In 1970, a branch served 9,340 people. By 2014, that number had decreased to 2,970—a 68% drop in 44 years.
“Yet there has been a nearly 300% growth in the number of branches since 1970, while U.S. population growth was half that,” said consultant Meredith Deen.
Deen, president of Financial Management Solutions, Inc., shared those sobering statistics on branch costs with attendees at BAI’s recent Retail Delivery Systems conference. But that wasn’t all of it.
Citing statistics from the 2015 FMSI Teller Line Study, Deen noted that although there has been a 45.3% decline in branch transaction volume since 1992, branch staff salary and benefits costs have risen 90.1%. Dean says this has produced a 133.3% increase in labor cost per transaction.
Fighting branch cost inflation
Three financial institution executives joined Deen to share how their institutions maximize branch staff to reduce labor costs. Here are their top five best practices.
1. Use transaction volume analysis data.
Martin Schrodt, executive vice-president and head of retail banking for FSGBank, says that his institution uses branch reporting data to analyze cost per transaction, customer branch visitation patterns, and the flow of customers in and out of branch for more accurate workforce scheduling.
Bank of the West’s Jodi Satkunam, branch organization planning manager, noted that her institution uses branch activity and transaction volume analysis to schedule staff in 15-minute increments. In addition, the bank uses data to analyze branch hours based on activity levels and market opportunities as well as to benchmark Bank of the West against other financial institutions.
2. Schedule idle time.
Even with the most rigorous scheduling tool, branch staff will have downtime. To maximize productivity during idle time, use a scheduling tool to assign secondary tasks such as making sales calls or taking required training, said Schrodt. Scheduling training during downtime has allowed FSGBank to largely eliminate the costs of paying staff to come in early or to stay late for non-customer facing activities.
3. Use part-time staff.
Like many executives, Karen Church, CEO of ELGA Credit Union, was faced with a dilemma: A challenging economic environment forced the credit union to reduce costs, but management didn’t want to lay off employees. Instead, the credit union allowed attrition to naturally reduce its workforce at the same time it began moving staff to part-time status.
“This was a shift in thinking,” recalled Church. “We realized it was okay to use part-time staff.”
FSGBank has increased its percentage of part time staff from 10% to 35%, said Schrodt. Bank of the West has also increased its number of part-timers as well as using “floaters” to move between branches.
4. Incent staff for efficiency.
When FSGBank implemented an incentive plan that rewarded staff for transactions processed over a minimum threshold, management worried that branch staff would rush customer service so they could perform more transactions. But the opposite occurred: Staff have gone out of their way to improve service so customers come back to see them, explained Schrodt.
5. Get bottom-up support.
While top-down support is critical to reducing branch workforce costs, all three executives stressed the need to gather feedback from branch staff and get buy-in.
“You need to have a dialog with staff in order to execute your strategy,” said Satkunam. “They need to know what success looks like.”
“You need everyone to understand how important workforce management is since it does impact efficiency ratios,” said Church, adding, “Be committed to it. You can’t put your toe in the water. Once you go down this road, everyone needs to be on board. Share the results with everyone in the branch.”