Opinion: are bank branches still relevant?

The rise of digital banking has paved the way for branches to focus more on tailor-made services for clients
Opinion: are bank branches still relevant?
Financial muscle lenders in the Gulf are investing heavily in their digitisation efforts to keep pace with the evolving trend
By Shaker Zainal
Fri 18 Jan 2019 01:47 AM

The banking industry has been privy to constant change, having to adapt to the ever-evolving needs and demands of customers. One of these pivotal changes has been the rising use of digital technology in banking both across international markets and also in the region.

A recent McKinsey research report revealed that at least 80 percent of bank customers in the UAE and Saudi Arabia prefer to do a portion of their banking on computers, smartphones and tablets. We have also seen a 50 percent increase in the number of customers utilising our digital services in the last 12 months.

As a result, there has been a drop in footfall to traditional brick-and-mortar branches as banks shift towards the adoption of technology-driven business models to keep up with the changing customer behaviours. This has also resulted in a shift away from the traditional branch concept.

According to the European Banking Federation, a recent drop in European bank branches was partially attributed to an increase in the use of digital banking by customers, with over 50 percent of EU residents utilising internet banking in 2017, compared to 29 percent in 2008. In the UAE, the central bank data indicated that 75 branches were shut down over the course of 2017. While the total number of branches has reduced, bank deposits in the UAE have still seen an increase with business being done in fewer branches. According to reports from the UAE Central Bank, the accumulated balance of non-resident deposits by end July rose AED196.1bn, the highest level in two years.

Does this mean that the traditional bank branch is dead? Not quite.

The rise of digital services presents traditional bank branches with a unique opportunity to reinvent and transform to focus on the services and amenities that cater to customers’ desires and needs. It is important for banks to understand core areas such as the channels utilised by customers, products required and the level of services they would need from their bank branch to effectively map out the branch of the future.

Human interaction and personalised advice also remain integral elements for customers, ensuring a positive and consistent customer experience

At its core, banking is still a people business at heart. Digital services cannot completely replace the value that is placed on face-to-face interaction, as customers take important financial decisions such as managing investment portfolios, developing financial plans for their families and borrowing for business or personal needs. Reports from Celent also support this view, with 77 percent of customers confirming that they prefer face-to-face branch visits for more in-depth discussions.

Human interaction and personalised advice also remain integral elements for customers, ensuring a positive and consistent customer experience. This is something that can be improved by introducing qualified relationship managers, who can truly listen to and provide sound advice to customers through side-by-side conversations or over a casual cup of coffee in a more relaxed setting. Data from Celent supports this view, with 62 percent of customers indicating that they prefer to be personally greeted by name and to have relationship managers, who understand their financial history with the bank.

Pushing ahead with opportunities for human interaction and personalised services, the branch of the future should also cater to bank customers looking to learn more about finance through engaging workshops, seminars and educational sessions aimed at expanding the customers’ understanding.

Banks should look to create a seamless customer experience through both physical and digital channels, leveraging the best that technology has to offer to anticipate the customers’ needs. While customers go for the convenience of digital banking for routine transactions, digital services located in the bank branch also allow for banks to improve the customer experience. The introduction of tablets to register requests, interactive displays and video conferencing services help connect customers with subject-matter experts and other forms of automation to increase the efficiency and speed of service.

While the rise of digital technology in the banking sector has led to a decrease in the total number of physical bank branches required, it does not mean that the brick-and-mortar branch concept is dead. Banking still remains a people business, with customer experience remaining at the heart of all products and services on offer. However, the traditional bank branch must evolve, to become more agile – providing customers with tailored assistance, expertise and a seamless experience through the integration of digital in a physical channel.

Bank branches should become more accommodating, less formal and a more comfortable place for customers to interact with the bank.

This is indeed the best way for bank branches to evolve and become more adept at addressing customer needs in this new and challenging landscape.


Shaker Zainal, Head of Retail Banking at Commercial Bank International

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