by Simon Bond

In the book Bank 3.0 by Brett King the author makes some interesting predictions about the future of banking. The big bang in the book may be the statement that; To remain cost-effective and competitive in the medium term, most large retail banking organisations will have to consolidate their branch network by 30–50 per cent over the next decade.

Novantas released a study in January of 2011 that clearly showed a shift of behaviour within the US market. Every single measure of activity in respect of consumer behaviour linked to the Bank branch is on the decline, and every indicator for direct banking shows a shift towards these channels. This is in a market with quite possibly the strongest remaining support for branch presence in the world today, so you can imagine how rapidly this is declining in locations such as the UK, Australia and Sweden, where digital adoption has been generally faster than in the US.

The dilemma then is that the most profitable customers you want to get into a branch are increasingly likely to try a direct channel first because their time is their most valuable commodity, which prevents them from seeking out a rich, face-to-face experience.

In Austin, Texas University Federal Credit Union has started the move to teller-less locations. Its goal was to make the space more inviting for interaction, rather than transactions. It required a minimal investment in the ATM footprint to improve serviceability, but the overall move to this type of branch saved UFCU $150,000 per location per year. 15 Customers did not notice a decline in service; in fact, as the tellers disappeared, customers commented on how they felt overall service had improved. The “third place” is a way to transition customers away from the transactional high-street location today to a place which still provides service and advisory, at a fraction of the cost.

In Australia the most successful model has been UBank which was founded as a start up business by National Australia Bank in 2007.

Since opening it's "online" doors in October 2008 UBank has attracted more than 300,000 customers and over 10 billion dollars in deposits whilst building a brand recognised by over 35 per cent of Australians.