It's a common belief that the death knell has been sounding for years to announce that the traditional bank branch has outlived its usefulness — and the COVID-19 impact has simply accelerated that sentiment.
Our early COVID-19 findings in April seemed to confirm a rapid migration to digital channels. A whopping 31% of banking clients used online account inquiry, deposited a check with their smartphone, transferred money, or paid a bill online for the first time due to COVID-19 restrictions limiting branch access.
A favorable future for in-person banking
We returned to our COVID-19 survey this summer to determine how clients feel about future touchpoints with their primary bank as restrictions ease and as we limp along to some sort of new normal. Over 50% of the 1,200+ respondents said that in a post-COVID-19 world, they would prefer to go to the branch to open a checking or savings account or apply for a mortgage. This was the case across all banks and credit unions, regardless of size.
Defying the digital-first stereotype
One concern among banks is that Gen Y and their younger Gen Z counterparts will go to the digital bank and never come back. However, our research shows that everyone — even younger clients — are more comfortable with an in-person experience for certain transaction types.
A colleague recently shared the experience of his twenty-something-year-old daughter. She straddles the Gen Y/Z borderline and bought her first home a few months ago in the midst of stay-at-home orders and limited banking hours. Rather than going through this process entirely online, she wanted to meet a couple of loan officers from different companies in person to not only learn of her options but also to establish a relationship. After the initial meeting and finding the house she wanted, she switched to digital communication by simply applying online and communicating via phone, text, and email — never again meeting face-to-face with the loan officer.
The most recent survey results confirmed that my colleague's daughter's experience wasn't an anomaly. And although younger clients did have a higher preference for digital access, they still valued the in-person experience. Forty-five percent of Gen Y/Z responded that they prefer to communicate in person during a mortgage application compared to 57% of Gen X/Boomers+.
The omnichannel advantage for brick and mortar banks
Channel usage within financial services is fluid, and the physical bank branch is more appreciated than you may think. It is abundantly clear that clients still value the in-person relationship. Even though the digital experience is critical and growing more each day, traditional banks need to focus on leveraging their only competitive advantage against their online competition — brick and mortar locations.
Overall, a bank's focus needs to be on the omnichannel customer experience. Like my colleague's daughter, clients want to be met on their terms, whether in-person or online, and your branch network can set you apart from your online competitors. The ability to meet someone in person can make all the difference to a potential client. Branch networks can maximize their competitive advantage by offering a seamless experience that allows clients to move effortlessly between both traditional and digital channels.
Reviving the traditional bank branch
Capitalizing on your in-person branch offerings and bridging the divide between your traditional and digital services will be crucial to future success. Our marketing and research specialists can help evaluate your current customer experience and pinpoint ways to enhance your omnichannel offerings.