The Customer Effect

Striking the right balance between branch and mobile banking

  • Mobile interactions incur a cost of about 10 cents, a small fraction of the $4 cost of a teller or call-agent interaction.
  • U.S. banks would save $11 billion annually if customers’ branch and call-center use declined to the Dutch level.
close

Email a Friend

Striking the right balance between branch and mobile banking

The common mode of thinking pits mobile banking against the traditional bank branch as a zero sum game. Though consumers do appreciate the ease of use and convenience of mobile banking, for the most part, they like to know the branch is there.

Mobile banking is a top strategic priority for most banks, not just because of the good customer response, but also because of the cost reduction associated with it. Each mobile interaction incurs a variable cost of about 10 cents, a small fraction of the $4 cost of a teller or call-agent interaction, according to Customer Loyalty in Retail Banking 2016, a recently published report by Bain and Co.

When comparing the two, both on price and customer satisfaction, mobile is a clear winner. However,  the off-the-cuff conclusion, to gradually shut down most branches, is a false one.

In most countries surveyed, shutting down branches was accompanied with some sort of negative business outcome. Many customer either switched banks after their branch closed or didn’t switch but started using products of other banks.

screenshot-www-bain-com-2016-12-12-09-52-53

How can banks ensure access to tellers while keeping costs down? Some European banks might have the answer.

The Netherlands was one of the first countries to adopt mobile banking and Dutch banks began to reconfigure their branch networks a decade ago. Dutch banks have not completely eliminated the traditional branch, though headcounts are way downs. Instead, they changed the nature of the branch.

ING, for example, has side counters in bookstores and tobacco shops. SNS has franchise arrangements with insurance agents and others. Most customers still have access to a banker in walking or biking distance, but in a streamlined, low-cost format.

Bain and Co. estimate that the 25 U.S. banks would save $11.4 billion annually in aggregate if customers’ branch and call-center use declined to the Dutch level, and the banks reduced headcount accordingly.

These findings are especially important for small or regional banks which might be struggling in an environment of high capital requirements and low interest rates and are looking to cut costs.

0 comments on “Striking the right balance between branch and mobile banking”

Member Exclusive, The Customer Effect

Citizens Bank’s Beth Johnson: ‘Personal interaction remains important to customers’

  • What bank clients expect from their institutions is changing, according a new Bank Experience Survey.
  • Citizens Bank CXO Beth Johnson joins us to discuss the findings of the research and how it's impacting banking today and in the future.
Zachary Miller | August 11, 2020
Member Exclusive, The Customer Effect

With deposit volume growing 705% in April, MANTL raises $19 million

  • MANTL, which helps banks open digital accounts, has experienced strong growth during the pandemic.
  • The company is also announcing an additional fundraising.
Zachary Miller | July 16, 2020
The Customer Effect

Now under the Linux Foundation, the Fintech Open Source Foundation wants to accelerate software development across financial services

  • FINOS runs 11 programs driven by more than 30 financial services organizations and technology members.
  • Aligning with Linux, the group will have more resources and reach to encourage open source software development.
Zoe Murphy | April 28, 2020
The Customer Effect

Americans carry more debt and turn to mobile banking in the face of the pandemic

  • Americans turn to digital solutions as they hunker down in the face of COVID-19.
  • They're responding by increasing emergency funds and not paying down credit card debt.
Michael Deleon | April 06, 2020
The Customer Effect

DriveWealth’s John Shammas: ‘We’re accessing the uninvested population around the world’

  • Fintechs are increasingly offering new forms of investment offerings.
  • Many of those investment offerings are powered by DriveWealth.
Zack Miller | December 20, 2019
More Articles