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In an interview with City A.M., the chief executive of Atom Bank, the yet-to-be launched digital-only bank based in the UK, explored the idea of using the Post Office as a substitute for branches to process cash and other paper-based transactions. Being able to provide human interaction in their service or process cash is a challenge for Internet-only banks, in a world where banks strive to achieve an omnichannel offering. Branches remain an essential part of the channel mix, although they are no longer the only or most important customer touch point. The lack of human contact and physical location has been addressed in various ways by other Internet banks.

Cash is the barrier to true digital-only banking

Providing customers with a seamless and better-tailored service on their preferred channels, which is increasingly important, is a potential challenge for digital-only banks when it comes to processing paper-based transactions. Digital-only banks such as Atom Bank may be targeting a customer segment that expects to use mainly digital channels, but for many customers the branch remains an essential part of the channel mix. In countries that still use cash and cheques widely, such as the UK, a physical location to process cash, in the form of a branch or ATM, is important. Also, as Ana Botin, chair of Santander, has said, customers want to talk to a person about their banking every now and then, even those in the younger customer segments, especially when making important decisions. Retail banks are investing in the IT in their branches to transform them: 20% of the respondent banks in Ovum’s ICT Enterprise Insights Survey plan to install new systems or transform their branches in 2015.

The lack of physical location is not a challenge that is unique to Atom Bank. Internet bank Fidor Bank does not offer a free service to pay in cash, but it has found a way to provide human contact by establishing a user community where its clients and community members (which do not have to be clients) share insights about financial and practical issues. First Direct, which offers services on digital platforms and on the telephone, uses parent brand HSBC’s network and the Post Office for customer deposits and withdrawals, while ING Direct, which operates in most countries as a digital-only bank, has opened branch “cafés” in North America and France.


Further reading

2015 Trends to Watch: Retail Banking, IT0003-000634 (December 2014)

2015 ICT Enterprise Insights in the Retail Banking Industry, IT0003-000631 (October 2014)

The Impact of Digital Transformation on Bank Branches, IT0003-000610 (June 2014)


Noora Haapajärvi, Associate Analyst, Financial Services Technology

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