How physical banking still holds a relevance in digital world
Faced with the rapid proliferation of digital technologies and an ever-increasing millennial/Gen Z customer base, major banks across the US and Europe reduced their physical branch network over the last decade. While the underlying thought process did influence strategic thinking globally, Indian banks bucked the trend. Instead, they focused on branch expansion, resulting in one of the best growth periods for the Indian banking industry as a whole.
Now, US banks such as JP Morgan Chase and Bank of America have outlined their plans to open 500 and 165 new branches, respectively, over the next two to three years, underscoring the need for a physical branch network to satisfy the banking requirements of the typical retail customer.
Research shows that while 70% of consumers are open to buying through digital channels, only 23% fulfil their financial needs digitally. When it comes to matters related to finance and wealth management, customers look forward to real interactions with their financial advisors before arriving at a final decision.
Physical branches provide the space necessary for such face-to-face consultations and offer customers access to knowledgeable staff who can provide personalized advice. This is more challenging to achieve through digital banking channels. Also, online communication is counterintuitive when customers are faced with a plethora of complex choices. This is especially true when addressing customer-specific issues, with the branch staff being more successful at effectively resolving concerns while upholding the highest customer satisfaction and loyalty standards.
While digital banking will continue to gain traction in the near future, traditional bank branches will evolve into “phygital"
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