Who still uses bank branches, and why?

19 September 2016

United Kingdom

Paul Race



The closure of bank branches has always been a contentious issue, with politicians claiming an adverse impact on local economies.In the UK, around 3000 branches have closed in the past decade but around 8000 remain.So is the branch still important?There is no doubt the way people bank has changed, with increasing usage of Internet and mobile banking contributing to the decline in branch visits.Is the branch an anachronism, or does it still have a vital role to play as part of a multi-channel bank offering?

The key to this must lie in another question.Who still uses the branch and why?One myth that can readily be dispensed with is that the branch is the domain of older customers without access to other channels.  Indeed some research shows that it is younger people who are the keenest users. According to Accenture ‘In addition to those around retirement age, 18-24 year olds were most likely to visit branches, reflecting ‘changing needs over life stages’.The report concluded that younger people have a greater bias for physical interaction.

From a different perspective, there is also the wider issue of accessibility of services, which is addressed in the Financial Conduct Authority ‘Consumer Vulnerability’ paper.To what extent does a bank have a duty to provide different channels of communication?

There is no doubt branch visits are down.Research from CACI shows that customers visited their bank branch 427 million times last year but it is forecast this will decline to 268 million visits by 2020. Of course this doesn’t tell the whole story.It doesn’t mean that people don’t expect their branch to be there when they need it.  For some the argument has shifted from ‘dependence’ to ‘convenience’. Though they visit the branch less frequently, they still value the availability and accessibility of branch services and a high street presence promotes brand recognition and loyalty.

How does the existence of a local branch affect customer behaviour, and in particular how does it impact on customer acquisition and retention?The research shows that for personal customers and SMEs, nearness of a branch is an important factor when opening an account.Again, GfK reports that a significant number of customers would close their account if the local branch closed, as this is seen as an important part of their relationship with the bank.
Novartis research looks at customer types and notes that branch ‘attachment’ isn’t always dependent on usage.Though they may be happy to use mobile apps to conduct banking transactions, many people still want the opportunity to speak to a representative of their bank face to face when it comes to product purchases or the resolution of issues.

What this research also notes is the change in the mix of activity in the branch. With change comes new challenges.  How do you deal with potentially labour intensive transactions such as withdrawing and depositing funds and enable your staff to focus on sales and the resolution of issues?  How do you best deal with the mix of transaction and interaction? How do you ensure a welcoming and accessible environment for those visiting the branch?

People are no longer dependent on the bank branch to obtain services, but the evidence suggests that it remains a valued channel moreover it is the only channel where consumers can conduct every type of banking interaction.The challenge remains to make it a cost-effective and profitable one – and that involves change.Footprint, design, use of technology are just some of the areas where Glory can help you succeed.

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