PwC’s point of view on branch transformation and the bank branch network of the future. Review our framework for branch innovation and design.
PwC’s viewpoint on branch transformation and innovation describes our firm’s point of view on the bank branch network of the future. It is a framework for fundamentally improving the branch network and individual branch design in order to improve revenue and maintain margins.
Alternative banking channels have matured over the past decade, along with increased customer demand for these alternatives. As a result, leading financial institutions are re-examining their physical branch strategies. With the current number of physical bank branches unsustainable, substantial reduction is needed. Failure to radically rethink branch strategies will saddle banks with an unsustainable cost structure and significantly reduce profitability. Branches cannot survive in their traditional form.
The future branch will require profound changes to current operating models, infrastructure, and design. These changes should be part of an optimized network of branches to offset costs and increase revenue flows. Banks should undertake a holistic review of their branch networks, including examining their product mix and identifying cross-sell opportunities. This will help offset the costs associated with the branch network and increase return on investment. 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.
Any large-scale branch transformation will present obstacles. Banks may need to overcome cultural and operational roadblocks as they shift to a multi-channel model and change the role of the branch. We see successful banks designing their branch strategies to deliver a differentiated customer experience based on customers' needs, the competitive landscape, brand promise, and internal capabilities. Most banks find that branch transformation is a long-term pursuit. To increase branch value in the short term, many banks are implementing complementary, smaller-scale initiatives in parallel with their branch transformation. If executed well, the branch network of the future can be mutually beneficial for banks and their customers.