The future of the branch in the digital era: An Angolan perspective
Will digital banking make the traditional bank branch obsolete? Probably not. But it is already clear that branches – as we know them today – will undergo massive change over the coming years. Indeed, we believe that the branch’s continued viability as a banking distribution strategy will require significant changes to the size and nature of the channel, making them smaller, more cost-efficient and oriented towards product sales and financial advice.
In large part, the evolving character of the bank branch is being driven by changing customer expectations. The reality is that bank customers are already enjoying customized multichannel customer experiences through online shopping on their mobile phones and increasingly expect their banks to be able to offer the same quality of experience. Simply put, banks are no longer being compared to their peers, but rather to the ‘best’ shopping experience the customer has had in their lifetime. The problem is that banks are struggling to anticipate customer demand and take the right steps to integrate the ‘digital’ experience with the ‘physical’ experience. And this has allowed technology startups, retailers and telecommunications companies to essentially invade the banking market. Banks are being forced to move quickly in order to defend their dominant position.
This process is already well underway in international markets and – given the speed at which disruption is occurring – it’s expected that the impact on Africa’s banks is imminent. And there are increasing signs that Africa’s banks are beginning to act to structurally integrate the physical and digital experience.
Our data illustrates the change underway. In Angola, for example, the branch continues to be the dominant channel but there are important changes happening in the mix of activities. The number of customers who said they prefer the branch for their ‘transactional’ activities – such as withdrawals, transfers and payments – decreased while the number who prefer it for financial advice increased. Combined with the fact that Angolan banking customers report an increase in the use of nonbranch channels (such as call centers and mobile banking), our data suggests that Angolan banks are facing many of the same trends as their regional and international counterparts. Given that banking customers in South Africa and Kenya report mobile banking usage rates comparable to Angola’s branch usage rates, it seems Angola is now moving through an evolution in behavioral patterns.