Is death looming for bank branches?
With the use of mobile banking in Singapore easily overtaking physical branch interactions by 15% in the past year, there is some question whether doing financial transaction in branches still remains relevant for a population that has gotten used to living their life in front of a screen.
Nearly eight in 10 Singaporeans are considering opening an account with branchless banks, according to a survey by management consultancy firm Mckinsey. Of this number, more than a third (35%) are willing to transfer their account assets into a digital wallet.
In recent months, DBS unveiled a chatbot, POSB digibank Virtual Assistant, allowing customers to perform transactions via Facebook Messenger. Not to be left behind, OCBC rolled out an algorithmbased robo-advisory service for its wealth management arm whilst UOB launched contactless ATMS.
“In Singapore, the role played by and the support given by our government as well as bodies such as the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) to the banks is a clear strength,” said Kok Yong Ho, Financial Services Industry Leader at Deloitte Southeast Asia. However, the ongoing migration of financial services to mobile begs the question of whether branch banking still remains relevant.
“Why even have branches and pay rent and staff costs to service the branches when banking can be carried out online or on mobile devices?” according to Choon
Fah Ong, CEO of Edmund Tie & Company. “With the convenience of mobile banking anytime, anywhere, customers are moving towards mobile banking. So banks adapt to the trend and save costs at the same time, making them more nimble and cost efficient.”
Although the impact on the property market could be hard to accurately measure as bank branches seldom occupy standalone buildings due to their location in shopping malls or office buildings, banks could save around $10,000 to $70,000 monthly which is the going rent for a typical bank branch, according to Huttons Asia. Ong, however, is of the belief that the trend will be much more felt in the property market in the long term. “The reduction in banking space is part of the global trend affecting the way we live, work and play – enabled by technology. Overall, there will be lower demand for office space as technology enables us to work any where, any time, and not just from offices.” On his part, Deloitte’s Ho suggests that the migration of banking services to online is more an evolution than an extinction of banking as we know it.
Banks could save around $10,000 to $70,000 monthly which is the going rent for a typical bank branch.
Why go to the branch when you can transact online?