Bank future revealing commerce operations - Open an account in a tobacconist, make a deposit in the Post Office or withdraw money at the checkout of a supermarket: why the future of bank offices is getting closer to commerce.

Banking seeks the balance between being close to the customer and saving costs by closing branches. In the midst of the digital transformation of the sector, the solution can go through agreements with third parties that already have a strong presence on the streets. A win-win move, as marketing strategists say, so that everyone wins business and the client can perform operations near their home.

The last to raise this option have been the representatives of the lottery administrations that met with Banco de España. The main association of the sector met with the supervisor in order to present its proposal arguing the capillarity of its network and the disposition of its premises and employees, according to Expansión.

This proposal is in line with some initiatives that have already been put in place. An example is the agreement between Santander and Correos. In September 2020, the entity signed with the delivery company to be able to offer its services in the 4,675 postal service points from the first quarter of 2021.

A formula focused on offering proximity services in those locations where the entity does not have offices. In this way, the agreement allows bank customers to make withdrawals and cash deposits at post offices and postmen can deliver money to any address in Spain being free for bank customers in those offices where the entity has no physical presence.

Bank future revealing commerce operations

This combination of using an existing physical point to offer banking services is also used by the neobank Nickel, French giant BNP Paribas. The neobank began operating in Spain at the beginning of this year and has gone from starting with 50 service points to having more than 500 in June.

The growth of Nickel in its home country can give an idea of the goals for Spain. The Nickel account was born in France in 2014 and in 2017 the BNP Paribas Group bought the company. The proposal is an account and a card that opens and operates in tobacconists and already has more than 2 million customers. Nickel can be found in more than 6,000 tobacconists throughout France, making its network the third largest in the country.

In 2021, with the COVID-19 pandemic, the use of digital financial channels and electronic money has skyrocketed, also becoming popular among groups that were more reluctant to use them. A situation that has accelerated the closing of bank branches within the plans that the entities already had in this regard.

"The profitability of banks remains their main problem that forces them to reduce costs by lightening the network of offices and employees. And as the problem persists, the adjustment is not over," explains Joaquín Maudos, director of the Ivie (Valencian Institute of Economic Research).

"In addition, as online banking penetrates, it is possible to close offices without affecting financial exclusion. And in Spain there is room for manoeuvre for more closures because we have a ratio of inhabitants per office much lower than the European average," adds Maudos.

Bank future revealing commerce operations

In this sense, Santiago Carbó, Professor of Economics at the University of Granada and director of Financial Studies at Funcas, also says that "there is a process of transformation of the office as a business unit".

"In reality, the services and structures of the offices have not stopped changing in the last decades. They are now more oriented towards commercial services and operations that require more advice such as investments or a loan. In any case, everything moves towards a digital model of service platform type, where it is cross-sold and compatible with other operators and financial and non-financial products, queries are made and it is operated in multiple channels," adds Carbó.

Even so, Carbó points out that the change will not be immediate. "The office, in any case, will gradually lose weight and not immediately because it still has an important business and relational value for many customers and for entities," he explains.

In recent years, banks are closing small branches and focusing on maintaining larger offices to offer more complex services, such as hiring a mortgage or a loan, leaving the simple operation, such as transfers or payment of bills, for digital channels or ATMs.

This trend means that the network of offices is smaller and that in the case of small localities they are left without an office. To bring the functions of branches closer together, banks are using different techniques. Among them, to reach agreements with third parties to use their physical points.

Bank future revealing commerce operations

"This is something that we are already seeing, with the recent experience for example of Santander in collaboration with Correos. And in several autonomous communities there are initiatives by the public administrations to facilitate access to financial services in those municipalities where there are no offices. For example, in the Valencian Community there is an agreement with CaixaBank to install ATMs in these towns", Maudos points out.

For its part, Carbó adds another derivative to the equation and is whether these agreements will be made exclusively or how the products offered on a banking platform will be managed.

"The offices are already very open spaces to financial and non-financial products (among others, products of technology operators that act as partners of each bank). By expanding the banking business towards a model of platforms is no election as, for example, if the partners are close in unique or if, on the contrary, it opens the possibility of using the platform (and offices) to a number open for potential partners," explains Carbó.

Bank future revealing commerce operations

In Spain, the extensive network of ATMs had also made it easier for customers to take out the cash they needed without having to make large displacements. This made it not so necessary to look for alternatives to get cash back and here it has not become popular as it happens in other countries the use of cash back. His practice so far is "testimonial" in Spain according to Maudos.

"Precisely because in Spain cash management is managed more efficiently by both entities and businesses and because the dense network of ATMs and offices had not made it necessary to use this cash back modality, more frequent in countries with less possibilities of access to cash," Carbó considers.

Bank future revealing commerce operations

This functionality is that when you go to make the purchase in a supermarket you can ask the cashier to give you an amount of cash (cash) back and be charged from your card with which you are paying for the purchase.

ING with the development of its payment application Twyp has been the only bank that has brought this practice to Spain in collaboration with several chains such as the supermarket chain Dia or gas stations Gap or Shell.

Bank future revealing commerce operations

"In any case, in the long term it will not be necessary to have cash given the increased use of electronic means of payment. In addition, this problem affects a very small percentage of the population according to the Bank of Spain estimates", adds the director of the Ivie.

The increasing digitalization and changes in consumption models, with an increase in e-commerce will also mark the steps of banking. This added to the scenario of negative interest rates, which has been prolonged by the pandemic, forces the banks to reduce expenses so that the accounts fit.

In the coming years we will see what are the formulas that entities use to approach the client, without having to make large investments in offices.