The future of banking will include brick-and-mortar branches
‘Even in a digital world, we believe that customers will continue to need relationship managers and specialists who can provide them advice and support in making these critical financial decisions’
Alibaba, Amazon, Uber, Grab and Airbnb, to name a few, are redefining customer expectations. Harnessing the power of integrated, digital platforms, they offer frictionless transactions and seamless service. Concurrently, clients are spending a significant amount of time on social media and more broadly across various digital ecosystems.
The ability to manage virtually day-to-day needs from the smartphone in your hand via any number of apps – social media, transport, weather, ordering a pizza, paying for sundries – has significantly raised the bar in what customers now expect from every interaction in the digital economy of today.
Consumers naturally now expect the same of banking – and rightly so.
This has important implications for Citi’s retail bank franchise in Asia, which manages 17 of the 19 markets where Citi has retail operations globally. We are already seeing a generational shift in how consumers want to access financial services and the rapid adoption of digital banking in many markets that are predisposed to using mobile technology rather than brick-and-mortar branches.
We are seeing a significant shift in where our customers are spending time, whether they are communicating or consuming. We are intensely focused on understanding this and building partnerships in key ecosystems to ensure as a bank we are present and relevant for clients in their digital world, as much as in the past, one wanted to be physically close, which led to large-scale branch networks.
At Citi, we think that one part of banking is already quite close to being 100 per cent digital: basic banking transactions. These include subscribing for a new service, money transfers, payments, balance inquiries or closing an account. Banking customers today are already choosing the convenience and empowerment of digital to conduct these simple transactions.
However, some financial decisions are more complex and could have a meaningful long-term impact: such as determining one’s financial goals, rebalancing an investment portfolio, managing investments across different currencies and markets, choosing the right long-term life insurance protection solution or creating a family legacy plan. Even in a digital world, we believe that customers will continue to need relationship managers and specialists who can provide them advice and support in making these critical financial decisions. So instead of a fully digitised bank, we foresee a combination of clicks and bricks, a mix of physical and digital that benefits clients. There are several examples of digital-only models globally that evolved into a physical presence. In reality, the smartphone gives a bank like Citi a transactional network of several million branches that was unthinkable just a decade ago.
But while clearly, the shift of basic banking transactions to the digital realm will mean one does not need the same physical network one needed five or 10 years ago, the branch will remain relevant even if its purpose will be changing. Our branches around the world are taking on the “smart-banking” model, with interactive touch panels, videoconferencing capabilities and full-service banking from devices such as smartphones and tablets. These were launched first in Asia in 2009 and have since been rolled out across the world. Our branches are now more focused on helping clients with that digital transition, as well as providing personalised advice for the important financial decisions. That is why we are also increasing the number of wealth management centres that include our best relationship managers and advisory experts.
Much of the industry still relies on paper, which is unnecessary now – our new branches are moving to paperless and digital instant servicing. We are in the process of getting rid of all the forms and putting them online. You can now apply for a credit card online without any paper forms in many of our consumer markets across Asia – this was unthinkable 10 years ago – and about a third of our new credit cards are now acquired digitally and nearly 95 per cent of our transactions in Asia now happen outside a branch. At Citi, digital, and mobile in particular, are shifting from having been simply a channel into being the primary operating system engine embedded in all we do.
The implications of digital in finance are significant for individuals, corporations and governments. Digital finance can reach more people at a lower cost than ever before, enhancing the prospects of financial inclusion. It also creates new sources of economic growth. Digital transactions, such as digital payments, also enhance efficiency and transparency, contributing to good governance and sustained economic growth.
While there are many unknowns, one thing is sure: the pace of technological change shows no sign of slowing. As a bank, we are fully embracing the challenge of driving and leading this significant transformation in the industry. There is no doubt there will be one clear winner though – you, the consumer. You will get to enjoy greater simplicity, transparency, instant resolution, always-on availability and broader access to products and services.
Gonzalo Luchetti is head of retail banking for Asia-Pacific at Citi