Bank branches face obsolescence

Technology is set to render as many as half retail bank branches obsolete according to a new report.

Property experts Jones Lang LaSalle expects the branch network decimation to be complete by 2020.

“Banks will assess their space requirements in developed markets, driven by increased consumer demand for technological innovation, flexible service capability and active management of retail environment presence,” according to Jones Lang LaSalle’s Global retail banking: Key trends for retail real estate report.

The reductions will largely occur in developed markets, such as Australia where consumers will require increasingly less face to face banking services as new forms of payments such as smartphone applications allow people to transfer money instantly.

But demand for retail space by banks will continue to grow in less developed markets such as Brazil, China and India where the adaptation of such technology is likely to be slower.

Jones Lang LaSalle Asia Pacific Banking Industry Group chief Iain Mackenzie says technology is a game changer.

“For banks in developing markets that are not as invested in legacy systems, there is significant opportunity to bypass the large, expensive and potentially obsolete physical branch networks and explore alternative channels that are flexible, mobile and tailored for their customers,” he said.

“This ability to customise and the flexibility to bring innovations to market quickly may provide many banks in this region with a competitive advantage over their western counterparts, similar to what we have seen in the telecommunications industry.”

JLL also predicts the advent of experimental branches open 24-seven giving customers access to call centre staff via video conferencing links.

Mobile transactions will soar, it says, and banks will be focussed more on data storage facilities than retail shop fronts.

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