Why Brick & Mortar Branches Still Matter
These days, there isn’t much you can’t do digitally. Practically every type of essential service or product can be obtained with a few clicks of a mouse. As technology continues to evolve, the march towards complete digitalization forges ahead in nearly every industry, including the financial services space. Which increasingly leaves a number of financial institutions asking the question: “Do we really need physical branches?”
Surprisingly, the answer to that question appears to be “yes.” Despite living in an age of computerized convenience, people still place a great deal of value on face to face interaction, especially when it has to do with a fundamental topic like finances. And this value makes brick and mortar branches an essential component of a robust and well-rounded customer engagement strategy.
On the surface, maintaining physical branches seems like a significant investment. And not necessarily one that makes a lot of financial sense. After all, there are factors like rising rent, increasing energy costs, maintenance, and employee salaries to consider. It’s these factors that have contributed to seeing a number of brick and mortar branches shuttered.
However, there is an interesting correlation between the types of transactions that typically take place during a branch visit and the profitability of the products and services involved in that visit. For substantive transactions that tend to be more profitable, such as investment advice, loan applications, or setting up an account, the majority of customers still prefer in-branch service as opposed to a digital solution. This suggests that maintaining physical branches may be a smarter investment than it may initially appear.
A Comprehensive Customer Experience
Analysis of the types of transactions that typically occur at a branch also offers an interesting insight into the customer mindset, especially that of younger customers. There is often an assumption that younger generations such as millennials might prefer a fully digital banking experience. And although digital is the interaction method of choice when it comes to routine matters such as checking an account balance, it’s evident that for important decisions such as financial planning, younger customers actually prefer consulting with the experts in person.
Due to the higher-stakes nature of transactions taking place at a branch, customers also have higher expectations when it comes to the service they receive. Despite a decline in the number of branch visits overall, a poor in-branch service experience is still the top reason for customers to switch financial institutions. This means that it’s essential to have experts available in a face-to-face forum to assist with important financial decisions, and to provide an in-person service experience that creates a positive impression.
Striking a Balance
So how can financial institutions reconcile a customer’s desire for the convenience of digital services with the demonstrated need for face-to-face interaction, especially when it comes to large-scale financial decisions?
In order to provide the most well-rounded customer experience, and to leverage the valuable type of customer engagement that comes with in-branch visits, it’s becoming increasingly necessary to adopt a multifaceted approach. Creating a seamless, uniquely branded digital experience for routine transactions that leads into an equally seamless in-person experience provides the best of both worlds. And in a world where both convenience and great service are key to customer retention, that’s a winning proposition.