Dakota West Credit Union (4)

If you’re as involved in the financial industry as I am, you may have noticed the same trend I’ve seen creeping up over the last few years. This trend has to do with the decline in lobby transactions and the growing popularity of online banking.

These two things combined have left some members of the financial industry questioning the future of the banking industry. It’s left them wondering if the banking industry is dead.

Is the Banking Industry Dead?

I have to admit, I’ve heard the same predictions and projections that in-person banking is on its way out, but I haven’t seen enough good evidence to support it. Sure, online banking continues to grow in popularity, and yes, lobby transactions as a whole are in decline, but that doesn’t mean banking is dead. Financial institutions provide so much more than just transactions. It’s more like banking has changed.

The Way People Bank is Changing

There’s no doubt about it, evolutions in banking technology have changed the way individual customers handle their finances. With the relative ease of online banking and continuous improvement put into banking applications, it makes sense that customers are handling their basic transactions digitally.

But reliance on online banking does not equal the death of in-person banking. Many bank customers still want the personal touch and overall experience that in-person banking provides, such as a school loan, your first car loan, a home loan, etc. Even an article about the recent trend in bank branch closures points this out. The article quotes Huntington Chairman, President, CEO Steve Steinour on online and traditional branch banking,

“'It’s not a strategy of one over the other. It’s all of the above.' He said that while digital platforms have become the preferred routes for daily banking business, 'the traditional branch remains the preferred method' for many customers when opening new accounts or finalizing details on certain loans, keeping the physical location important."

I think Steinour really gets to the heart of the issue. The future of banking isn’t 100 percent online, and it’s definitely not 100 percent in-person. Instead, it’s a combination.

Designing for Customer Preference

The reality of the matter is that many customers still have a preference for in-person banking, and they're seeking out that personal experience and connection. But, how do we combine a preference for banking experience with the reality of online banking?

One way to look at it is through the types of transactions. While some transactions have gone more digital — like the basic, day-to-day withdrawals, deposits, and transfers — there are still numerous transactions that online banks don't provide (or don't provide well) like instant cashier's checks and money orders, unlimited cash withdrawals, safe deposit boxes, notary services, and coin services.

Digital banking continues to be brought up because technology is cool and fun to talk about. But, community banking has been and always will be about relationships. The other important products and services we need throughout our lives, such as consumer loans, home loans, business loans, lines of credit, and wealth management are the value a financial institution provides. 

So, if we know what transactions customers will rely on their local bank branch for, we can design a branch that’s optimized to provide those services. After all, ensuring customers come back to your branch time and time again has a lot to do with the experience they have when they visit. Perhaps today’s underperforming branches aren’t providing customers the experience they’re looking for.

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Published on June 17, 2019

Topics: Bank Architecture, How to Start a Bank

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