To IP, or Not To IP..?

Michael, much of what you say is right and the questions you ask are mostly valid... but you lose me when it comes to branches...

Yes, retail banking is looking to tap the mass affluent market by offering more and more wealth management, asset management, investment banking and private banking services.

I have been around this industry for almost as long as I can remember. My father was an investment manager and I have spent practically all my career (over 20 years) working in stockbrokers, investment banks, private banks or vendors into the same.

Wealthy clients very rarely set foot inside our premises. Our financial advisors, relationship officers or portfolio managers (call them what you like) interacted either by phone or by visiting the customer. People trust people. I don't see that aspect of human nature changing and I don't see affluent people having the time or inclination to go to a branch, whatever it may look and feel like.

The other aspect of your argument I find a little paradoxical is where you see the threat coming from. Do you really see banks in emerging markets entering our mature markets by revamping the branch experience?

Not so long ago, ING Direct was unknown in the UK. In a very short period of time it has captured market share in deposits and is now cross-selling into mortgages - without a branch in sight!

Here's a profile snapshot of the digital-gen punter:

In Defense of Gen Y Workers

http://www.cio.com/article/157050

In a world where personal service and quality of service become the differentiators as service delivery of core products becomes ever more a commodity affair it will be a bank's ability to protect and nurture its customers through sound commercial advice that will underpin a bank's success - if the customer thinks more of the bank as a partner in their life plan the more important it will be the bank behaves like one - if a bank measure's it's success on it's customers' success we might actually be getting somewhere, wouldn't we!?

Of course many might say this is in place - I doubt that what exists today is working all that well as per the legacy issue otherwise we'd know what to do with the branches :->

My career has so far spanned 22 years, half of which was in banking and the other half in Banking related IT. So I write this post more as a branch user than a banker.

I think you are all right in your own ways (Chris, Mihael, Alan) and perhaps what you are describing is differentiators between different banks, which all have their place. I have experienced banking from two aspects, one where I had money and one where I did not. My honest opinion, and personal experience, is if you have money, you never need to set foot in a branch and you are happy to go on-line. When you do not, and need to argue with someone about why you can't get an overdraft, that's when you want to go to your branch (not that anyone there is empowered enough to help you). If follows then that if a bank targets HNW, their branch networrk does not need to be extensive (e.g. like private banks) but when they target Joe Public, who let's face it don't have so much money and may not even have a computer, they need their customer service outlets (note I did not say sales!).

For completeness, with regards transactions, I live and work in Brussels and a lot of transactional banking here is done at hole-in-the-wall type terminals in banking lobbies. There are even such banking lobbies with no bank branch behind them. Separating these from the customer service aspects to me seems like a very good idea. Of course, they are IP based.

So my humble belief is that banks need to find out what their clients need from their branches before they make their decision on the position of the branch in the channel pecking order. Banks that target HNW will probably need far fewer branches than banks that target those needing to borrow.

Oh, and with my IT hat on, naturally IP should be the centre of the universe, let alone banks.