What Bank Branches Can Learn from Retailers


As the shift to digital banking continues, physical bank branches are losing their raison d’etre and closing in many locations. More than 3,000 bank locations have closed in the United States over the past year, with more closures expected in 2023.

More than ever, it’s important for banks to adapt to the changing landscape and leverage technology to keep pace with what consumers expect. According to Lumen, a multinational technology company, banks can learn a lot from retailers, including Apple, and shift their focus to meet consumers where they are and how they want their banks to be. Lumen’s Revolutionizing Banks through Branch Transformation whitepaper gets into how banks can change their approach.

Banking in the Digital Era

The pandemic proved that although consumers need banks, they don’t necessarily need to go to a physical location for most services. Most consumers visit a physical branch for the personal touch many offer, as well as out of habit. This is especially true when much of banking can be done online, so to get customers in the door, banks put an emphasis on knowing their customers personally.

According to Lumen, banks can set themselves apart from competitors by addressing the omnichannel experience. That comes down to ensuring that they offer a user-friendly and reliable experience across mobile, desktop, and in-person transactions. This is similar to what is happening in retail environments. Initially, stores thought of e-commerce as a separate, secondary business and treated it accordingly. Now retailers are working to integrate physical and digital business assets for a unified customer experience, and banks are following suit.

Improving customer service can also be a game-changer. Indeed, customer service is the factor that sets the best apart from the merely good. And as in the retail space, customer service can help banks not only drive in new customers but also, just as important, retain current ones, building on long-established loyalty.

Turning to Retail Innovation for Answers

In many ways, banks and retailers face similar issues. But unlike many retailers, banks have been slow to adopt new technologies and stay ahead of the curve. An examination of successful retailers and taking some of the key lessons that have worked well for them will help banks long term.

According to Lumen, banks should look at Apple for inspiration. Central to Apple’s optimization of the customer experience are specialized cameras that track customers as they move through the stores. “By monitoring how customers used their stores, Apple has been able to continually improve the in-person services and products it offers to give customers a consistent experience across all its locations, while also tailoring services for local needs in each store,” the whitepaper noted. “The in-store interaction fits in as a part of the company’s omnichannel strategy, so customers have a familiar experience when they’re using a smartphone or computer or talking with an employee in a store.”

Banks can leverage tracking and customer identification technology in a similar way to learn how customers use their services, then use that knowledge to create compelling customer experiences that will keep bringing them in. For example, smartphone proximity sensors can pick up on where phones (and their owners) are in the room and use that information to track how customers move and spend their time in a bank.

Smartphones have a small infrared LED and photosensor located near the earpiece. The infrared light emitted by the LED is reflected back by the objects near the phone and sensed by the photosensor on the phone. The sensor measures the time it takes for the pulse of light to return and uses this to determine the distance between the phone and the object. It then sends a signal to the phone’s processor, triggering an appropriate action, such as turning off the screen. But IR light can be picked up by other photosensors in a room. Using the same principles the phone uses, photosensors scattered throughout a room can be used to triangulate a phone’s location as it moves through a room.

Photo sensors are complemented well by cameras that use machine vision. These cameras can visually track customer movement through a store. The combination of data from these two technologies can help determine which in-store activities consistently require human interaction and which don’t. Biometric facial recognition could help employees provide quicker account access and make it easier to address customers by name when they walk in.

Banks could use this technology to create a more interactive and engaging in-branch environment. This can include using digital displays, interactive kiosks, and other digital tools to enhance the customer experience and make the branch a more enjoyable place to visit.

Furthermore, technology can personalize the banking experience for customers and draw in new ones. As peoples’ lives have become more digital, a personal interaction is likely to become a stronger selling point. Indeed, for people who work from home and spend most of their days on the computer, going out to do errands and talking with real human beings may become highly desirable. That will be especially true if the people they interact with at physical bank locations know them personally. The reorienting of part of society around digital, remote work has the potential to enhance physical retail and banking locations, if those businesses play their cards right.

Although banks historically put more of an emphasis on reliability than on innovation, now is the time for differentiation. Bank branches need to become innovative showcases with a personal touch. One idea might be to transform a bank into a financial literacy center, with courses on budgeting and investing—similar to how bookstores bring in authors for book signings and host community events. Although these events are not part of the core banking business, they build relationships with the community and get customers in the door. This approach, coupled with the technological advances advocated by Lumen, could help bank branches differentiate themselves and thrive well into the digital age.  


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