The benefits of 5G – delivering super-fast, low-latency broadband to consumers, wirelessly, wherever they are – promises to revolutionise the way we interact with one another and businesses. For the first time consumers are going to have immediate, portable access to the kind of speeds and connectivity that was previously only available to enterprises. This is going to be transformative, and consequently consumers are going to move more of their lives and interactions to the digital, where the convenience is far greater.
The potential of this technology has many wondering if it’s going to herald the death knell of bricks-and-mortar banking. A combination of factors has already resulted in a steady decline in the number of branches across Australia – from 5,816 in mid-2017 to 5,173 in June 2020, and another 300 closures announced this year alone.
So, the question is, with banks moving more digital services than ever, and 5G Internet delivering a higher standard of digital interactions and driving a high level of social and cultural disruption, will the decline of banking branches accelerate even further?
Impacts on bricks-and-mortar banking
There are a number of clear consequences that 5G ubiquity will have to the retail banking sector. These include:
1) The elimination of in-person services. Bricks-and-mortar banking won’t be necessary if consumers are exclusively interacting with their bank over digital platforms. With AI chatbots delivering instant low-level support and answers, and tele-services to provide remote – but instant – face-to-face meetings with banking agents, the need for in-person service and services will be greatly reduced, impacting on one of the major roles of the bricks-and-mortar retail branch.
2) Self-service banking. The days where you needed to talk to a banking agent to open accounts, apply for loans, or discuss financial options are long gone. Accounts can be set up instantly through web portals, and that’s just the start of the self-service options that banks are rolling out over digital platforms.
3) New applications of technology providing a better customer experience. There are a number of advanced technologies that 5G unlocks. Banks will be able to provide VR and AR experiences, for example, or deliver deeper, AI-driven experiences – imagine being able to apply for a home loan simply by pointing the phone’s camera at the house, and a combination of location data and AR interfaces allows the bank to instantly commence the application process.
4) The rise of pop-up branches. Banks are being more mobile with their in-person engagement. Rather than simply dropping ATMs at a large event, festival, or other temporary congregation of people, 5G connectivity, which delivers edge computing, allows the rapid deployment of branch experiences anywhere. This will allow banks to become more dynamic with their in-person interactions with customers, rather than relying on them to come to a traditional branch space.
5) No-fee trading. Mobile devices, wearables, and other such IoT devices can have payments services implemented that allow for low, if not no-cost trading. In comparison to the costs of managing ATM networks and staffing retail branches, moving customers to mobile payments will be seen as a significant cost efficiency measure.
6) Digital currencies. Almost one in five millennials have stopped using cash altogether, but the next innovation that is currently driving wild demand is cryptocurrencies, which are digital-only money that has no physical “note” that can be withdrawn and spent. Financial services are looking at how they can participate in this rapidly growing new form of transaction, and it all bypasses much of the role of branches, as there is no cash to exchange.
So, is there room for the traditional branch?
Financial services is not the only sector being disrupted by 5G and digital technologies. Most areas of retail are, and in response, bricks-and-mortar stores are increasingly transitioning their spaces to become experience focused, rather than product orientated. “Yes, we’re selling product, but a lot of people come to a retail store for pure entertainment purposes,” Opus Design chief executive, Chris Tourgelis, said in an interview with Inside Retail.
Some innovative banks are undertaking similar innovation with the branch experience. In China, CCB has implemented 5G technologies in a way that aims to make the branch experience more vibrant for consumers, and turn the branch into a major point of marketing and branding, re-defining the role of the branch away from being purely transactional.
There is no doubt that 5G is a disruptive, transformative technology. However, that doesn’t mean it spells the end for bricks-and-mortar banking. It does mean that the branch experience needs to evolve, however, and those banks that are unable to find a way to give consumers a new branch experience will find themselves left behind. Bank branches have such a large and prominent position in our community that they can be converted into powerful branding and marketing opportunities, and there is one thing that technology is, ultimately, unable to replace; there are times where you do want to interact with another human, face-to-face. For that there will continue to be demand for branches for some time to come.
Todd is a freelance writer specialising in business and education or focusing primarily on the meaning of life. His passion is making topics simple and easy to understand and hates jargon. Todd loves being outdoors, spending time with family and reading sci-fi. When he’s not doing that, he can be found sipping coffee and writing on the front deck.