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It’s well-known within the financial industry that online banking transactions are popular. Customers enjoy the convenience of completing their transactions without needing to travel to a physical bank location or interact with a teller. 

When you look at it for what it is, online banking allows customers 24/7 accessibility to their accounts instead of requiring them to rely on “banker’s hours.” Now, the concept of banker’s hours is quickly becoming a thing of the past as customers grow accustomed to the convenience and independence online banking provides.

All these benefits have some wondering, are online-only banks the answer? 

What Are Internet-Only Banks Lacking?

It’s clear to see that benefits brought by online banking are here to stay. Any claims that the financial industry’s future is one without brick and mortar banks is likely misguided. Sure, the technological revolution rages on for transactions. But there are some areas of banking that internet-only options have yet to excel at, like customer experience, some services, and education. 

Customer Experience

When you boil it down, there are a few key things customers want from their bank. Convenience is near the top but it’s not alone. Customers also want a great experience. The 18-34 age demographic will use technology to do their transactions, but studies have shown they want to talk in person about lending opportunities, mortgages, investments, etc. Today, young and old come into the branch for the more important banking needs so a convenient location is still critical.

Now, a great banking experience can look a lot of different ways, but there’s something to be said about the friendly, reliable, consistent experience provided by local community branches. I’m talking about community-based branches where lenders get to know their customers and build relationships with them and learn about their lending needs. 

The trust and connection that grows from these consistent experiences are nearly unbreakable. If you talk to someone who’s had the same bank since they were a kid — the same bank their parents used — they’ll be able to tell you what they think about their bank. They’re going to bring up a couple of the employees by name and share how the employee knows them by vehicle, face, and name. They might tell you how they’re not afraid of identity theft because their bank knows who they are. 

Now, their visits might not be as frequent because their paycheck is direct-deposited and they can manage a basic transaction online, but for those times when they do visit, they know who’ll be there to greet them and help with all the banking services they need. 

That’s a level of customer experience online-only banks haven’t figured out how to compete with, and it’s a level of experience many bank customers want and need. 


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Although online banking is a popular choice for routine, daily transactions like transfers and deposits, there are plenty of services that are only provided in person — or I could say virtual banks haven’t yet figured out how to perform the transaction and provide a good customer experience. These types of services include notary services, coin services, safe deposit boxes, instant cashier's checks and money orders, unlimited cash withdrawals, lending, investing, insurance, etc. For these services, online-only banks will leave their customers wanting more. 


Other areas where customers want to rely on their community bank is for learning about financial products and services they may only need a couple of times throughout their lifetime. Sure, digital banking is convenient when you want to facilitate a cash transfer on a Saturday evening, but what about when you want to secure a business loan? 

Community banks are the places customers want to rely on for financial education they can trust. Figuring out how to navigate home loans, lines of credit, insurance, and wealth management doesn’t come naturally. Instead, they require a lot of consideration and expert guidance. 

Today’s banking customers don’t want canned responses and a digital assistant to help them navigate these life decisions. They want a real person. Someone who knows them and can sit across from them and look them in the eye. Until online-only banks can replicate that experience, brick and mortar banks will always be a vital part of the communities they serve. 

What Does the Future of Banking Look Like? 

There’s no doubt that digital banking is here to stay. But I’m also convinced that brick and mortar branches aren’t going anywhere, either. To me, the future of banking looks like a hybrid between digital and in-person banking. 

I know the follow-up question here is to ask about percentages. What percentage will be digital? And vice-versa. Well, the answer there is always going to depend. It’s going to depend on your customer base, your community, and your geographic location for starters. Because banking, when it really comes down to it, is still about the people and the communities being served. And preparing your branch for success is going to depend on an understanding of who it is you’re looking to serve. Luckily, that’s something we can help with.

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Published on September 12, 2019

Topics: Bank Design, Bank Architecture, How to Start a Bank

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