E-banking, what will banking look like in the future?

Almost all banks all over the world offer most of their traditional services such as account checking, transfers, portfolio management… The development of mobile applications (also named web 2.0) and artificial intelligence make all banks all over the world re-think their services and the usefulness of traditional branches. Are the bank branches (agencies) still useful in the web 2.0 era? Do they need to be radically closed or transformed? How can they be transformed?

The consequences of E-banking on the banking industry

It is clear many banks included the bigger ones have more and more difficulties for many years ago due to the development of mobile terminals such as smartphones and tablets and the rude competition of the fintechs. Many banks have seen their profits decrease for many reasons included low-interest rates or the decrease of the visits rates of branches. For instance in France, they decreased from 52% to 20% between 2010 and 2016. Everywhere in the world particularly in western countries, the B to C strategies have radically changed in the banking industry. Many banks are closing most of their branches as customers are more and more connected to the web. Branches are not profitable more because of costs they generate such as wages. For example in France, the number of connected people has increased about 300% between 2001 and 2010. One of the direct consequences is the closing of many branches. Almost 1,500 (1,466) agencies were closed in France in six years (2010-2016). Moreover, the head of Société Générale, one of the top 5 banks in France has recently announced the closing of 300 agencies of his group before the end of 2020. That trend is going to be generalized in many other countries. Such as situations driven many managers and specialists to re-think the “bank of the future”, so that they improve the quality of their services. As a well-known Mackenzie consultant recently said, the half of banking will go into bankruptcy within ten years if they don’t transform their business. So, what will the traditional bank branches look like in the coming years? Let’s explore some possible approaches.

The high-tech business center

In many countries in Europe, more and more branches are turned into high-tech business centers. The customers can then come in these agencies powered by free high-quality Wi-Fi to do all banking operations they come for more quickly than it was in traditional known-branches. For example in Portugal, the major private bank, Millenium BCP allows tiers, clients, to quickly achieve many banking operations due to the Wi-Fi and some automated and interactive services. The new roles of the staff only consist of assisting customers if needed. The experience was a real success. Millenium BCP has decreased its operating charges by 40% in 2011. In many other countries in Europe, the massive digitalization of branches is now more and more matching with the customers expectations. But American banks did it better.

The agency without staff

Bank Of America, one of the top in the USA has done it. Since 2017, it made it possible for many branches without staff. How do these agencies work? Customers can ask for any service thanks to an assisted and connected system using many technologies such as robots and video conferences. They can then talk to a customer care service agent via video conference who gives them an answer or solution to all their need. Moreover, Erica, the robot of the bank assists them in all their operations.

Finally, the real question is not about to close the branches but to transform them to face new challenges.

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