When it comes to major purchases customers still want to see a professional in-person
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With customers’ increasingly using mobile banking platforms over in-branch services for everyday transactions, the announcement this week that Bankwest would be closing 29 bricks and mortar locations on the east coast came as no surprise.
But instead of it being perceived as a bad sign for the industry— it might actually be a boon for brokers and for competition, according to IBISWorld industry analyst Tommy Wu.
“Competition will likely be heightened as more banks are operating on lower costs and competing on lower fees. This has already been highlighted by ING bank’s model and the emergence of Volt Bank, with digital banks often incurring lower overhead costs than traditional banks,” he said.
Branch closures highlight the undeniable shift in consumer behaviour towards online banking over the last five years, Wu said. Often customers were only visiting branches to close an account or consult on a major transaction like a mortgage. That’s good news for brokers.
“It is likely that if more branch closures occur, brokers will become a vital point-of-contact as consumers continue to use online platforms for all transactions accept major ones,” he said.
“The closure of bank branches may lead to more people seeking out traditional face-to-face financial relationships. Consumers are often hesitant to make large financial decisions without consulting a financial professional.”
As brokers have already experienced, their roles are evolving. Homebuyers and SMEs are increasingly turning to them for a financial education, as well as to arrange their loan. Wu expects this to continue.
With bank branches becoming obsolete, there will be more closures in the future. But face-to-face interaction and customer service will remain a focal point of differentiation— for both banks and brokers— among customers seeking advice beyond their computer screens.
Bankwest’s branch closures
Bankwest announced on 18 July that it would be shuttering 29 east coast branches starting 17 August, reducing its footprint on that side of the country to 14 and eliminating 200 jobs.
Bankwest managing director Rowen Munchenberg said in a statement that the bank had seen a consistent trend of customers choosing mobile banking over in-branch services, with an 88% rise in app logins over the past three years.
“We know we can’t match the major banks’ nation-wide footprint and also deliver world class digital services, so we will prioritise digital channels and broker relationships,” he said.
“This change does not impact Western Australia, where our strong brand and established footprint enables us to maintain highly competitive branch and digital offerings.”
