Last year, there was a lot of talk about branch renewal but what does branch renewal mean? For many, it means new logos and brochures, softer and more attractive lighting, new uniforms and systems that work at internet speed. But that is not what branch renewal is all about. Logos, labels and linkages are superficial and do not make a branch profitable.
Most bank branch structures were created a century ago. The branches were located at major street intersections where business and retail interests met. They were in city, town and village centres that demanded a banking infrastructure to enable commerce. The branch network became the differentiation factor for a bank.
In the past quarter of a century, that has changed and banks have tried to adapt. The change has been fuelled in part by the introduction of technology that has distanced the consumer from their reliance on a branch touch-point.
But technology changed more than just banking; it changed society. Now, less families visit the town centre for their shopping; many go to hypermarkets and shopping malls. The main street branch is going to be challenged, no matter how much investment is made in its design, because consumer traffic has moved elsewhere.
Even in these new retail cities, society is changing as new channels, such as the internet, become more widely used. Only a couple of years ago, a record shop was the only place to buy the latest CDs and DVDs, or to browse the range of artists and creativity on display. Now, consumers can visit iTunes and Amazon online. The same can be said of photographic shops because many people can now print photographs at home. Just as easily, people can book holidays and buy supermarket shopping online.
As banks undertake branch renewal in town centres, it is surprising how many bookshops, travel agents, supermarkets and photographic shops have closed and moved out. Next to the charity shops, coffee shops, restaurants and bars, bank branches are the last bastion of the traditional high street.
If consumers are shopping elsewhere, what is the point of keeping branches in the redundant corridors of a society that no longer exists? With cutthroat margins, banks should be taking the tough decisions to close branches in redundant main streets and relocate them to major retail conurbations, staffing them with sales people and behaving like retailers.
Chris Skinner is founder of Shaping Tomorrow and chief executive of Balatro Ltd. Find out more at www.ShapingTomorrow.com or e-mail Chris at chris.skinner@shapingtomorrow.com
