Some years ago, NatWest bank ran a TV ad campaign depicting an elderly lady struggling through a snowy high street to her bank, only to find that every branch had been turned into a "trendy wine bar".
The message was that no amount of mobile banking could replace the security and convenience of popping into your local branch and chatting to a familiar bank manager. However, this may soon be a thing of the past, according to HSBC's chief executive Stuart Gulliver, who earlier this year predicted the end of the traditional high street branch.
A study by Nottingham University, which found that 40 per cent of all bank and building society branches have closed since 1989, appears to back up Gulliver's forecast.
If the majority of customers prefer the convenience and facility of digital banking, then keeping costly bank branches open is no longer viable. The risk for banks, however, is that they move to a predominantly online or mobile model without addressing fundamental weaknesses in their IT infrastructure.
Cumbersome infrastructure holds back banking apps
With the success of mobile banking, you'd expect the leaders of the big banks to be congratulating themselves on the prowess of their digital strategies. True, there have been several digital initiatives by the established banks to push more digital services to users, such as HSBC's attempt to encourage mobile banking by rolling-out of free Wi-Fi in 650 branches across the UK.
Behind the scenes, however, many of them are thinking about how the growth in the popularity of mobile banking will necessitate urgent upgrades to their IT infrastructure, applications and related management systems.
We're clearly a nation in love with managing money through our mobiles. Recent figures from the British Bankers Association (BBA) show that, each day, mobile and internet transactions total a billion pounds and an average of 15,000 banking apps are downloaded.
The problem is that delivering a first-class mobile service able to deal with millions of transactions a day relies on the seamless interaction of multiple different applications and IT systems. Due to a succession of mergers and acquisitions, many big banks possess outdated IT infrastructures that are simply not able to cope.
Furthermore, they are unsuited to the next-generation technologies, such as the Paym and Pingit mobile payment platforms that are now available, which is in contrast to the new, digital native start-ups like Metro or Atom that are not lumbered with outdated IT systems.
Another pressure on the banks is the increasingly high standards of performance and availability that consumers demand from their mobile apps.
AppDynamics recently conducted research into consumer attitudes towards app performance and found that 30 per cent of UK adults would change banks if a mobile app wasn't up to scratch. Unacceptable app performance is surprisingly common, too: more than four out of five people have deleted or uninstalled an app because they were unhappy with how well it worked.
Given the huge and growing amount of competition in the retail banking sector, mobile banking apps must meet the highest standards of performance and reliability, whilst also providing a far greater range of services than traditional banking.
To achieve this, banks must ensure customers have 24/7 access to key services, whether it be through proactively predicting when their applications will experience surges in traffic, or spotting and fixing glitches as soon as they occur.
Providing perfectly-performing mobile apps that can deal with millions of transactions a day often relies on complex, distributed applications working seamlessly. It's made harder still by the added complexity that comes from managing the mix of the requisite software, hardware, cloud services, app developers, third party web services and so forth.
All this, piled on top of the creaking IT systems that many traditional banks have accumulated, makes for a potentially risky situation.
Building an app strategy
To remain competitive in the new era of mobile-centred money, banks must ensure that they undergo the necessary business and digital transformations required to adapt to the new way in which customers expect to manage their finances. Burying one's head in the sand is not an option. As the 2014 KPMG report, Reinvention of UK Banking, suggests, banks need to innovate urgently or risk falling behind their competitors.
To do this many banks are becoming, out of necessity, software-defined businesses (SDBs), either wholly or via a division or subsidiary. These SDBs are enterprises or organisations whose fundamental value proposition is defined, enabled or delivered through software. Notable examples include companies such as Nike, Expedia and the next generation of banks typified by Atom, the UK's first all-digital bank which launches in 2015.
These businesses typically have highly complex IT architectures, with all the potential risks outlined above. To counter this complexity, SDBs employ sophisticated analytics and monitoring to help mitigate risks and give them certainty about their software and operations in real-time.
This "application intelligence" should not only be able to identify availability and performance problems, but also pinpoint which users, devices or locations have been affected, and highlight the cause of errors right down to the code level.
So, if a winning app strategy does indeed lead to the demise of the bricks-and-mortar bank, while there will always be those who will lament the disappearance of the traditional high street branch, they can at least console themselves with something nice and chilled from that trendy wine bar around the corner.
Tom Levey is the Chief Technologist at AppDynamics