Do financial institutions still need branches? Is digital transformation more of a cultural shift than a technological shift? According to one industry insider, the answer to both questions is no.
In this episode of The Digital Banking Podcast, host Josh DeTar welcomed Ron Shevlin, the Chief Research Officer at Cornerstone Advisors. Shevlin and DeTar explored the world of fintech and tech trends in banking. They also discussed the digital transformation of FIs and what’s going on in banking in this context.
⚡ Digital transformation refers to technology transformation. Every year, Shevlin does a study called “What’s Going on in Banking.” As he pointed out, in the past few years, almost 90 percent of surveyed banks and credit unions said that they have some form of digital transformation strategy or initiative. “For some, it really is about digitizing the technology infrastructure in their business, but I’ve seen a lot of articles in the press that say, ‘Digital transformation is all about culture change in the organization.’ No, it’s not; it’s about technology. It’s about digital technology.”
⚡ FIs should focus on the needs of the consumer. According to Shevlin, community FIs should focus, first and foremost, on providing value to their accountholder base. “This presumes that you can describe and define who your [accountholder] base is. And for too many financial institutions, it’s defined in terms of geography. And I don’t think that there’s a lot of areas, in the U.S. at least, where there’s enough homogeneity in a particular geographic area. A lot of established banks and credit unions don’t have a good understanding of what their base wants or needs because it’s geography-driven and not affinity- or needs-driven.”
⚡ Branches are dying out. Shevlin considers bank branches dead. He said that people are very important, but we no longer need the physical presence called a branch to facilitate interaction between two people. “The technology-intermediated interaction between two people is better than being face-to-face in a physical location with no technology support. If you were a bank employee or a credit union employee and I were a customer or member, having this conversation through this technology platform, you’d probably be able to call up statements, call up tools that help me understand my finances better — things that, if we were sitting across a desk in a physical branch, you might not have access to or might not be as convenient to see and integrate.”