Deep Varma is the chief technology officer at Alkami.
How Americans conduct their banking has drastically changed with the advent of digital banking technologies.
One significant shift, for instance, has been banks and credit unions rethinking the role of physical branches as more and more account holders make deposits, monitor spending and manage accounts through online portals and mobile applications. In fact, according to research by Cushman & Wakefield, the number of FDIC-insured branch offices has been declining since 2010, reaching record lows with an average yearly reduction of 1,555 branches by 2023.
While some consumer demographics may continue to visit bank branches—16% of Baby Boomers continue to do so, according to American Bankers Association research conducted by Morning Consult—71% of account holders prefer mobile devices or online banking via a computer.
With the number of devices connected to the internet also continuing to rise, financial institutions must continue to embrace digital channels to remain engaged with account holders.
However, physical branches still play an important role in modern banking. They are instrumental to local communities and will continue to be key in ensuring personal relationships thrive. Also, some account holders, particularly those over 65—only 37% of whom use a mobile payment app—or those who require ancillary services like safe deposit boxes, will continue to look for local branch access.
All this leads account holders to question what will remain in branches and what will transition to mobile banking in the coming years. In the long term, branches will continue to exist because they provide human interaction, but specific aspects of the banking experience will evolve.
Seamless Omnichannel Experiences
Even the most tech-savvy account holders may need to interact with their bank or credit union’s branch for support and services. The current interconnected environment across other industries, such as entertainment and e-commerce, has established an expectation for similar seamless experiences across web, mobile and physical banking.
Consumers are accustomed to shopping in stores, cross-checking competitor prices on their mobile phones, adding items to their carts and completing purchases from a home computer. This continuous process enables users to move across platforms while working through their customer journey.
Omnichannel experiences in banking will also become like Netflix, where people can start a show at home, watch it on a plane and then complete it at home. This marriage of the digital and offline provides a seamless transition.
The same should be true of banking experiences. An account holder may initiate a loan application online but visit their local branch to complete the process. That information should be seamlessly accessible via any channel, enabling them to return home or use a mobile device to review, finalize and submit the document.
Evolving Security And Identity Verification
As personal identification evolves, banks and credit unions will need to assess the security, verification and acceptance of digital IDs. According to the Information Technology & Innovation Foundation, digital IDs are increasingly being explored for their ability to streamline verification, add convenience and enhance security.
Those financial institutions that can consider these types of alternate forms of identity verification may differentiate themselves, while physical or laggard onboarding processes could deter account holders from moving forward.
Data As Differentiation
Data management and monitoring remain crucial for financial institutions to give account holders the best individualized in-person and online experience. Data can help them personalize account holder experiences and enhance risk management. It can also help the mid- and back-office make some decisions faster.
Banking system data is dynamic, continuously adapting to reflect consumer behavior and interactions. Account holders can conduct transactions from different locations via different platforms at varied frequencies and amounts.
One of the most pressing challenges financial institutions face in adopting advanced digital technologies is evolving legacy infrastructure and unifying fragmented data systems. Sophisticated digital banking technology requires a cohesive data strategy that enables institutions to collect, analyze and act on information in real time across all channels.
Moving away from siloed systems and toward scalable, cloud-native platforms is essential for supporting this shift and delivering the speed and flexibility today’s account holders expect.
For many financial institutions, human monitoring of these processes can lead to inefficiencies and accuracy issues. Embracing technology solutions—including AI for real-time analysis and centralized banking-specific platforms for data capture and consolidation—can help banks and credit unions make stronger business decisions to position themselves for future success. These systems can be used in tandem with in-branch services to streamline account holder interactions while powering online self-service options.
Along the way, building internal data literacy, empowering teams with the proper training and fostering a culture of innovation are also critical to realizing the full potential of digital transformation. With the right combination of a digital sales and service platform and people, financial institutions can create seamless, personalized experiences while driving greater efficiency and long-term growth.
By understanding how to integrate advanced digital banking technology, financial institutions can enhance account holder experiences, improve operational efficiency and redefine the role of branches in a digital-first world.
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