Era of the bank branch may soon be over - expert

Johannesburg - Financial technology experts believe the advent of digital disruption has placed the current bank branch model under severe threat.

This was one of the key topics of discussion at the recent two-day FinTech Academy Africa roundtable discussion in Johannesburg, which focused on global best practice, trends and organisational strategies in the financial technology industry.

Nicole Anderson, CEO of FinTech Circle Innovate, an organiser of the event, told Fin24 the bank branch model is hugely under threat, with international banks reducing the head count of back office staff.

“It is definitely under threat - I wouldn’t necessarily say that branches will go away altogether, but I think you will see a mass consolidation of how the branch is used,” Anderson told Fin24.

She added that there is and will continue to be some relevance for high-value transactions at bank branches where people want to engage face-to-face. 

“I think the format of the physical space that a customer can engage with will be different and will be used differently, and the same goes for online,” she said.

“The swing to online, while it is massively pervasive, depends where you are in certain markets. So in Africa north of the border physical proximity is quite important for people who want to transact, but that physical touchpoint is definitely not a bank branch because there are very few them,”  Anderson added. 

READ: Millennials must upskill to stay on top in FinTech space - expert

In South Africa, Vodacom shut down its mobile money transfer product M-Pesa on June 30 2016 because of a lack of demand.

However, mobile payments are hugely successful in other African markets like Kenya, where mobile network Safaricom has over 11 million M-Pesa users. 

Anderson explained that while there are few branches, mobile operator depots or hubs serve as a physical touchpoint.

“There is still someone at these hubs who can help someone else with a financial need. They may not be that professional but they are equipped to know at least how to get someone started through their mobile,” she told Fin24.

“So I believe a hybrid model will be adopted; it is just the proportion of what is online versus what is physical, and when it is physical what is that format and what is it used for. I think that will be for high-value transactions,” Anderson added.