Banking: Balancing digital and branch


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When the financial crisis hit and retail banks – desperate to cut costs – closed less profitable branches, they did so chiefly in rural towns, or low- to moderate-income (LMI) communities.


In the UK, a report published in October by the Office for National Statistics shows that nearly 6,000 local bank branches have shut in the UK since 2010 – a drop of a third. In the US, 1,200 branches were closed in 2017 alone.

Leaving individuals unbanked or underbanked, banks have defended themselves by pointing to improved online and mobile banking.

However, as research is now showing, people need some balance of digital offering and high-touch service that neither banks nor pure fintech players have managed to fully figure out.

In LMI communities where access to wifi or devices is limited, minimal data packages deter the use of mobile banking. Some individuals, particularly the elderly, are not digital savvy, and among them the reduction in high-touch banking has been felt most starkly.


There are many online banks offering free savings accounts with solid interest rates, but without a human touch to explain and help individuals to set up an account and support them in accessing it, they end up excluding a segment of the population that would benefit from their services.

There are now 1.6 million unbanked adults in the UK – chiefly in the LMI segment.

It’s also a challenge facing developing countries.

Fintech has given billions of people access to financial services through mobile banking – however, the statistics show that people are not interacting with products in a meaningful way, such as opening savings accounts.

In October, a report by Accion Venture Lab and the Mastercard Foundation showed that, as in developed countries, the lack of digital savviness, lack of trust in financial service providers and limited product understanding are deterring underserved customers from using fintech.

So, what to do?

Bank of America is testing how to get that balance right. It has introduced wifi, computers and iPads into some of its LMI branches with employees trained to assist customers as they wait in line and show them how to use digital and mobile banking.

So far, the uptake looks like this blended model is working.

Pure online banks perhaps have a harder task. They somehow have to develop ways to imitate through technology, otherwise the very point of fintech in meeting the financial needs of the mass population will be lost.