The rise of the digital consumer and the high-cost infrastructure of physical banking locations are leading to a declining ROI for branches. If the branch model stays on its current course, it will become a financial burden to banks, cutting deep into cross-channel profitability. Evolving the branch network to align with changing consumer and economic realities can help banks boost ROI and position themselves for the future.
The branch of the future has a critical place in banks' overall channel strategy. But branches can't survive in their traditional form. Banks will have to consider their branch strategy in the context of their overarching distribution strategy including direct/self-service channels. Not all models work for all banks. Adopting a combination of branch models based on target customer segments in the local market as well as the bank’s strategic goals is the most effective strategy.
If executed well, the branch network of the future can be mutually beneficial for banks and their customer.