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, eŸciency 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 eŸciency 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.com


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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