Bank Branches Evolve Into Financial Education ‘Magnets’

Last year, banks shuttered 2,300 branches.

The move should come as no surprise, given the fact that banks, like any other business, have been examining their cost structures. At the same time, they’ve been investing aggressively in technology and digital experiences, fending off challenges from neobanks and FinTechs.

The stately, Greek columns, the marbled facades that are hallmarks of the bank itself — well, they might seem more like museums than bustling centers of financial life.

But, as Splitit CEO Nandan Sheth told PYMNTS’ Karen Webster, observers penning the obituary of the brick-and-mortar banking experience are being a bit hasty.

Sheth said he has not been a in branch for his own personal use in the past year and a half, since getting a document notarized a few years ago as Splitit went private. The CEO noted that one of his sons banks with a neobank since that’s where his friends use a peer-to-peer payment service — and the neobank also offers investment services. All his son’s financial needs are taken care of via phone and purely digital channels.

Nonetheless, “I don’t think the branch is dead,” he said, adding that “the branch will evolve and still is evolving.”

As he told Webster for the final installment of the “What’s Next in Payments” series, which seeks to answer the question “What is a bank?” and to delve into the changing nature of financial services, many firms are getting a bit creative, taking a cue from commerce giants and other companies as they fine-tune their omnichannel offerings and use the real estate that they already have.

He recounted an example where banks in Europe have made their branches available as co-working spaces. Clients come in, grab coffee, work and get their banking done in a seamless work-day setting.

“Since the pandemic, the classification of a bank — and how we see the image of a bank — has changed,” he said.

For those of us of a certain age, a bank may have been a place where one walked in, went to a teller, got a bank book and stood in line whenever they needed to deposit or withdraw cash.

Brokerages, which operate within financial services, can offer some guiding lights for banks, as Sheth said they do a good job of connecting physical and digital activities in a frictionless fashion. He told Webster that during one recent occasion, he was examining a potential investment, and he was able to book an appointment with his investment advisor the same day — and the in-person presentation took less than 15 minutes.

“She showcased everything on screen, and I was delighted with that experience because, for all of us, time is at a premium,” Sheth said.

With such tailored experiences in the mix, he said, banks can become “magnets” for financial education, which represents a never-ending journey for clients and customers, especially where complex, high-value transactions, like mortgages, are concerned.

The Four Elements of Modern Banking

To get there, he said, four elements of change are converging to shift the ways and means by which consumers engage — and want to engage with — their banks.

We’ve all gotten used to digital channels as being the primary points of interaction — and among the stickiest points of interaction.

Asked by Webster if we’re headed toward the age of the banking super app in the United States — where everything can be done through a single digital front door — Sheth demurred, saying that consumers still want choices.

Although banks have made strides in improving their digital operations, more progress must be made with simplicity as the guiding principle, and with links that connect users instantly to live banking professionals to address clients’ needs. Advanced technologies, especially artificial intelligence, are helping to change the delivery of banking itself by using client data to form actionable insights, he said.

The second element is that the omnichannel experience that might be needed for certain transactions must be seamless, so that consumers can start something in the digital world, and terminate the flow of documents, or funds, in the branch setting, he said.

The third element is one of personalization, which shapes everything from the user experience preferences on one’s banking app to rewards tied to cards and investment advice, he said.

“Last but not least, when I think about my interactions with the bank … the veil of security is also changing,” he said.

Passwords must give way to biometrics and AI to speed up and improve the banking interactions themselves.

“Leveraging the digital channel within the banking system is increasing … but this means the fraudsters that are trying to get your account, your data or your personal information are becoming more sophisticated,” Sheth told Webster.

Passwords are proving too easy to steal, and SMS codes can be intercepted, so AI and biometrics will prove to be better lines of defense.

The Greek columns, then, will still stand but will house a decidedly different range of experiences — informed and complemented by digital devices. The bank books of yesteryear will have given way to the personalized, omnichannel approach that clients value.

“The number of branches may decline, but the specialization of the branch, and the purpose, mission and vision of the branch, is going to change,” Sheth said.

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