The Effect of Mobile Banking on the Traditional Branch Network

Mobile banking has greatly revolutionised the payments industry.   Its convenience has strongly influenced the financial behaviour of bank customers, especially people in areas that can be deemed as underserved.

How has the traditional branch network been affected by the mobile banking boom as more people look towards banking apps and a useful money saving app instead of walking to a banking hall?

Loss of jobs

This is the first obvious effect. As smartphones become more sophisticated and more people go digital with their banking needs, a number of bank staff have become redundant. This is why there have been mass branch closures and layoffs in the sector over the last few years.   Between May 2015 and May 2016, 600 bank branches were closed across the UK.  A total of 2000 branches have been closed over the last 5 years with another 2000 to be closed by the turn of the decade.

Reduced infrastructure costs

Banks are normally obliged to create new branches when there is too much traffic in one branch.  However, setting up the branch and staffing them, translates to increased costs. The rise of mobile banking has greatly reduced the need for branch expansion, increasing cost-effectiveness for banks.

More insights to customer behaviour

Since mobile banking records transaction history and behaviour of customers, banks are able to understand the needs of their customers. This ensures more bespoke marketing. Personalised marketing offers as a result of insights gleaned from mobile banking analysis which has been proven to be more effective in terms of lead generation.

Wider spread

Mobile banking may have cut back the physical branch network but it has helped spread services to the unbanked and under-banked.  This group would typically stay away from banking halls as a result of time constraints.  The elimination of location and time constraints by mobile banking apps has helped some banks to grow clientele in untapped areas.

Enhanced loyalty

Customers feel more empowered when they are able to keep tabs with their finances. With the enhanced convenience offered by mobile banking, customers become more loyal. Customers also regard banks with popular mobile banking solutions as more competent than the competition.

Summary

The mobile banking boom is a conundrum.  For the tech savvy customers, it is a welcome trend. Customers who still prefer physical banking, however, have been left with reduced access to banking. For the banks, physical branch networks are becoming unsustainable but the digital network holds a lot of promise as the mobile phone boom continues.

With advances in technology around voice recognition and an increased amount of banks opting to use biometrics like fingerprint IDs, we will see a new banking services that is almost physically integrated into our lives. Currently the smartphone market is dominating how we bank, but with home hubs like the Amazon Alexa starting to appear in our homes, it’ll be interesting to see how the banks choose to integrate this type of technology into their operations.

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