“Reports of my death have been greatly exaggerated”—The Bank Branch
Paraphrasing Mark Twain, the demise of brick-and-mortar branches has been over-reported. While it’s true that the number of bank branches is declining, branches still remain an important, albeit expensive, delivery channel.
Online and mobile banking will not replace branches, although technology is absolutely transforming the role that the branch plays in delivering products and services. Customers can even deposit checks at an ATM or on a mobile device. The vast majority of customers prefer to do their banking when and where it’s convenient for them, rather than conforming to branch hours.
However, for banks with a substantial investment in brick and mortar, the key is not necessarily to shutter branches, but to reconfigure them so they become less transaction-focused and more relationship-focused. Optimizing the branch network requires leveraging what the branch does best: Providing targeted financial advice, educating customers on financial products and services, and building customer relationships.
That’s not to say that some branches shouldn’t be closed. Those with diminishing traffic volumes or those made redundant due to a legacy “hub and spoke” channel strategy, or merger and acquisition activity, are indeed candidates for closure.
However, these scenarios probably describe only a small number of branches.
“Love the ones you're with”
Here’s what to do today with those branches that are vital to growth, expansion, and retention of customer relationships, recognizing that the role of branches tomorrow is more likely to be defined by customer behavior than by network optimization models.
Mahogany and marble—the mainstays of many branches—exude formality and were appropriate in the era of formal living and dining rooms. Take a lesson from the casual, open floor plan of the modern home and redesign branches to reflect the more relaxed approach of today’s consumer.
Since the branch has become less transactional, replace “teller row” with a single cash drawer or cash dispenser and several self-service kiosks. Customers are used to self-service in a variety of places now, ranging from grocery stores to airport kiosks, so the learning curve is minimal. Consider how eliminating teller row provides space for comfortable seating where customers can interact with branch staff.
Some banks are even closing their drive-through windows or building new branches without them. These banks wisely want customers who do visit the branch to get out of their cars and interact face-to-face with branch employees.
2. Sharpen your affluent customer strategy
The mass-affluent or high-net-worth customer is performing more routine transactions outside the branch. That’s a net positive, since delivery channels such as online and mobile are less expensive. However, it also means that your bank has no face-to-face contact with those customers.
The customers most likely to frequent branches are the mass-affluent and high-net-worth customers needing transactional service and financial guidance. The challenge is equipping and staffing branches to serve those customers and compelling these customer segments to engage with branch employees on complex topics such as investments, mortgage, retirement planning, and education saving.
Create a compelling reason for mass-affluent customers to visit your branches.
And once you have them there, provide the accurate, efficient, and exceptional service they demand. When customers walk in, you have one chance to wow them and make them glad that they made the effort.
Your employees are your torchbearers, particularly for the mass-affluent market. They have an opportunity to build relationships with customers and promote other bank delivery channels such as online and mobile. These employees need to understand customer needs as well as be able to eloquently explain why the bank’s products and services are better than competitive offerings.
Ultimately employees need to know their value so that in turn, they express that value to the customers they serve.
Embrace the mindset that the branch is a building and the employee is the channel. Human employees are what is capable of listening, responding, and tailoring services to the unique needs of customers.
3. Optimize all your channels
Banking today has more “versus” going on than an evening of boxing. The branch vs. mobile banking. The branch vs. ATMs. The branch vs. the call center. And so on.
Many banks view the branch as a separate delivery channel that competes with, rather than compliments, other channels. This is a huge mistake.
It’s not an us vs. them situation. Instead, the branch should work in conjunction with these other channels.
Install self-service kiosks and iPads in branches where employees can demonstrate mobile and online banking to customers. Instead of daily checklists designed to keep employees in the branch doing branch “things,” add activities that promote all the channels. Conduct daily live demonstrations for customers on the bank’s self-service tools like loan calculators and retirement and education planning.
Thus the branch becomes an education hub for customers to learn about the bank’s technology and delivery channels.
However, employees have to feel confident that educating customers on non-branch channels won’t put them out of a job. Instead, moving transactions to other channels frees them up to provide richer, deeper experiences for their customers and gives them a chance to expand their knowledge of the bank’s products and services and elevate their skill level. The employee becomes an indispensable knowledge base.
The branch is not dead. We still rely on currency and coin, and the cashless society is still a few years down the road. Banks still need branches and employees capable of serving, connecting with, and improving the financial health of customers.
You may no longer need a branch on every corner.
However, on the corners you do have them, you need to get branches right.
About the author
CCG Catalyst, a bank consulting firm, provides strategic direction and focused guidance for banks in North America. The firm assists in all areas of banking, including lending, finance, retail, operations, mergers & acquisition, technology, enterprise risk management, compliance, marketing, and business development.