Artificial intelligence. Microchips in your wrist. Optical scanners. That's meant to be the future of banking, right? Well, it might not be too far away. Banks are changing the way they operate, and some examples in the UK are ditching the traditional big branches in small towns in favour of micro-branches, according to a news.com.au article from April 6.
These micro-branches are currently on trial in the UK by some major banks, and are a far cry from the major banking centres in the big cities. Measuring just 14 square metres and staffed by only two tellers, they will be significantly cheaper to run and potentially more efficient.
The tellers will not have any cash on the premises, so there won't be money changing hands. All they have is a mobile device, from which they can do internet banking and anything that a regular bank teller in a major branch could do.
"Think Apple store, as opposed to bank branches," said Lloyd's Bank COO Jakob Pfaudler, reported in a BBC article from April 3.
"We have a lot of branches that used to have a lot of footfall, and therefore feel quite empty and intimidating for customers. So when there's too much space we may board up places in existing branches."
This switch to micro-branches might not end at new branches or even smaller towns. Wherever a big branch feels too spacious and "intimidating", banks might choose to remove that space from public use (convert it into storage, perhaps) so it's not such a scary space to walk into.
Why the change to smaller branches?
"The UK is ahead of the curve with branches because there's a lot more competition than in Australia."
Many banks are changing the way they operate, and in some instances that means getting rid of branches. Stated by the Sydney Morning Herald in August 2016, Australian Prudential Regulatory Authority research showed that the number of branches around Australia fell by 315 (to 5,904) in the year to June.
Branches are expensive to run, and in an effort to improve the bottom line, some banks might be considering a change to either smaller branches, or fewer branches this year.
"The UK is ahead of the curve with branches because there's a lot more competition than in Australia so there's a bigger drive to increase revenue and decrease costs," said Professor Steve Worthington of Swinburne Business School.
"Australian banks will be looking closely at this hub and spoke branch idea which could see you having a video conversation from a micro-branch with someone in a regional banking centre."
It could be the way of the future for banks in Australia, and you need to have a firm grasp of the concept. To have a conversation about how it could affect you, get in touch with CAPE today.
