In a society driven by smartphones, tablets and instant connections the concept of commercial banks seem a bit befuddled, or the product of a past life that we’re quickly moving away from, one text message at a time.
A recent article by William Weidman dealt with the broad issue of retail banking trends and laid out key questions facing retail banking in 2014:
- How can they benefit from digital /mobile/online?
- What’s the future of branch banking?
- How can bank branches create new revenue streams?
If bank branches are going to stick around for the next 25 years they have to make a strategic and dramatic shift in how they conduct business.
Think about it: why do banks have branches?
- The main bank wants to serve different markets and gain a greater market share of deposits.
- The bank branches provide convenience and give the main bank opportunities to make high-profit consumer loans.
- The branches provide a source of new customers for bank services like trust departments and real estate operations.
The existing branch-banking concept is an expensive way to gain deposits and small business and consumer loans. They are staffed with a required number of qualified tellers and loan officers. So the current branch-bank marketing system is the best way for the main bank to get deposits and loans, but it is an expensive money collection system.
How might the mobile revolution help solve the issue of the expensive branch bank network?
- We’ll start to see more mini branches in well-located and consumer-oriented national and regional retailer chains. Some of these mini branches already exist in national and regional retailers like Wal-Mart, and in Atlanta, in the Publix Supermarket chain. These mini branches are quite small, but adequate with a staff of 2 or 3 all-purpose personnel.
- We’ll start to see more of the second and third generation, smart ATM machines that not only disburse cash but accept loan and mortgage payments, process loans, and later with smart-talking digital glass, can answer any and all questions about your account, and any of your other banking business questions.
- We’ll start to see these mini branches and sophisticated ATM machines offering a number of new services like insurance policies and all sorts of accounting services, financial planning and consulting programs.
In short, banks may well need to redefine their business from being a money processor to being a broader financial service provider, with money management as a key ingredient.
If banks take a look at a wide range of marketing initiatives they could develop solutions that will help them navigate the uncharted waters ahead.
* BAI Banking Strategies. Article by William Weidman