Foresight 2020: Network Development in a Multi-Channel World

Date: 24-May-2013
London, May 24th, 2013 – As the costs of branch banking increased in the 80s and 90s, banks attempted to reduce costs by reliance on centers, mobile and online channels to lower costs and improve service. The digitization of banks has made transactions more convenient, but the need for human interaction will prompt the evolution of branch banking. Given the choice, customers will usually pass automated devices and queue for a human teller. Human customer service offers a convenient mode of transaction while also being capable of more complex tasks. Customers and banks typically acknowledge that some of the basic transactions, including credit application and financial advice, still require a branch visit.


Branches still have the greatest number of sales, products and transactions. However, they also have the highest costs associated with them. Banks are shifting their branch transactions to low-cost direct channels such as mobile banking and online banking. Branch revenue growth is under pressure with increased competition and a more effective regulatory environment. According to a Fiserv study, branches and call centers have the highest average cost of US$4 and US$3.8 per transaction whereas the average cost at ATMs is US$0.9 per transaction.

Retail branches remain the core banking channel, though the advancement of technology and associated changes in consumer behavior has led to the growth of alternative channels for transactions. Over the last two decades new delivery channels such as ATMs, call centers, online banking and mobile banking have become formidable substitutes for bricks-and-mortar banking.


Banking customers are using a mix of delivery channels to fulfill their banking needs. Increasing internet and mobile penetration has led to the growth of online and mobile banking channels, leading to the reduction of local branches. Consumers prefer to research online before going to branch for financial advice; they explore different channels for the same services. Different channels are competing to get the customer’s attention. Online and mobile channels are growing at a significantly faster rate compared to traditional channels.


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