For many years a friend of mine managed a junior rugby team. He would regularly report the ups and downs of the team's endeavours and I remember bumping into him following one disappointing reverse for his then under 14 team at the hands of their local rivals. 'It hardly inspires fear in the opposition when your scrum half is driven to the game sitting in a child's booster seat' he moaned. Whilst I understood where he was coming from, I pointed out that one of my all-time favourite players was the French scrum half and captain Jacques Fouroux. I had been too young to see him play live but can still remember watching my parents' TV entranced as the five foot nothing Petit Generale bossed both his own and opposition players. In the years since the game may have changed but if you watch recordings of his performances you will see that his size was no disadvantage. He had all the tools required to do the job, and to do it well. You see, Fouroux may have been small, but he had presence.

Why is that relevant? Well as I retold the story to some colleagues over a Yuletide drink it struck me that there is an analogy with the provision of financial services. If you have all the necessary tools, then size really doesn't come into it. Indeed, in a fast-flowing competitive environment it can be the nimbler more flexible player who has the advantage.

In the provision of retail banking services, it has been argued that a legacy branch network can be a disadvantage to traditional banks in that it is a costly anachronism as more and more business is carried out online. The reverse argument is that the physical presence is a core strength that does in fact provide a competitive advantage. Or is it all down to size?

Until well into the 20th century people did nearly all their retail banking business at the branch. Indeed, the branch was how the bank attracted deposits. And once you attracted customers it was unlikely that they would shift accounts. It was therefore not only necessary to have representation in areas with significant populations, it was also important that it was a visible and impressive presence.  

It was the norm for towns of any significant size to have branches of each of the major banks and these were frequently large imposing buildings that were meant to give the impression of strength and security.

Of course, times have changed. CACI Research shows that by 2022 customers will only visit branches four times a year and much banking is now carried out online. Developments in technology mean that security is no longer defined by large banking halls and perspex screens. A more flexible open plan approach also means a better use of space. Indeed, it could be argued that large traditional branches are not only too expensive, they are no longer fit for purpose. But when it comes to competition with new types of banks, a branch network can still differentiate traditional retail banks from new competitors. Rather than a burdensome cost, a flexible network can enable a service delivery option that is still valued.

When it comes to branch banking, it's no longer about size, but it is about having the right tools to do the job and to deliver cost effective best in class customer service

Deloitte global research (February 2019) shows that in a changing environment branches still play a key role. We earlier mentioned how branches traditionally attracted new customers and that once attracted customers stayed with the same bank. Things have changed, but not completely. The research found that across generations most customers preferred branches over digital channels 'when opening accounts for both simple (savings accounts and debit cards) and complex products (such as loans)'. 68 percent of respondents said that the proximity to branches and ATMs is an important or very important attribute in choosing their primary bank. What's more the research found that branches are still associated with trust and 'foster the bank image, helping maintain relationships with customers'.

Looking forward, whether it is cafe branches or community hubs, innovative banks are still finding new ways for branches to 'punch their weight' within an omnichannel service offer. Size may no longer be important, but presence is.