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Corporate Real Estate impact
The evolution of the retail bank branch
will present a range of impacts on
corporate real estate planning, costs,
operation and management. At the
front end, a greater degree of planning
will be required to identify optimum
branch type, location, and ultimately the
configuration of the entire network. More
detailed planning and understanding of
branch type and location, though, could
subsequently permit greater flexibility
and cost savings.
“Lounge” and “Digital Pod”-style
branches would no longer need the space
and cost considerations associated with
banks featuring safes, vaults, or strong
rooms. Being fully digital, or o¥ering
more limited services, the branches
require smaller floor plates, which not
only directly reduce cost but also present
less onerous space requirements, and
therefore more numerous leasing options.
However, the transformation to a fully
digital branch type could also incur higher
fit-out costs on di¥erent expenditure
items such as Information Technology (IT)
infrastructure and (cyber) security.
The timing of these changes and the
associated planning required will, of
course, vary across the region. This is
not only due to the variation in levels of
digital sophistication and take-up, but
also other fundamental and financial
factors such as lease expiries and asset
depreciation considerations. Lease break
costs, especially in countries with longer
lease lengths such as Australia, are
also likely to be prohibitive. As a result,
the move to di¥erent branch sizes and
formats is likely to be more evolutionary
than revolutionary. Although in more
developed countries, the evolution in
strategy is already underway.
Conclusions
The Asia Pacific region is economically and culturally diverse. For this reason
the future of retail banking is likely to take di¥erent paths of evolution. For
many emerging economies, the demographic forces of population growth
and urbanisation are driving growth in retail banking networks. However at
the same time, branch and ATM rationalisation are already underway in some
countries where a higher level digital sophistication is on o¥er.
It is in these more developed economies that we are starting to get a glimpse
of the opportunities and challenges ahead for retail banking. The drive for
greater cost savings, eciency and the disruptive forces of fintech are forcing
banks to be more analytical of their branch network. Ultimately this is leading
to fewer locations. At the same time it is also resulting in a greater array of
branch formats that embrace the eciency gains o¥ered by technology along
with the need to provide detailed advice to individuals making significant
financial decisions. Branches remain an integral part of the future network, but
it is clear that the role they play is changing.
From a regional perspective, while we expect all countries in Asia Pacific
to head in the same evolutionary direction, the penetration rates of digital
technology between countries vary. Some countries may therefore make
slower progress, while others may jump ahead and bypass intermediary steps.
The combination of innovation, evolution and disruption overlaid onto the
cultural and economic diversity of the region therefore makes the future of
retail banking far from passé.
DOMINIC BROWN
Head of Research
Australia & New Zealand
T: 61 0 431 947 161
dominic.brown@cushwake.comTHE ASIA PACIFIC REGION IS
ECONOMICALLY AND CULTURALLY
DIVERSE. FOR THIS REASON THE
FUTURE OF RETAIL BANKING IS
LIKELY TO TAKE DIFFERENT PATHS
OF EVOLUTION.
References
McKinsey&Company “Retail banking in Asia: actionable insights for new opportunities”
EY “Banking in Asia Pacific: Size matters and digital drives competition”
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