The Future of Bank Branches

Capgemini Consulting 2$ The Future of Bank Branches Ш Evolution of Retail Banking Digital technologies have brought a significant shift in consumer banking behavior Business and economic Transactional activities happening online in North America realities have forced the shutdown of bank branches ONLINE BANKING SMS Bill Pay US Customers - Online Banking Preference View Balances / Transactions In the US, 3,000 bank branches closed between View Statements 62% 2009 and 2012 36% Money Transfer 2010 2011 Digital Technologies will Accelerate Branch Transformation and not make them extinct Proxlmlty and Advisory wlll remaln Integral to a bank branch 47% of US Banking customers believe that a bank is not even legitimate unless it has branches, up from only a year ago 41% 90% of consumers prefer face-to-face advice for complex products We don't envlslon a branchless future, but a future wlth fewer branches. Branch Models of the Future Based on the levels of digitization, we predict the emergence of four bank branch models 1.THE SHOP 2.THE LOUNGE - Minimal staffing without complex advisory skills - Has low levels of digitization with self-service options - Focuses on relationship building with high levels of customer intimacy Involves low levels of digitization 3.THE DIGITAL POD Offers retail-like displays and self-service aisles - A showcase for high-tech banking innovations for customers - Video Conferencing Online Document Sharing Digital Signatures and Limited advisory services Card Readers Focuses on standardized - Provides complex advisory services products and services 4.THE PHARMACY Flagship branch that O incorporates all aspects of self-service and online banking Promotes high levels of customer proximity with an entire range of advisory services Used to reinforce a bank's brand image Optimizing a branch network helps banks save up to 30% Current State of Bank Total Branches Cost of Existing Branch Network 4,000 $ 2,100 million Our Estimation Model STEP 1 STEP 2 Differentiate Branch Network Post 10% Based on Proposed Models Rationalization The Pharmacy Digital Pod 20% 15% 45% The Shop The Lounge Total Branches 3,600 Cost of Proposed Branch Network Total Savings $ 1,472 million 30% The future of banking lies in physical co-existing with digital. Sources: 1. AZCentral.com, “Are bank branches endangered species?", May 2013; Chicago Tribune, "IMlinois sees more bank closings than openings in last year", July 2012 2. American Bankers Association, "ABA Survey: Popularity of Online Banking Explodes", September 2012 3. Forrester article: "The State Of North American Digital Banking: Priorities, Goals, And Metrics", 2012 4. EFMA, "THE FUTURE OF BANK BRANCH NETWORKS", December 2012 5. Novantas, "U.S. Multi-Channel Customer Research 2012", May 2012 Reach out: Interested in reading the full report? Visit http://www.capgemini-consulting.com/the-future-of-bank-branches Follow us on Twitter @capgeminiconsul or email [email protected] ....... --..... %07