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#Trending: Self-Service Replacing Branch Banking?

Topics: Trends
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The development of Zoot’s thought leadership content; from blog posts to webinars, requires us to stay abreast of news affecting the financial industry and our clients. When we notice a new trend or hot topic making headlines, we’ll pass it on to our readers in the form of a #Trending report right here on ZootBlog.

A hot topic in 2012 that has continued in 2013 is growth in self-service channels such as mobile banking and a corresponding decline in the use of traditional channels like branch banking. Read on to hear the latest opinions on the rise of self-service and the decline of the branch.

Wells Fargo weighs in

As reported by Bank Innovation, the CEO of Wells Fargo recently weighed in on the role of branches in the face of growing mobile adoption. He begins by defending Wells Fargo’s branch infrastructure.

“I couldn’t be happier about the 6,000 or so stores that we have and stores still today remain incredibly important in the overall distribution community.”

“Most customers choose their first financial services provider based on proximity to where they live and we have a store within two miles of half the American population. It’s a huge advantage.”

However, like everyone else in the financial industry, Wells Fargo is hedging their bets.

“That might change over time and the tablet or the smartphone is changing the way customers do business with us. They are on with us much more. They are learning more and we’re doing, have all kinds of experiments and test going on, paperless stores and more self-service.”

Brett King piles on

Never missing an opportunity to share his bearish outlook on branch banking, Brett King (of Banking 2.0 and 3.0 fame) jumps into the comments section of the Bank Innovation article.

“I’ve been saying this for 4 years now, glad to see the industry is catching up with customer behavior. The wrinkle is that with the nature of banking changing rapidly, the role of banks themselves has to significantly change. The role of intermediaries and new players can’t be underestimated.”

Self-service channels find consumers “branching away from branches”

Elaborating on the idea that consumers are increasingly moving towards self-service and away from branches, the Infosys Finacle Blog explores the implications of “Do It Yourself Banking”.

“As per a recent survey, about 35% of customers of US banks don’t visit branches for their day-to-day needs. With banks investing in innovative technologies and channels like image-enabled ATMs and RDC on smartphones, branch transactions have declined at the rate of 4-5% over the last 3 years.”

“It is only a matter of time before banks enable not only basic banking transactions but also complex ones through self-service kiosks.”

Bank Human, Again

There are some in the financial industry pushing back against the idea that branches are going to disappear, as explained by Bankrate.com.

“TD Bank recently launched ‘Bank Human, Again,’ a new advertising campaign that highlights why account holders should still count on real human beings for their banking needs. From staying open later to offering dog treats to providing free coin counting, TD Bank calls attention to a range of services that customers can only find in-person.”

With mobile becoming the channel du jour, some banks like TD are seeing traditional face-to-face banking channels (or “human banking” as they have humorously taken to calling it) as a competitive differentiator.

“Banks like Ally and CIT have adopted a model that relies solely on Internet banking. Other institutions like Bank of America have checking accounts that actually charge for customers if they make a deposit or a withdrawal with an actual person. As banks look to lower their overhead expenses, they’re counting on tech-savvy consumers to turn to human-less channels.”

“TD Bank is looking to prove that a big network of branches and ATMs and friendly tellers remain essential ingredients of a good banking experience.”

Have any thoughts on the self-service vs. branch debate? Share your comments with us.

-Alex Johnson

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Zoot Staff Contribution

About Zoot Staff Contribution

Everyday, Zoot employees are working with the largest, most sophisticated banks in the world to solve their complex business problems. As Zoot employees gain new insights into the financial industry, they will share them with you as a Zoot Staff Contribution to ZootBlog.

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