Within the survey’s context, FIs have two overlapping options: 1) Diligently manage the operating costs of face-to-face interactions and 2) subsidize the cost of face-to-face interactions with sales that digital-only competitors won’t offer or can’t offer effectively.

Here are a couple of ways we think these actions could play out:

• FIs may close or modify branches and adapt the roles of branch staff to better reflect customer interactions with the highest return. They may also invest in digital banking features that reduce or eliminate the need for a physical branch for some face-to-face services and encourage the digitization of front-office and administrative processes that are paper-based in the branch. FIs may particularly benefit from how the pandemic normalized video conferencing for face-to-face interactions and made it an accepted alternative to in-person meetings.
  
  
• FIs can use face-to-face channels to support fee-generating businesses, like financial advice, and expedite the sale and closing processes for highly profitable products that contribute to net interest margin. Using face-to-face channels to retain customers for their deposits alone may not be worth the expense of servicing those customers.
  
  

A face-to-face strategy that combines cost efficiency and maximizing sales of the most profitable products and services is crucial when traditional banks must compete with digital-only competitors for customers. They must maintain digital self-service that is robust enough to handle a wide range of customer needs when face-to-face interactions aren’t warranted or practical. (That includes, for example, 24/7 customer service; the survey suggests that many consumers value it).

Bankers may feel stuck between a rock and a hard place. Does doing everything their competitors do make FIs more competitive? Not necessarily. It’s easy to mistake the ability to do something for its business value and make or stick to a decision that no longer makes sense.

FIs should keep in mind the following when they consider their strategy for face-to-face customer interactions:

• Face-to-face interactions differentiate traditional FIs when they preserve customer trust, meet customer service expectations, and are delivered at a reasonable cost.
  
  
• The sale of high-value products and services should be part of face-to-face services while lower-value interactions that justify little overhead are digitized.
  
  
• Competing with digital-only banks should be about making disciplined choices about where in-person service differentiates the FI’s value to customers.