# Is this the start of the race to redefine the banking operating model?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-02-01
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: The Rise of Digital Banking: HSBC's Branch Closures
Meta Description: Discover how HSBC's branch closures signal a shift towards digital banking, and how banks are adapting to meet customer needs in the post-pandemic world.
URL: https://financedigest.com/is-this-the-start-of-the-race-to-redefine-the-banking-operating-modelhtml

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_By **Sudeepto Mukherjee,** Senior Vice President, Financial Services, Publicis Sapient_

HSBC’s announcement this month to “close 82 Branches and revamp its network for the digital age” is the beginning of a race for banks to adjust the way they serve their customers and lay the foundations for a new banking model that’s reflective of the shift that the pandemic has created in both consumer behaviours as well as the underlying economic environment.

Bank closures are not new. Driven by the rise in usage of [digital channels](https://www.financedigest.com/gamers-spend-twice-as-long-viewing-intrinsic-in-game-ads-compared-to-other-digital-channels-reveals-new-research-from-lumen-and-anzu.html "Gamers Spend Twice As Long Viewing Intrinsic In-Game Ads Compared To Other Digital Channels, Reveals New Research From Lumen and Anzu") and strong profit pressures, there were a staggering 3,303 bank branch closures in the UK between January 2015 and August 2019 — equivalent to 34% of the overall branch network in country, according to data from Which? However, this has usually been followed by strong criticism from both [customers who have seen their services](https://www.financedigest.com/how-can-financial-firms-improve-customer-service-after-the-pandemic.html "How Can Financial Firms Improve Customer Service after the Pandemic?") downgraded (or disappear) and employee unions who have seen job losses as a result of this action. In this backdrop, HSBC’s announcement is interesting and different in 2 important ways – it talks about HSBC’s intention to remodel their branch network to balance the needs between providing a full service for [products like cash services for consumers while also investing in creating innovative](https://www.financedigest.com/probiotic-soda-market-product-innovation-by-live-soda-and-lifeway-foods-to-create-exciting-growth-opportunities-reports-by-fact-mr.html "Probiotic Soda Market: Product Innovation by LIVE Soda and Lifeway Foods to Create Exciting Growth Opportunities, reports by Fact.MR") ways to provide self-service offerings in other areas like payments. It also talks about avoiding any redundancies by redeploying staff.

COVID has created this new opportunity for banks, to fundamentally re-imagine their [operating model to meet customer](https://www.financedigest.com/theres-a-fine-line-between-relinquishing-control-and-accountability-financial-institutions-must-balance-both-to-successfully-cloudify-operations-and-meet-customer-expectations.html "There’s a fine line between relinquishing control and accountability. Financial institutions must balance both to successfully cloudify operations and meet customer expectations") needs in a way that’s fit for purpose for this digital world and introduce new innovative services via new technologies/partners while reducing their cost to serve. We already see examples of this with Goldman Sachs diversifying its portfolio to offer services in retail via Marcus and transaction banking via GS Transaction Banking while HSBC launching HSBC Kinetic — a proposition leveraging technology to meet the unique [needs of small businesses](https://www.financedigest.com/do-small-businesses-need-branding.html "Do small businesses need branding?").

This is being made possible by two [key factors](https://www.financedigest.com/automotive-soft-trim-interior-materials-market-size-key-players-growth-factors-regions-and-applications-industry-forecast-by-2026.html "Automotive Soft Trim Interior Materials Market Size, Key Players, Growth Factors, Regions and Applications, Industry Forecast by 2026") that’s creating a once in a generation opportunity for banks. Firstly, forced by government lockdown rules, consumers have [embraced digital](https://www.financedigest.com/why-the-time-is-right-for-finance-to-embrace-digital-change.html "Why the time is right for finance to embrace digital change") channels where appropriate like never before. Similarly, bank employees are also a lot more equipped to serve customers from the confines of their homes as [banks moved](https://www.financedigest.com/u-s-to-move-3-5-billion-in-afghan-central-bank-assets-to-swiss-based-trust.html "U.S. to move .5 billion in Afghan central bank assets to Swiss-based trust") aggressively in adjusting to the pandemic by sending large percentages of their workforces home while continuing to serve customers. This change in culture within [banks to look at digital](https://www.financedigest.com/can-ai-supercharge-your-banks-digital-transformation-strategy.html "Can AI supercharge your bank’s digital transformation strategy?") as the primary channel for serving customers should not be underestimated. Institution Inertia is one of the biggest obstacles that leaders face when trying to [drive change](https://www.financedigest.com/the-meta-trends-driving-positive-change-for-financial-services.html "The meta trends driving positive change for Financial Services") within an organisation. COVID has just made that a lot easier. Secondly the [availability of new technology](https://www.financedigest.com/advertys-multi-patented-and-industry-leading-in-game-viewability-technology-brainimpression-now-available-within-oracle-moat.html "Adverty’s Multi-patented and Industry-leading In-game Viewability Technology BrainImpression™ Now Available Within Oracle Moat") and tools to enable this transition is also facilitating this change. We not only see the big tech providers like Microsoft, Google, and Sales Force creating broad solutions focused on the Financial [Services market](https://www.financedigest.com/condition-monitoring-service-market-buoyant-with-flourishing-power-generation-industry-adoption-exhibits-a-notable-decline-amid-covid-19-pandemic-fmi.html "Condition Monitoring Service Market Buoyant with Flourishing Power Generation Industry; Adoption Exhibits a Notable Decline Amid COVID-19 Pandemic: FMI") but also, niche Fintechs like Form3, ForgeRock and Mambu/ThoughtMachine offering solutions in specialised areas like Payments, Security and Core Banking that are easier to develop and integrate into a bank’s digital ecosystem.

The next few years will be a pivotal moment for banks to see who can take advantage of this unique platform to build a future proof model for banking which reduces its reliance on expensive branches while continuing to deliver superior and [innovative services](https://www.financedigest.com/accelerating-financial-services-innovation-with-the-promise-of-data-mesh.html "Accelerating financial services innovation with the promise of data mesh ") to customers. It requires a bold vision, a focus on [maintaining the momentum](https://www.financedigest.com/fintechs-should-accelerate-into-edge-computing-to-maintain-momentum.html "Fintechs should accelerate into edge computing to maintain momentum") in changing internal culture/behaviour, a strong partnership with the leading digital product/service providers as well as a relentless focus on understanding and meeting changing customer needs. The [leaders will be the ones who can leverage technology for not only automating low value transaction services but also enable the bank’s](https://www.financedigest.com/digital-trends-for-banking-leaders-looking-to-compete-in-2022.html "Digital trends for banking leaders looking to compete in 2022") employees to be more insightful and productive by giving them the right tools and insights about the customers they serve.

We saw the 2008 financial crisis create new [leaders](https://www.financedigest.com/now-is-the-time-for-finance-leaders-to-take-on-a-more-strategic-and-valuable-role.html "Now is the time for finance leaders to take on a more strategic and valuable role") and laggards based on the balance sheets/liability that banks held and their ability to deal with that effectively. I [predict that the post-pandemic era will similarly produce new winners and a hopefully new service model that should be exciting for both consumers and the industry](https://www.financedigest.com/heightened-interest-in-global-cuisines-to-brighten-the-expansion-prospects-of-herbs-and-spices-manufacturers-industry-predicted-to-rise-at-3-6-cagr-future-market-insights-inc.html "Heightened Interest in Global Cuisines to Brighten the Expansion Prospects of Herbs and Spices Manufacturers: Industry Predicted to Rise at 3.6% CAGR | Future Market Insights Inc. ")!


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