Technology has certainly brought significant disruption to banking, but the underlying impetus for such rapid change — how best to serve customers — is not new at all.

The result so far of technological innovations has been new and exciting ways to embrace customers and provide greater convenience. But while customers have more options for how they engage with financial institutions, the newer options have yet to entirely supplant the classic — in-person — banking experience.

Let’s take the example of contactless debit and credit cards. They are increasingly popular in Europe; some banks offer only a contactless card option. But customers have expressed some discomfort with the technology. There are fraud concerns that do not extend to more traditional payment cards, perhaps explaining why contactless cards have yet to really catch on in the U.S.

Banks are closing branches at an unprecedented pace, retreating from the communities they serve. According to SNL Financial, the number of physical bank locations has dropped each year since 2009, hitting a record 1,614 closures in 2015. While this cost-cutting tactic can appear to be a sound business strategy, in reality, it often yields a short-term balance sheet improvement while risking the long-term value of loyal customers.

Still, while banks are reducing their physical branching footprint, they are still hiring branch staff. Last year, JPMorgan Chase bucked the conventional wisdom about the industry’s branching contracting by announcing that it was hiring more tellers and other branch staff.

Meanwhile, as the digital age reduces barriers to entry, creating more competition, customer service remains the number one brand differentiator and a key growth driver. A six-year study published by Forrester found that publicly traded companies that excelled in customer service outperformed the S&P 500 index by a factor of three to one.

The importance of a positive, in-person customer experience cannot be overstated. An American Express survey reported that more than two-thirds of shoppers spend more on average with a company that exceeds their service expectations. Nearly half of those surveyed reported that they always tell others when they experience a positive interaction, and old-fashioned word-of-mouth marketing has never been more powerful with customers sharing their opinions across large social networks.

According to, half of all Americans have visited their local bank in the last 30 days, proving customers still derive great value from visiting a physical location.

However, banks are increasingly ignoring this clear consumer preference by placing heavy value on utilizing online services. The result is a reduction of channels for customers, not a broadening of their options, serving as a detriment to the overall banking experience. Customers want a comprehensive array of banking services, whether they choose online, in-store, mobile or via an ATM.

New technology shouldn’t replace a physical footprint and personalized customer service; it should complement it. Even Amazon — a longtime e-commerce titan — has begun investing in store locations; it now plans more than 100 pop-up locations in malls throughout the country. The stores are an attempt by the company to strengthen its bond with customers by providing a physical touch-point to loyal patrons. This venture was a direct result of the evolution of the market. Although people use their mobile devices in 45% of all shopping experiences, the majority of sales still occur in physical locations, with 90% of retail sales taking place in-store, according to Facebook IQ and eMarketer.

The banking industry as we once knew it has changed, but a world-class, person-to-person, in-store experience still provides a unique way to connect with customers on a genuine level.

Andrew J. Logue

Andrew J. Logue

Andrew J. Logue is president of Republic Bank, a Philadelphia-based retail bank.

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