By Mark Aldred, Banking Specialist, Auriga
Bank branches as digital hubs
In 2018, a key trend we witnessed was the shrinking of branch networks as infrastructure costs, combined with a general decline in usage of bank branches prompted banks to consolidate. In 2019, we will witness banks focussing investment into their remaining locations. In fact, branches are set to become ‘smarter’ than ever before and develop into fully digital hubs.
We will see banks deploying more in-branch technology that improves user experience, including video banking and smarter use of in-branch tablets to improve service and sales. As customers shift to almost fully digital relationships with their banks, they will demand exceptional user experiences that provide real value.
Location, location, location
Banks will continue to review their branch networks next year. We are likely to see them relocating away from underperforming locations and opening in areas of higher footfall and with more demand for banking services, such as out of town shopping centres.
We’ve already seen retail banks including Lloyds and Halifax open state-of-the-art branches in Manchester city centre and in central London, and this trend of banks investing in city centre flagships is set to continue, especially as such locations become more accessible as a result of investment in smart cities and improved transport links.
Open Banking and PSD2
While Open Banking and PSD2 have prompted banks to think about their offerings, progress has been slow so far. The full range of potential threats and opportunities from Open Banking are yet to be realised. This is especially true as the digital natives, who at age 18 are now opening their own bank accounts, try to balance their demand for easy to use, integrated services (such as account integrators and budgeting apps) with concerns around data privacy.
Financial institutions will need to think creatively and capitalise on new technologies to offer the right solutions in the right moment to their customers.
Collaboration over competition
Competition in the banking industry is already fierce, fuelled not only by the likes of new entrants like Monzo, Starling – and more recently N26 – but also by traditional players stepping up their game by innovating and enhancing the customer experience, challenging the challenger banks themselves. With banks still adapting to the changes set in motion by PSD2 next year though, competition will only intensify.
Through collaboration, customers can get the best of both worlds, FinTechs can expand their offerings, and traditional banks can maintain their share of the market and adopt new services into their existing portfolios. This leverages the customer experience and journey expertise that challenger banks have put at the centre of their offering, combining it with the infrastructure presence of traditional players.
More experiments but little likelihood of mainstream AI rollouts
Despite the buzz around artificial intelligence and how it will revolutionise banking, development and deployment of AI in 2019 will broadly remain experimental. More and more, banks are testing AI for easily repeatable tasks, for example using chatbots to administer dialogue between the bank and its customers, and this is resulting in great improvements to system efficiency and cost reduction.