Would you believe that when automatic teller machines (ATM) were introduced, there were debates in the banking sector whether bank branches would remain relevant?

Those very debates, of decades past, are all too similar to the ones we are having today, as we question the impact of digital banking and online services. Yet, we can all rest comfortably in the knowledge that ATMs have neither replaced banks nor branches.

There is no doubt that innovation in the tech sector is leading to disruption in other industries too. Consumers are quick to embrace the convenience and efficiency offered by technology, and governments are increasingly emphasising on smart services and digitisation.

In the last five years, the world has witnessed the rise of ‘Neo-banks’ or digital banks that exist without any branches. Sometimes referred to as the Uber of banking, these branchless banks are redefining the practices associated with traditional banking operations, relying on partnerships with other banks and functioning entirely on a digital and mobile platform.

According to research by Kaspersky Lab, 97 per cent of the UAE’s population carry a smart device, with 61 per cent conducting banking transactions via mobile apps. Customer demand is decisively driving the advancement of digital technology and big data in the banking and insurance industry. As digital disruption changes the way we live, work, shop, eat and bank, we work with our partners across sectors to help them and their stakeholders navigate through a change in consumer culture.

Branching out

In recent years, we have seen a wave of new digital technologies redefine the market, from challenger banks to super mobile wallets and fusion banks.

Last year, we welcomed Neo-banks with Mashreq and EmiratesNBD. Given this trend, it is expected that there is a lively debate about the role of a branch.

We are in an era that expects ubiquitous service and must cater to consumer convenience — through the channel of their choice at the time of their choice, be it mobile, digital channel or physical. Instead of engaging in a debate of “to branch or not to branch”, banks need to approach these new touchpoints with an open mind and work to find avenues to complement them to deliver unique and valuable services.

We believe that branch banking has an important role to play in modern retail banking. The chief reason is that customers still value and expect personal service when they need advice on a big transaction or financial decision. There is no doubt that banks are under tremendous pressure to reduce costs, but also to grow market and wallet shares.

In the region, banks are exploring innovative ways to leverage their branch distribution network. Some of these strategies include transforming the branch into a more advisory and sales focused asset. For example, the Saudi-based National Commercial Bank clearly articulates such a strategy in their Q3-17 investor presentation, as they elaborate on “streamlining branch formats to enhance productivity gains” and “equip branches with self-service/assisted-service technologies”.

Assisted or interactive service technologies integrated with mobile and tablet-based technologies can enhance the branch experience by reducing wait time and improving customer experience. We are uniquely positioned through our technology and history in the banking sector to partner with companies as they implement their branch transformation strategies.

According to a recent survey by consulting firm Synechron and global non-profit organisation Efma, 88 per cent of banking executives said that physical branches add value for customers and will continue to contribute to the future of the industry, while nearly 63 per cent planned to revise their branch model, in line with digital transformation targets.

The most common goals when undertaking a branch transformation strategy are to improve customer service and engagement (42 per cent), evolve the role of branch staff (40 per cent), introduce digital interactive experiences (38 per cent) and roll out automated self-service technologies (36 per cent).

By looking at the branch as part of a whole customer journey and by leveraging assisted technologies, banks will be able to transform their distribution network. This will enable them to further improve their service, deliver a personalised experience, and increase wallet share.

Banks that can do that will be the ones reaping the rewards of loyalty and customer stickiness in a mobile first world.

(Wael El Aawar is Vice-President for NCR Banking Services, Middle East and Africa, Global Sales.)