Against the background of the global trend towards a reduction in the number of retail bank branches, a new trend began to develop – offices of a new type, without cash registers, with a free layout and employees with tablets. In Russia, the number of such branches has exceeded one hundred, this is only 0.5% of the total number of bank offices, but by the end of the year the share should grow several times. At the same time, the costs of such offices are high and are still available primarily to large credit institutions.
Change of design
A year ago, three largest Russian banks at once – Alfa-Bank, Sberbank and VTB – opened the first offices of a new format. Since then, Alfa-Bank (60) has opened most of the new type of offices, followed by Rosbank (more than 40), VTB (23), Sberbank has almost two dozen of them. New words came into the industry jargon: phygital (from a combination of English physical and digital – physical and digital), free planning, zoning, cashless service.
In new offices, banks have revised their approach to space management, in particular, their employees often do not have a fixed workplace. According to VTB, in new offices, a specialist with a laptop invites the client to a convenient place in the service area or at a table nearby. “Not an office, but a coworking space, there is no traditional counter, but there are cozy service areas. The ability to transform the space allows you to hold events with clients, ”adds Alfa-Bank. The new offices do not have the usual cash registers behind armored glass; they are being replaced by self-service devices. Depending on the load, there are from three to six ATMs.
“Usually these are medium-sized offices with five to seven employees and which provide the widest opportunities for obtaining remote services using ATMs and bank terminals,” says Maxim Lukyanovich, Deputy Director for Retail Business of Rosbank. VTB employs virtual assistants, video services, and more.
The office of the “new generation” of Sberbank also has checkpoints. And it turns out that this is not only a bank, but also a store, offices become a place for selling products of its ecosystem. The first results show that less than 8% of clients from the monthly flow in Sberbank offices are interested in the ecosystem. In particular, in 2020, 3.7 million customers were bought in its branches of non-financial services, the bank said in a report. There are no data for 2021 yet.
VTB plans to open offices without people by the end of 2021. There will be already familiar card machines, and video banking, with the help of which it will be possible to get advice and issue a complex product, as well as other services.
Even three or four years ago, almost any banking operation – registration of a new service or an operation on the current product – required the client’s personal presence in the bank, says Anna Kambulova, managing director of Sovcombank. Now customers have less and less reason to visit a branch, since the mobile application and Internet banking are becoming more functional and convenient, Uralsib adds.
Over the past three years, the structure of operations for which clients come to the office has changed, VTB specifies. “The share of service operations in the bank’s offices decreased from 80% to 53%. The most frequent transactions in the network were consultations on the design of banking products (deposits, loans and credit cards), their share now amounts to 40% of all transactions, ”the bank explains.
According to PSB, in the near future the number of service operations in offices will be further reduced, such as transfers between accounts, payment for utility bills and others, connection and disconnection of additional services, receipt of statements and information on accounts. All this determines the new format and how the branches will look in the future.
The new style “is especially in demand among young people, who generate new traffic to the network,” Sberbank explained in its annual report. “New branches often resemble not a bank office, but a coffee shop. This is an important psychological aspect of the new office format, designed to evoke positive associations among clients and a desire to return, ”says Lyudmila Kozhekina, Director for Banking Ratings at Expert RA. According to Aleksey Okhorzin, Head of the Directorate for the Development of Retail and Electronic Business of MKB, “the further struggle in the market will go for the emotions of customers.”
Change of functionality
“The new branch formats will serve as an advisory rather than a service one and will create a special customer experience,” says Maxim Nalyutin, head of the financial services group at Deloitte.
Alfa-Bank notes that now most often customers turn to branches for complexly structured transactions, for which an employee’s consultation is required. Retail clients come to offices, mainly to arrange mortgages, investment and card products, SME clients – for complex credit and investment products, “where a certain degree of trust and live communication are important,” the PSB notes.
Citizens “choose a visit to the branch for those moments when it comes to issues of particular importance or if there is a need to obtain values, documents or bank products on the bank’s territory,” adds Maria Magdeeva, Head of Sales Channels at Raiffeisenbank. This can be, for example, using safe deposit boxes, withdrawing or depositing cash, processing products that require special attention or individual financial planning.
