What will Happen to Bank Branches in a World of Digital Banking?

Jun 29, 2021
Author: Ean Barnard

When last did you visit your local bank branch? A few months ago? Longer? Were it not for that constraint to have a stamped bank statement or any other small necessity every time you try to do something, you likely wouldn’t have visited a branch in quite some time.

To Bank or not to Bank?

Unless you’re staying in the north pole and the only thing you have to worry about are polar bears, frosty toes, and catching your dinner though a hole in the ice, storing all your money under your bed might not be the best option for you. Most, if not every single one us, have bank accounts. So to bank or not to bank isn’t the issue here – all of us recognise the convenience that comes with a bank account. When you have a bank account, you can access your money from anywhere. What’s more, an account also makes it much easier to pay Bill - you no longer have to pay bills in person like oupa did, you can transfer money online via digital banking, often for free. Thus, the question most of us have probably been asking ourselves lately -  Do I visit the branch or not?

No more need to visit the Branch?

Just a few years ago, almost every possible transaction used to require some sort of manual process performed by a physical person at a brick-and-mortar location i.e. you had to go to the bank to get something/anything done. Now? You can open an account, apply for a home loan, personal loan, enquire, replace a card, deposit money, and just about everything else you can imagine, without ever setting foot in a bank. Each of these interactions is becoming more and more efficient and automated as digital banking innovates. FNB has led the charge locally and has been very successful at making the shift to digital banking, with the other big banks probably soon to follow.

The Good, the Bad, and the not so Ugly

In the wake of what many financial technology experts of the banking industry have argued -  that within a decade the retail banking model will be long gone, you may have heard that South African banks like FNB, have some plans to reduce the physical footprint of its banking network. As the number of people that come online dramatically increases daily, this comes at no surprise, welcome to the faceless future of banking. Not surprisingly, whatever consequences arise from banks making the shift to more efficient digital banking channels and reducing physical brick-and-mortar footprints, will surely come under much negative and also positive outcry. Sure, those negatively affected won’t be able to look at this calmly - but it is obvious though, that no one can argue with a bank that is making moves by shifting transactions and investments to more efficient channels. We call this innovation.

In Closing

The reality is, retail banks have become especially good at channeling transactions and processes to their digital channels. But, we won’t say goodbye to visiting the branch just yet as most of us would probably visit our local branches within the next few months, give or take a few years.

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