What is the impact of virtual branches on banking? It changes a lot, starting from resource allocation through the role of physical branches to the general competition between financial organizations. In this article, we examine this more closely. We invite you to read on!
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Virtual Branch Experience and Its Impact on Traditional and Digital Banking
There are many benefits of virtual branches, but these often aren’t equal to their impact. This is why we want to look deeply into the latter. How can the virtual branch experience affect traditional and digital banking? Here are our answers:
Resource Allocation
The first key impact of a virtual branch will be visible in resource allocation in banking. Currently, you need onsite employees near your bank’s physical locations. Teams are region-restricted; if an employee works in a call center or a certain branch/set of branches, that’s the only place where they sell their products.
It is quite different with virtual branches. Here, you can have a completely decentralized team consisting of experts from different physical branches. They can switch to an online service whenever they don’t have enough clients locally (or at certain set hours). Or, they might switch back and forth depending on their schedule in a meeting manager, such as that available at LiveBank.
Ultimately, you don’t change physical resource allocation. Your employees still work at the same branches on the same equipment. What changes, though, is how you allocate their time, as you need to balance virtual and physical service. Why bother? Virtual branches generate more sales, so switching to this resource management model will benefit your organization.
Physical Branches and Their Role
Physical branches still remain crucial in the whole chain, though virtual branches have a visible impact on them. After all, their role will change.
Comparing virtual banking vs traditional banking, it is clear that digital channels should become your primary mode of communication with clients. Naturally, in case of doubts, more complex cases, or simply a lack of technology (which still happens), your clients might want to visit your brick-and-mortar sites, and that’s what they are for.
Moreover, even though we have developed many innovative technologies, it’s impossible to complete all processes fully virtually. That’s why physical branches need to remain a sort of link for those actions that the client cannot complete online. A good example here is mortgage applications—your client can complete almost all steps of this process in LiveBank, but they will still need to visit a physical branch (exactly once throughout the whole process).
Learn about our digital mortgage solution.
Competition
This particular impact of virtual branches on banking is closely connected with the previous two. As more banking becomes more accessible, procedures get faster and more intuitive, and physical branches won’t always be necessary; you will no longer compete with a few local banks. Instead, your competition will be all the banks operating in a given country (and some other international financial institutions).
This also means you’ll have to focus more on improving your customer service if you want to give your clients the best virtual branch experience. At the same time, moving your banking services into virtual branches will open new opportunities. For instance, you’ll be able to:
- Collect data on your digital onboarding and gradually improve it.
- Automate your processes to make them faster for the clients.
- Send the most complex processes almost entirely to the digital realm; for instance, with LiveBank, your clients will need to visit a physical branch only once during the digital mortgage application process.
The above are just a few of the possibilities that digitization opens. When virtual branches become widespread, you will no longer acquire clients based on your accessibility and location but rather on your bank’s specific perks and services. Hence, the better your agents and tools are, the more likely you are to succeed.
Virtual Banking s Traditional Banking. How Likely Is It to Become the Future?
Knowing the impact of virtual branches and current market trends, we are sure they will soon become a standard in the banking industry. Although the digital transformation in finance is far from completion, it has begun accelerating, so we should experience the true rise of virtual branches in just a few years. But why wait? After all, you can start introducing them right away.
Virtual Branch Banking Experience vs Traditional Banking. The Takeaway
The impact of virtual branches on traditional banking models and digital banking in general is quite far-reaching. They slightly reshape how resources are allocated, new products are designed, and physical branches are deployed. However, this will also increase customer satisfaction and lead to higher competition. Should you be afraid of the changes? No, but you should start adapting now to locate all the opportunities before other banks do!
You might also read: How to Create a Virtual Branch?