Against the background of the change in the functionality of offices, the requirements for the qualifications of employees are also increasing. This is no longer just a clerk, but primarily a consultant. In new offices, the functionality of employees becomes more versatile, “which, along with paperless technologies and signing documents on a smartphone or tablet, speeds up the customer service process and makes interaction less formal,” explains Ms. Kozhekina. As noted in VTB, a bank employee “conducts less routine operations, acts as an expert, helps to find the best solution for a financial problem.”
So far, even against the background of a significant reduction in banking networks – almost 3 thousand branches have closed in three years, and their total number has decreased to less than 26 thousand units – the share of new-type offices is still only 0.5%. But by the end of the year, it may increase several times, and in the future it may take a more significant share (at least 10%).
So, this year Sberbank plans to open at least two or three such offices in each region, bringing their number to 200-300. VTB and Alfa-Bank are planning to operate 100 offices by the end of the year. By the end of 2025, VTB plans to bring more than 940 branches (70% of the network) to a new format. From 2022, new Sberbank offices will appear in small towns. A number of large banks – Sovcombank, MKB, PSB, Uralsib, Ak Bars – are also planning to transform their own networks.
Naturally, such a transformation is not a cheap pleasure for banks. Therefore, a massive transition to the new service is still available mainly to large organizations.
The cost of opening an office in a new format can reach 10 million rubles, clarifies in Alfa-Bank. “Since the size of offices differs from city to city, the cost of their implementation varies from several to tens of millions of rubles,” added VTB. Taking into account the plans for modernization, the costs of the largest banks can be estimated at billions of rubles in the coming years.
In general, the cost of the new format is comparable to the price of the old one, in which a branch could cost 3-10 million rubles, notes Natalia Rakova, head of consulting services to companies in the financial sector of KPMG in Russia and the CIS. However, their content is significantly different. In particular, the price tag for more modern ATMs is definitely higher than the old ones. A traditional ATM with a cash dispensing function for large quantities can cost from $ 7 thousand, updated ATMs with a recycling function, which save on cash collection, can cost from $ 10 thousand for bulk purchases. More modern ATMs, for example, with the function of recognition and provision of services for biometric data can cost from $ 30 thousand. You will have to spend money on retraining employees, as well as on increasing their salaries in accordance with the increasing functionality.
But bankers also talk about saving. According to VTB, the functional zoning of new offices reduces the area of the outlet by 20-30% and reduces infrastructure costs by up to 20% – “the reduced area of the branch allows you to save on rental payments, the effect is measured in millions of rubles a year.” In addition, the bank saves up to 72 thousand rubles with the help of the system of automatic optimization of temperature, humidity, illumination and CO2 concentration. per year for housing and communal services in each department. The absence of cash registers allows you to save on collection and employees.
At the same time, productivity should also rise. Igor Yasenovets of McKinsey & Company points out that expertise in complex products, such as mortgages, and high-income segments will gradually be centralized on a remote consulting model: a consultant can be chatted via video link from a branch or anywhere in the world. This approach will increase productivity by 30-50%, the expert estimates. And moving to a leaner, flatter organizational structure through agile practices and consolidation of branch groups will increase productivity by another 20-30%.
Change of priorities
The first branches of a new type that have appeared, which blur the line between digital and physical interaction experience, “are rather pilot projects for testing new concepts and formats,” Mr. Nalyutin is sure. Nevertheless, “the number of offices will continue to decline due to the possibility of carrying out almost 100% of services in a remote format,” he believes. In fact, experts and market participants agree, the transformation of financial services is coming, and in the course of time, there will be no bank offices in the usual form of bank offices.
Of course, the regulator’s requirements for accessibility, security, confidentiality, etc. will remain for the new formats, or even intensify, says Mikhail Polunin, First Deputy Chairman of the Board of ICB. But against the background of the trend for combining licenses of various financial institutions, admitting high-tech companies to financial operations, expanding the range of applications of biometrics and remote identification, which the Central Bank is currently working on together with interested market participants and departments, such a transformation looks inevitable, he believes.
It is possible that new financial outlets will not always be distinguishable from retail or food establishments, although they will remain under the name of the respective bank. The expert believes that the offices of financial organizations will be as far from the branches of the beginning of the century as modern smartphones are from push-button mobile phones twenty years ago.