Banks: stop thinking about branches as a place to transact

By William Weidman | 14 November 2016

For decades, the branch has been built to enable customers to transact with the bank and manage accounts. While the branch was always a driver of sales, service has traditionally been the primary focus. In all likelihood, the strong majority of your bank’s network is still oriented in this way. This model, though, is rapidly evolving, as customers are fundamentally changing how they interact with the branch. Banks must make substantial course corrections to their branch networks if they are to survive and thrive.

In the mid-1990s, the average person visited a branch 2.2 times per month. 10 years later, that figure was only 0.26 times per month, and it only continues to decrease. However, according to a recent study, more than 60 per cent of millennials still find value in bank branches. Many people still prefer to have an in-person conversation about more complex financial products and services, meaning that banks who disregard their branch footprints could miss valuable growth opportunities entirely.

Today, it is critical that the branch seamlessly integrates with other channels to both meet the needs of customers who value services and drive new sales. Whether that means offering non-traditional ancillary services or redesigning branches to facilitate sales conversations, the organisations that embrace a redefinition of their branch network will quickly rise to the top.

Redefining the branch: new layouts

Banks can make their branches more adaptable to current consumer needs by redesigning them to encourage conversations between customers and bankers. Many banks have been experimenting with open floorplan designs, concierge services, and more modern exteriors to make the branch inviting and conducive to seamless customer interaction.

Banks should also consider the synergies between open branch layouts and new staffing models. Some banks are moving towards staffing “universal bankers” who can perform nearly all branch tasks, from depositing a cheque to helping customers open or manage investment accounts. While this approach has potential for success, banks need to closely monitor branch performance to ensure that generalist bankers can meet the customer’s needs with more complex products.

For example, higher income areas or regions with more small businesses may require product specialists. Carefully testing new staffing models in a variety of locations will allow banks to optimise staffing mixes branch by branch to maximise total program returns.

Other banks are designing branches completely outside of the traditional model – some can hardly be recognised as banks. The most famous example is Capital One’s 360 Café format, which has the look and feel of a cozy coffee shop, but has knowledgeable associates on hand who can open accounts and answer questions for customers. Innovations such as these signify that banks are willing to take dramatic steps to connect with customers in new and exciting ways in the hopes of growing lifetime value.

Redefining the branch: new technology

Self-service options are becoming fairly ubiquitous in the consumer world, even in industries like restaurants and hotels that are typically known for their hospitality. Indeed, in a recent survey, 40 per cent of customers said they preferred self-service to human contact for future interactions with companies. This trend dovetails nicely with banks’ desire to take some of the cost out of their branches. Many are introducing technologies to automate the more routine tasks of the branch, using cash counters, information kiosks, and of course, ATMs.

It is critical for banks to introduce technology that customers will truly value and utilise, not just technology that seems sleek and trendy. For instance, some banks have introduced offices with video conferencing technology to allow customers to speak with remotely-located product experts. However, some customers could be disappointed when they come to a branch to speak to someone and are instead presented with a TV remote – from the customer’s perspective, this interaction could seemingly have happened from the comfort of their home.

Given that these technologies require substantial upfront investments with far-reaching consequences, banks must introduce them on a small scale first and perform extensive analysis to correctly target them to the most receptive branches.

Further, it will be critical for banks to continue innovating and enhancing their digital capabilities to seamlessly connect and integrate with the branch. Fintech start-ups such as Simple and Betterment can offer excellent user experiences, but they lack the physical network and in-person support a bank can offer. Banks should look to seamlessly integrate digital and physical channels to maximise this advantage. For example, customers should be able to see targeted ads in a mobile app for a specific banking product, research that product, click a link to connect with the call centre, and from the app schedule an appointment at the branch.

Redefining the branch: look beyond your four walls

A continuing theme of the “branch of the future” vision is connecting with the customer in nontraditional ways to cement the value of the bank in consumers’ lives. One tactic that innovative banks have begun to explore is offering customised promotions and offers for partner vendors. Using “beacons”, or Bluetooth-enabled devices that can communicate with smartphones, banks are now able to detect when customers are near a branch or ATM and send them targeted messages.

When this technology was initially introduced, executives’ gut reactions may have been to use it to alert customers when they are near a branch or ATM. Some banks, though, are looking to use beacons more creatively to create stronger bonds between the brand and the customer. Citibank, for example, is using them to send nearby customers localised promotions and event information. This reflects the trend towards banks becoming intertwined with non-banking aspects of customers’ lives in hopes of building deeper relationships. Now, rather than the bank simply being a place where people keep money, it can be a company that provides localised, unique experiences.

As banks continue to innovate within their branch network, they must get out of a traditional transactional mindset and focus on developing high-value customer relationships.

By Will Weidman, Senior Vice President, Applied Predictive Technologies

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