Personalized advice, human interaction, and trust are the main reasons for choosing a branch. Personalized advice is by far the main reason in Austria and Germany, selected by 51 percent and 43 percent of the respondents respectively. Trust was the top reason for consumers in France and Spain, selected by 29 percent and 27 percent of respondents respectively.

Banks can support consumers in their digital transition. To move more consumers to digital channels, banks will need to consider not only the above trends, but also the financial benefits of using digital channels (selected as a potential incentive by about a fourth of respondents), easier and simpler to navigate online or mobile banking apps (19 percent of respondents), and better customer service for online users (16 percent of respondents). Every 12th person who uses a branch says they are not ready to switch to digital channels for anything, with the stickiness to physical changes being highest in France (24 percent) and Switzerland (16 percent).

Takeaways

An omnichannel strategy is a must. Banks still need to combine superior digital capabilities and human interaction with personal advice—and be good at both. Lagging in either one is a disadvantage in a competitive market. At the same time, this is a costly strategy, which requires foresight about evolving consumer preferences, smart and timely investments in digitalization, and skillful management of the human capital in branches.

The branch transformation needs to focus on reinventing the format. With almost half of European branches having closed their doors over the past 15 years, the pace of branch closures is slowing. With many customer interactions still taking place in the branches, it’s up to banks to find the best format—one that will people draw in for high-value activities, meaningfully manage the skills and time of branch staff, and educate consumers to support their transition to digital channels.

Stay tuned for more articles in this series

This article is based on the Kearney proprietary Retail Banking Radar channel survey, conducted annually in more than a dozen European countries since 2020. More than 500 people in each country responded to our survey. The study aimed to capture respondents’ banking channel preferences and their attitudes about buy now pay, later products.

This is the second in a series in which we explore changes in customer behaviors and the evolving use of channels. In addition, this series will explore the rise of embedded finance as well as environmental, social, and governance issues—analyzing the most pressing challenges and how banks should respond.

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