ZEW Survey Among Financial Market Experts: Banks Strengthen Focus on Branches as Distribution Channel

In the future, banks will strengthen their focus on branches as distribution channels. In particular, branches will offer more counselling to their customers. To attract customers to branches, banks are expected to introduce new branch concepts like the in-branch experience. This is the result of a survey among 252 financial experts conducted by the Centre for European Economic Research (ZEW), Mannheim.

During the last years, the bank costumers were often kept from going to branches and asked to use alternative distribution channels like internet banking or ATMs. In the future, branches will play a central role as distribution channel once again. Particularly, consulting services to private and business clients will be offered by branches. Around 75 percent of the experts participating in the ZEW survey think that customer advisory services will be important or even very important for branches in the future. Moreover, branches will be the best place for real estate financing and granting large loans. According to the experts’ assessment, other distribution channels will be used for account management services and securities transactions in the future.

In the coming years, the banks will not only strengthen their focus on customer advisory services. They will also introduce new branch concepts, such as the in-branch experience. Some credit institutions already have such special branches with cafés or shops for exclusive brands.

The experts think that the percentage share of transactions handled in branch banks will be more than seven percent. The focus of credit institutions on customer advisory services is shown by the high market share of branch banks only offering counselling. The financial experts expect that more than one fifth of all banking will take place in branches that only offer consulting services. Such branches are even more important than self-service branches which are expected to handle about 20 percent of all products and services sold in branches. ZEW expert Matthias Köhler says: "In the future, particularly complex products with high profit margins will be sold by the branches."

The major percentage of transactions will, however, still be handled by full-service branches. Banking or credit shops which can already be found in some German cities and only offer a limited range of services are expected to have a market share of slightly more than 10 percent.

For further information please contact

Matthias Köhler, E-mail: koehler@zew.de