''The branch is dead, long live the branch''

Most banks have recognised the challenge o
08 June 2005

Most banks have recognised the challenge of convergence, and have even started to deal with it. With the branch as a pivot around which all key applications will converge, rather than sliding into oblivion, it has got its due resurrection. The branch of the 21st century is here to stay.

The late '90s sounded the death knell of that quintessential customer touch point of the retail banking landscape-the bank's branch. It was the time when newer banks were looking to expand their presence in the country and to effectively compete with the far-reaching branch network of state owned banks, deployed innovative delivery channels such as ATMs, phone and Internet banking.

In the era of the dotcom boom, clicks were valued higher than concrete bricks and the world thought it was the take-over of a hi-tech new age of doing business.

Years after the dotcom bust, banks were as keen to remain hi-tech, especially since the new way meant lesser overhead costs. And while phone and Internet banking did take off to a laggard start, this was blamed on a combination of psychological, technological and socio-economic factors that banks felt customers were eventually bound to overcome.

Cut to less than a year ago in a country that can easily be described as one of the most evolved marketplaces today: according to leading research firm, Forrester, in a survey conducted in June 2004, 49 per cent of US households stated that the bank's branches and whether they were situated in convenient locations made them decide in favour of one bank over another. Surprisingly, only between three and four of the sample chose a bank for its online offerings or the fact that the bank offered a free online bill payment facility.

Simply put, though most retail banks have invested and promoted their internet banking channel proactively, customers still continue to express a need and desire for the traditional bank branch. However this is not to say that the hi-tech customer touch points are unsuccessful. Migration numbers are continually increasing but the efficacy of the remote banking channels is limited to routine cash withdrawals and checking of bank balances only. Remote banking has not been anywhere near successful as a bank's branch in increasing a share of the customer's wallet, namely in cross-selling.