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Beyond Banking: what will bank agencies look like in the future?

The re-emergence of branches is a hot topic in the Digital Transformation scenario of financial institutions. Is your bank prepared for what’s next?

It is impossible to talk about the future of banks without first mentioning the last major transformation in the sector, caused by fintechs. As you well know, financial system startups have shaken market structures in the past decade, integrating convenience, red tape, and experience.

These companies brought the user to the center of the product development process and, with high doses of usability research, encouraged the creation of innovative, convenient, and therefore more adherent digital solutions.

The result was the gradual replacement of trips to the agency with smartphone interactions. The added value was the drastic reduction in attrition in the banking experience, such as queues, bureaucracy, and restrictions on working hours – elements that until then the agencies have not been able to eliminate efficiently.

With a natural opening of a new phase in the banking sector, the role of financial agencies in the future of consumption needs to be rethought.

Will smartphones replace agencies? Stay with us until the end of this article and find out!

Mobile Banking: the future and present of branches

Think: when was the last time you had to go to a bank to make a transfer? When was the last time you received your cash payment?

This is because Mobile Banking is the future. But it is also the present.

Mobile Banking refers precisely to the growth in operations via mobile applications. In practice, what this model does is to transfer the options that ATMs and face-to-face service at branches offer to features within the institutions’ apps.

Currently, for every 10 transactions that take place, at least 6 are made through a computer or cell phone. The other 40% is done in branches, of course.

Even so, there is a distinction when it comes to Internet Banking – transactions made by the computer – and Mobile Banking. While Internet Banking rose slightly, mobile was responsible for practically all the growth of online operations in the banking/financial sector in recent years.

In 2018, for example, the growth in payments made via mobile was 80% (with 1.6 billion transactions). Internet Banking numbers remained stable. There was a 119% growth in Mobile Banking (with 862 million) against only 10% in Internet Banking (which still covers 534 million).

We say “against”, but there are no winners or losers here. Everything is a victory for banks and customers – a gift to the sector’s digitalization! 

Some of the benefits of Mobile Banking are:

  • Cost reduction
  • Improved user experience
  • Predictive data-driven analysis
  • Better segmentation and more adherent products

Customers also benefit, and much of this agency is within reach. With a user-centric vision, keeping into account that customers count on convenience, reduced bureaucracy, and time savings, anything is possible.

What will the branches of the future look like?

But what about the agencies? Will smartphones replace bank branches altogether?

The answer is: not entirely.

There will be no branch mass extinction, but the banks will need to prepare their professionals to act more and more remotely and strengthen their relationship with customers from a distance.

There is no doubt that the number of agencies spread across the nation will decrease, but it will be a gradual process. In addition, the extent and speed of this shrinkage will vary from region to region – everything will be guided by user profiles.

However, this shrinkage of agencies is no reason not to adopt the user-centric mindset at physical locations too – quite the contrary! It is necessary to refine them so that they remain relevant to a portion of the public.

And believe me, we’re still going to need them.

The user-focused mentality must penetrate branches and face-to-face services, especially in larger countries like the United States, with different financial and digital maturities – in addition to greater or lesser ease of access to the Internet (a variable that does not apply everywhere).

What we can expect from bank branches of the future is the remission of the transactional characteristic, since consumers prefer to do this in the comfort of their homes. Or on the way to work (but if you can, stay at home).

Oh, and preferably, with very few clicks.

Another interesting point concerns the high touch relationship, one in which customers demand a relationship of greater proximity and reliability. Agencies should become centers for resolving complex or high-risk transactions, in addition to closing new deals and acquiring new clients

In other words, that “coffee with the manager” is probably guaranteed.

COVID-19 adds a new variable to the financial equation

The COVID-19 pandemic changed the way social interactions happen – and as a result, changed the way we relate to financial institutions.

The coronavirus scenario gave us some clues as to what the future of agencies will look like. The new health regulations removed people from branches and pushed the resolution of all problem through Internet Banking and/or Mobile Banking.

This increase in demand for digital solutions has accelerated the digitalization process of banks, which will need to offer options for digital solutions – secure ones, that’s important – in addition to transactional services.

This movement of society towards a digital medium is unstoppable. That is why the relevant financial institutions are investing in Change the Bank, an operational adaptation process to manage these changes in an agile and scalable way.

The challenges of Digital Transformation in agencies

In order to remain relevant, branches will need to change the service profile diametrically, offering even more personalized monitoring in operations with a higher level of complexity.

However, before setting a target for agencies, we must reinforce the idea that in such a large and diverse country, there are several different types of users and everything must be dealt with on a case-by-case basis.

In regions with less economic power, suffering from a lack of technological infrastructure, agencies will continue to play a crucial role in making their facilities available for transfers, withdrawals, deposits and other more basic operations, combating the lack of digital inclusion with financial inclusion.

And speaking of inclusion …

The number of lower-income clients, those receiving 1, 2 or 3 minimum wages represents the vast majority of clients from various institutions.

For a long time, there was a myth that this type of customer could not offer anything to banks, but we at MJV overturned that in practice.

Through an inclusive policy, language adaptation and humanization of the relationship between bank and customer, it was possible to increase the profitability of this type of customer by up to 20%, while also offering greater equality in access to financial products.

We experienced this as a pilot project for the transformation of bank branches in 23 cities in the country. It’s worth checking this one out: click here.

Future banking: build your bank’s future with purpose

The banks didn’t notice the fintechs around the corner and were caught off guard. Startups have established themselves not only as rivals in the fight for market share but also in competition for consumer preference.

Now, times are different. In recent years, we have seen large institutions acquire significant fractions of these same fintechs as a laboratory for Change the Bank.

There is no longer any doubt: to run the necessary transformations and be a protagonist in the digital world, it is necessary to be “a little more fintech”.

As banks become more and more digital, they evolve towards finding agile and accurate partners to provide tools that are more aligned with the needs and values ​​of customers.