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Digitization Brings A New Way to Bank

Appian Contributor
October 19, 2016

Bankers are rethinking how they provide services to their customers. Digitization is in,' helping to create a new way to bank, and brick and mortar branches are under siege.

Could this mean the demise of traditional branches and tellers? Might we see relationship managers disappear, morphed to avatars, smart robots and, RPA-assisted business processes?

Is the ultimate future of banking without human dimension, a digital-only world where IoT and blockchain rule?

Hold on.

While this extreme scenario makes for an interesting action movie, perhaps with Keanu Reeves as Commander Neo Blockchain, we will more likely see a new way to bank that has human and digital forces collaborating to serve the customer.

The Branch is DeadÖ Long live the Branch

The trends are clear across the globe. Banks are closing branches, shrinking branch footprints, and trying new branch formats to match changing customer behaviors.

    • In the U.S., the bank branch model, that peaked at roughly 95,000 branches, is down to 86,000 branches and falling rapidly. According to The Unbanked Generation, 94 percent of U.S. consumers under 35-years-old bank online.

    • In many European countries, more than half of the traditional bank branches have already disappeared in the pursuit of digital banking, and

    • In Asia, online and mobile banking have leapfrogged the creation of brick-and-mortar branches in many countries.


Overall, 700 million global consumers have begun banking on their mobile over just the past five years. Traditional branches have simply become too costly to support the declining "non-digital" customer base, and many no longer generate enough new business to pay their way.

Indeed our smartphones may well become the bank branch of the future; however, banks have not given up on the brick and mortar branch quite yet.

Refresh the Bank Model

Banks are taking steps to refresh the banking model, using digitization to experiment with new kinds of branches that range from automated compact branches to Starbucks-like coffee houses and Apple-like genius bars.

Technology and staff are being used collaboratively to reduce reliance on transactional service staff over time. A new type of branch with different centers or "experience zones," is a way for banks to innovate how they deliver, using a combination of human digital ambassadors, avatars to perform transactions such as balance transfers, deposits and withdrawals.

At the same time, a recent CEB survey found that while 40 percent of customers prefer to go online for most banking activities, they are still reluctant to open accounts that way, and head to the branch financial advisors to do that.

And while branch tellers might be an endangered species, financial advisors continue to inhabit the branch. One large bank has flipped its staffing ratio at its new compact branch centers in the U.S. going from 60 percent transactional staff to 60 percent of the staff providing financial advice.

Reimagine The Customer Journey

Digitization is an inevitable force in banking. It is being applied across channels and products in a variety of ways to respond to and even anticipate the changing customer journey.

Basic transactions and sales of simple products are increasingly migrating to digital channels, and the branches are taking on a new personality.

In Asia branches more often serve as showrooms for complex product sales and as venues for expert advice. FRANK by OCBC branches in Singapore could pass for hip clothing stores. Go to its web site and you will see the invitation to "Visit us at any of our 5 fabulous stores. Our super friendly FRANK Ambassadors are ready to help!" Clearly FRANK targets young consumers. It offers edgy images on debit cards and a simple savings account. What you don't find at FRANK are tellers or cash.

Quartzreports that a major Dutch lender, plans to cut 5,800 jobs as part of a "digital transformation." An additional 1,200 employees will have their jobs changed or moved. At another large international banking and financial services company, there is a planned launch of an AI-powered customer service capability that "can apparently read a customer's moods and respond accordingly. It also, presumably, never takes breaks and doesn't ask for any perks."

Digitize to Meet Customer Expectations

One thing is certain: Customer expectations for banking have changed forever.

FinTech digital innovators are jumping on those changed expectations to present both collaboration opportunities and significant threats to the traditional business models of banks. And banks in turn are looking for ways to give customers a better experience one that's faster, cheaper, more convenient and enabled by tech Ö and ultimately one that provides choice.

Meeting customer expectations - whether in a branch or online or both - requires powerful digital capabilities. Moreover, supporting the changing bank workforce requires new business process automation and knowledge worker capabilities be deployed. All at an increasingly rapid pace. And digitization is critical to meet the ever increasing compliance burden that must be addressed in all relevant processes.

The true challenge for bankers then is to find the right digital overlay technology that will:

This last requirement cannot be underestimated. AsMcKinsey's just published research survey of senior executives at financial institutions concludes:

"a company's success in building out great customer journeys requires agile capabilities that excel at rapid iteration and testing and learning."

Bankers and their customers may ultimately have to say goodbye to the branch tellers that were once their favorite banking helpers. But have no fear, digital forces are on the rise and, in collaboration with technology, operations, services, and financial advisory personnel, will form the basis of a new way to bank.

Find out about the digital forces of choice for leading bankers -- Appian's low-code digital application platform-- and learn more about the Appian approach to reimagining the customer journey.

Deb Miller,Director ofIndustry Marketing