The bank branch has triumphed over all other alternative service networks, according to Yiannis Pehlivanidis, vice president of National Bank. Speaking at Thursday’s Third Economist Banking Forum, which focused on retail banking, Pehlivanidis added that banks have abandoned the position that e-banking can compete with branch banking. In Europe, he said, seven out of 10 transactions involving time deposits and almost half of housing loans were conducted at branch level. At the same time, one out of every two clients in Europe uses more than one way of doing their banking business, but only one in 10 avoids visits to a branch altogether. Thus, the branch has reasserted its importance because it was proven that clients are not ready to substitute a visit to a branch with Internet or phone banking, he said. «We can say now that e-banking has remained a visionary’s utopia. E-banking has been considered as a network apart from the traditional banking channels, without the necessary synergies with them that would maximize utility both for the bank and the client,» he added. Concerning the new bank branch and its necessary features, National’s vice president said that the new branch must provide the opportunity for physical contact for those transactions the client wants to conduct in such a way. At the same time, it provides alternatives, such as a room with a video screen for personal contact with specialized personnel at the bank’s headquarters, as well as places for automated transactions. «This combination of physical and electronic access within the branch allows banks to develop branches with a small number of personnel. The main criteria in designing and locating a branch is to minimize operational costs and maximize geographical dispersal. The latter feature appears to have become increasingly important, since six out of 10 Europeans choose a bank on the basis of its location, and this is by far their most important criterion,» Pehlivanidis said. Describing the Greek market, Pehlivanidis said that the newer bank branches have fewer than 10 employees, are more productive and form the main service provision network. «Physical interaction is necessary in order to sell certain bank products. However, the bank branch is changing in order to respond better to new needs. Gradually, branches will become smaller and will consist of three areas: an automated transactions zone, a cashier zone and a sales zone. Sales of loans, cards, deposit, investment and other products are made in the sales zone, a specially designed place that ensures discretion and comfort, so that clients can discuss their needs with the personnel.» Innovation is key Giorgos Taniskidis, CEO of Nova Bank, said that the banking sector is the most competitive one in the economy and backed his assertion by saying that, contrary to other retail sectors, for example, the banks’ clientele is uniquely aware of the cost of products and services offered. «We constantly battle each other and one of the weapons we have is innovation. For example, someone thought to take an ATM card, attach the VISA brand and transform the ATM card into a payment instrument,» he added. Concerning Nova’s strategy, Taniskidis said that «we try to eliminate factors that banks often take for granted,» such as long lines, «but also to create these factors that our sector has not offered yet. We tried to create a space that the clients feel is all theirs, as in a retail store… we want to simplify procedures, create a happier environment and, at the same time, provide standardized services at all points.» «It is very important to focus on innovation, but innovation as understood by the client, not us. There is always an asymmetry of knowledge, and an asymmetry of information…The client does not know the market to the extent we do, even we do not have a perfect knowledge of the market. Thus it is very important to think how each innovation will be perceived by the clients as such,» Taniskidis added. Reducing operational cost Marinos Yiannopoulos, general manager of Alpha Bank, described the effort being made to reduce the operational cost instead of the capital cost. He used the term «deconstruction» to describe the effort of financial services providers to specialize in a narrow range of the production and sale of bank products. «This phenomenon goes against the grain of what we used to perceive as traditional commercial banking here in Greece,» he says, adding that non-specialization inflates operational costs. If banks split this production process into small chunks they can achieve lower operational costs, Yiannopoulos added. Alpha’s general manager also expressed skepticism about the increased emphasis on technology. «We believe that technology… offers only a temporary advantage. Existing technologies are widely disseminated and, sooner or later, everyone uses them,» he says. What is crucial for banks in the long run is the total quality of services to clients and the trust that gradually develops in the bank-client relationship. This relationship is helped if banks tailor their products to customers’ needs and refrain from hidden expenses.