The death of branches has been predicted for years as banking habits switch to the digital side. But even the most sophisticated customer refuses to bury branches.
While trends suggest a continued shift towards digital transactions, banks are tweaking the models of branches to give them a touch of technology as opposed to eliminating brick and motor. Just like automated teller machines (ATMs) did not kill branches, customers are also not about to bury branches in favour of technology. And bankers are taking note.
The bank branch as we know it, with tellers behind windows and bankers huddled in cubicles with desktop computers, is getting disrupted into a smart-branch model. But while Kenyan customers are joining the world in embracing digital banking, they are not yet ready to completely let go of that friendly face over the counter.
“Markets have ways of surprising you,” says Paul Russo, chief executive at KCB in reference to the day he tried stopping Saturday cheque clearance only for customers to complain.
Now he dreams of the day cheques will go digital but remembers his clients who religiously depend on the physical cheques as a core reference for records.
Top banks including Equity, KCB, Cooperative Bank and NCBA are still betting on branches to deepen their market share despite the many customers adopting digital banking. NCBA Group chief executive John Gachora whose bank has 84 branches in Kenya says the quickest way to reach new regions in the country will still be through physical branches, even though the size and capabilities will be different.
“We are responding to the behaviours of customers. Customer behaviour is that they still want to know where you are located before they can open an account with you,” said Mr Gachora.
“Once customers have seen your branch and opened an account with you, they want to interact with you on mobile technology. So we don’t view branches now as a point of service but as a point of sale.”
NCBA is among the lenders that have been introducing technologies such as open banking, cash deposit machines and online-cheque deposit machines to encourage do-it-yourself services at the branches to resonate with increasingly tech-savvy customers.
Standard Chartered (StanChart) Bank of Kenya has also been rolling out sales and service centres and co-shared spaces as part of transforming the traditional branches into advisory centres. The new branches model is serviced by a universal banker and digital platforms including ATM, iPad and phone banking.
StanChart, in 2021, partnered with Artcaffe to open three new branches in outlets owned by the restaurant chain in Nairobi, Isiolo, and Nanyuki.
The coffee, bakery and meal outlet has the ambience and Wi-Fi services, which have been attractive for business and casual meetings, inviting the set up of the bank within the space for customers who want to take control of when, where and how to do banking.
Cooperative Bank, which in 2015 became the first lender to station mobile agents inside branches says full self-service outlets cannot be ruled out going forward. The lender says, with 94 percent of all customer transactions now happening outside branches, self-service branches will increasingly become a “bright new phase” of innovation.
“Co-op Bank has for some while now been closely studying the prospects for adoption and acceptance of full self-service banking channels by customers, and is convinced represents a bright new phase of retail banking innovation,” said the lender.
Some lenders have been giving up part of the leased space and trimming down on branch sizes as they give these outlets a touch of technology. Mr Gachora expects those setting up new branches to go for reduced spaces and target customers opening new accounts or seeking advisory services as opposed to traditional services of depositing and withdrawing money.
“You are more likely to see slightly smaller branches, staffed with fewer teller stations but more advisory and sales stations,” said Mr Gachora.
The branch redesigns aim at letting customers complete basic transactions such as deposits, for themselves so as to free employees for high-income generating activities like winning a customer looking for a bank to refinance his or her mortgage or wants advice on investing pension money.
KCB, which is eyeing additional branches in the country, will take the route of leaner sizes and increased technological capabilities, according to Mr Russo.
“The size will become smaller, partly self-service and more of relationship management. Customers want technology but with a human touch,” said Mr Russo.
Kenya Bankers Association (KBA) customer satisfaction surveys have consistently shown that customers increasingly prefer digital transactions, but nearly half still hold on to the human touch.
The KBA 2021 survey for instance showed most respondents (46.4 percent) preferred human-assisted services as the best channel for complaint resolution.
“The trend shows that while there is a general increase in preference for automated transactions, human contact is still largely preferred by bank clients in customer service support,” said KBA in the research published in February last year.