From Branches to Apps: The Evolution of Modern Banking Services

The last few decades have seen a great change in banking. Once upon a time, one had to go to the nearby branch and fill a paper form; now something like this can be done in just a few minutes on the smartphone. From brick-and-mortar branches to powerful mobile apps, the evolution has nourished customer expectations, new competition, as well as a broader understanding of what constitutes “banking services” in life. 

The erstwhile time of branches: Trust, relationships, and manual processes

For almost all of modern banking history, branches were the core of the business. They played several roles as transactional hubs, advisory centers, and visible symbols of trust. The customers would open accounts, deposit cash, apply for loans, and receive advice in person. There was a special kind of human connection: relationship managers recognized their clients' businesses and preferences, allowing banks to offer suitable advice and build long-term resourcing.

But there were also several restrictions imposed on branch-centric models. Banking services​ were manual and slow; costs were high and passenger limits were applied. For populations that lived in remote areas, the nearest bank branch might be several hours away. On scaling or if it wished to reduce operational costs, the institution would pay a heavy price in terms of either proximity or efficiency.

Digitization begins: internet banking and automation

The big shake came with the arrival of the internet. Online banking websites allowed the conduct of trivialities of banking, such as checking balances, transfers, bill payments, and so on, without going to the branch. Automation gave way to speed and accuracy in carrying out routine processes; thereby increasing efficiency in back-office operations and capturing data by banks that could be used for service design.

This digital plaster was laid over branches, and in no way did it replace them altogether. Customer times spent in branches used to be higher for the complex cases; increasingly users prefer digital access at their convenience. The realization dawned upon the industry that the hybrid service model could serve diversifying customer needs, which is able to render the human advisory service as well as automated convenience.

A Mobile-First Transformation: Redefining Convenience with Apps

Smartphones contributed to accelerating the change. The mobile banking app made the bank an all-the-time service in the user's pocket. Other functions that the apps provided were instant notifications, remote check deposit, card controls, budgeting tools, and P2P payments. These possibilities changed the customers' expectations fundamentally: they started to expect frictionless, instantaneous interactions and personalization.

Banks also used mobile platforms for product expansions. The digital onboarding simplified account opening via identity verification by selfie or e-KYC tools. APIs then facilitated third-party integrations, either investments, insurance, or e-commerce, all wrapped into a single app. In consequence: banking became more modular in character, embedded, and with an experiential focus.

Competition, regulation, and rise of fintechs

On the other hand, new competitors have come in with the eruption of apps: the fintech startups, focused on payments, lending, or money management. Being quick and focused on customers, they somewhat threatened the slower pace of innovation that was characteristic of traditional banks. Meanwhile, regulators began to update their rules, aiming to protect consumers but also somehow to foster competition, and to introduce frameworks around open banking and data portability that would allow for the secure sharing of which financial data an institution holds from an institution to a third party, thus increasing further the services landscape offered on the consumer side.

Effect on customers and communities

Transitioning through the brick-and-mortar business model to apps has been touted as delivering very discernible benefits: a greater convenience, greater access to financial services, and reduced transaction costs for many. High-speed deliveries of payments, invoicing, and credit applications characterize the mobile-first solutions that create fewer entry barriers for entrepreneurs and small companies. However, advisory services, complex lending decisions, and relationship banking flourish where nuance and trust are involved.

There are challenges as well. Digital divides may persist where elderly clients may be shut out or where there is simply no good internet connection. 

Local perspective: banks in Yerevan and adaptation in the regions

Local banks in cities like Yerevan have been applying regionalized methods to this global shift. Banks in Yerevan have been increasingly using a combination of branch networks and digital offerings to appeal to a population that highly values convenience and personal relations. Mobile applications have been worked on to allow Armenian interfaces, local payment systems, and integrations with regional popular services. The banks seek to place an equal footing between customer trust that historically came through branches and the efficiency of the new age.

What comes next: personalization, ecosystems, and inclusive design

Ahead sit trends that will change the next chapter of banking services. Personalization, supported by data and AI, will equip banks to provide their clients with relevant financial advice and products at the right time. Banking is, therefore, becoming embedded within everyday apps and services to the point where users take care of financial matters in context, instead of having to switch to an isolated banking platform. 

Lastly, inclusive design will have its relevance: successful banks will realize the benefits of digital banking in the life of every person with interfaces anybody can use and a great deal of hybrid service provision.