4From Products and Channels to Experiences
We still have one million people coming to our branches every day, and they need that channel. Some need it to transact, but a lot of them come in for advice and we want them to do that. So, we need a certain footprint of financial centers. —Paul Donofrio, CFO at Bank of America
The new “network” and “distribution” paradigms
Let’s propose a binary question for the digital age. In 10 years’ time, who do you think will have a greater chance of survival—a bank wholly dependent on branches for revenue and relationships, or a digital pure-play, challenger bank wholly dependent on digital channels?
If you answered a branch-based bank, I think the facts suggest a different reality1. While branches aren’t going to disappear in the next 10 years, the relative importance of a bank branch for day-to-day banking is most certainly in decline. In December of 2015, Bankrate.com reported that 39 percent of Americans hadn’t visited their bank branch in the last six months, and a report from CACI in 2017 predicted that visits to branches are set to decline by another 40 percent over the next five years. This is a global phenomenon in developed nations.
We’ve seen drops of 30 to 40 percent happening over a few years, and in some of our traditional bank branches around Australia in some areas we see as little as five or ten people [visit] a day, and the economics are very difficult...But what’s happening is the growth in digital interactions ...