The consensus is in about the future of bank branches and about the future of cash, but I believe they are not quite right. It seems not a day goes by that there is another article, study, or opinion paper declaring some inescapable conclusion about the future of bank branches and the future of cash. Some claim that with the rise of electronic payment methods there will soon be no need for either the branch or for cash. Others claim that the branches can’t go away, but must change toward a different purpose to meet the new needs of the customers of today and tomorrow. They imply that all branches must adopt a particular solution model and then all will be right in the banking world again. While there are elements of truth in all these claims, none of them are entirely correct. However, there is a definitive link between the future of cash and the future of branches that must be examined.
Cash is not likely to ever go away. While cash transactions have shrunk in actual volume, the primary reason they have become a much smaller piece of the total transaction pie is simply because the pie has gotten bigger with all the other forms of payment being added to the mix. The fact is that the demand for cash is strong and there is more cash in circulation than ever before; $1.5T USD according to the Federal Reserve Bank. In addition, there are socio-political reasons that cash will continue to be utilized for a core set of transactions, whether they be concerns around security, anonymity, the additional cost of non-cash payments, or just access to the non-cash payment options. Let’s also not forget that the US dollar is used internationally as a store of value, physically. So, since the U.S. and the international community will continue to demand physical cash, any elimination of physical cash would have to happen via a government mandate. Frankly, that would be the political 3rd rail of economic policy and no politician would touch that.
So, what does this all mean for the bank branch? It’s true that cash transactions in the bank branch are on the decline, but that is not true for every branch or for all customers. Many consumers conduct fewer cash transactions within the branch because their remaining cash needs are satisfied with more convenient direct deposits and ATM withdrawals. However, some segments of the population still frequent certain branches to deposit and withdraw cash, some in significant amounts. Merchants also conduct regular deposits of cash and buy change inside the bank branch. This is because they accept a lot of cash from their customers and the bank branch has traditionally been their only option for processing that cash.
So, the transaction types that a branch will experience are greatly determined by the type and location of the branch and the demographics of their customer base. Some will be cash intensive, some will be cash-less, and others will be somewhere in between. Some will continue to have Tellers and Personal Bankers while some will have only Universal Bankers and self-service automation. Some will have an opportunity to offer financial advice and to sell additional financial products, and some will not.
Based on this assessment of the branch network a one-size-fits-all approach to the branches will not work for the banking industry. Different branches have different needs and to different degrees. Banks need to design and operate branches to meet the banking requirements of their individual local customer bases. The solution options needed to support the different branch operations across a branch network will range from self-service multifunction kiosks, to high end and secure front line cash automation, to lobby self-service coin sorters, to back office cash and coin sorters, to video conference room capabilities, etc.
You’ve heard the phrase “omni-channel” to describe how banks need to support customers through all channels. Well, in addition, the branch network channel needs to be an omni-branch network. This is a branch network that has a variety of branch types in the right locations, with the right branch designs, with the right solutions in each branch to best support the needs of each branches’ customers and the goals of each branch. This requires a proven solutions partner who can provide a variety of different solutions to meet the changing and varying needs of the omni-branch-network; a proven solutions partner like Glory Global Solutions.
Mark Buechler is the Sr. Director of Marketing Operations at Glory Global Solutions with responsibility for Glory’s entire family of cash automation products for the Financial Market. His career spans 26 years in the technology solutions and consulting industries.