Between 2016 and 2021, in Spain, one third of bank branches closed, and more than half of Spanish towns no longer have a physical branch.
The process of restructuring branch networks, starting with the 2008 financial crisis, has led to the incessant closure of bank branches all over. This has been further compounded by digitalisation, mergers and COVID-19. Many banks have closed branches to reduce costs and increase efficiency. In Spain, between 2016 and 2021, 33.4% of branches (9,700 in total) were closed, according to data from the Bank of Spain.
The current branch density map of the country is a warning of an impending “banking desert”. Branches are fast going extinct. Not long ago, Spain was the country with the most bank branches and bars per inhabitant. Now, however, more than half of Spanish towns (4,400 of 8,131) no longer have a physical branch. In total, there are more than 1.6 million people who do not have access to a branch in their town, and the pattern more or less coincides with what is known as “Empty Spain”, also empty of branches and infrastructure. This, in turn, further aggravates another social problem: the inability of certain segments of the population, particularly the elderly and people with mobility problems, to access financial services. Faced with a complete lack of local branches, they have to travel many kilometres or even resort to help from friends to do something as basic as collecting their pension.
Physical branches have served an invisible but important role in society, and they have traditionally been a place where people could manage their finances effectively with confidence. Today’s banks are fully aware of this, and this is why they are committing increasingly to the use of new technology to modernise their existing branches, make them more efficient and provide comprehensive services that meet their customers’ needs. Physical branches are now changing and becoming smart environments focused on delivering efficient services and an improved customer experience.
According to GDS Modellica, financial institutions will still continue to play a key role in the future, even if they change their appearance and processes. They will be more efficient, sustainable and effective and will aim to guarantee customer satisfaction whilst being more profitable. Furthermore, their services will be better. Financial institutions are increasingly adopting new technology in their branches, such as artificial intelligence, big data or augmented reality, in order to offer an improved customer experience. Branches are no longer exclusively dedicated to financial transactions but have redesigned themselves to serve a range of different functions.
Digital technologies are changing and redefining the way we live, learn, communicate, interact and do business at an unprecedented speed. In turn, this digitalisation has led to many layoffs in the financial sector and a need to train the remaining workforce so that they can perform their roles in the new digital financial ecosystem more effectively.
In the words of GDS Modellica, “banks have access to a huge amount of available and accessible customer data (customer payment details, spending behaviours, social media activity, online browsing, etc.)”. This information can provide a detailed picture of the customer and their behaviour through analytical and risk management tools. In turn, this can help respond better to customer needs and develop more appropriate business strategies. But the implementation of technology in branches brings with it certain risks, such as the threat posed by cybercriminals. They are becoming increasingly more sophisticated and difficult to identify, and they are ever ready to exploit weaknesses in security in order to commit fraud.
To address these issues, new techniques have emerged to deal with risk management and fraud detection. GDS Modellica has developed its High-Performance Environment, a solution that enables efficient data storage, detects risk and enables a fast, effective response. It is a solution that analyses data, applies existing knowledge, integrates processes and, ultimately, forms the basis for a robust decision-making process.