/income ratio of many retail banks. This is the main reason why SNS Bank moved the cash-dispensing function out of its branches and replaced them with ATMs. But ther are more examples as stated by my colleague Benjamin Ensor in his blog about digital banking innovation in Turkey.