Financial institutions (FIs) are facing an unrelentless pace of change. For decades, the traditional teller-led branch model has been undergoing a seismic shift as self-service, automation and most recently, digital provide more convenient ways for consumers to conduct their everyday transactions. And as consumers have become more self-sufficient, branch models have become more focused on self, remote or in person assisted service technology and collaboration spaces where consumers can seek advice on managing their finances.
This change in consumer preference is seeing FIs decide if they really need a branch at all as the frequency that consumers need to attend the branch is falling. In Europe particularly, FIs are optimizing branch numbers as ways to reduce operational costs as footfall declines. In Europe particularly, FIs are optimizing branch numbers as ways to reduce operational costs as footfall declines.
According to the most recent figures from Retail Banking Research (RBR), global branch numbers are falling by circa 1% year on year – with 937,000 branches worldwide expected by 2025 – that’s down from 965,923 in 2020. In Europe, the UK is estimated to close 22% of branches by 2025 to an estimated 7,495 and Spain is also estimated to rationalize their estates by 19% to 18,400 branches.
However, those that think the branch is dead, do so at their peril. The branch plays an important role with customers and many would avoid a digital-only FI as consumers want a place to go when they need face to face interaction, financial advice or support with a complex transaction. It’s also a key way to maintain brand presence. So how are FIs finding a middle ground to maintain a presence, while combatting the issues presenting by footfall decline? Here’s what we’re seeing in the market.