| Criteria
for Renewal
By Steve Klinkerman
Branch renewal should be a reflection
of a larger, long-term vision that ultimately revolves
around the customer.
Now that Web fever has died down, the
financial services industry is placing renewed attention
on branches, which have seen their status elevated from
extinction-bound transaction centers to the cornerstone
of relationship banking. Whether this revival proves transformational,
or just another terrifically expensive fad, largely depends
on whether the customer can be kept in sight.
Underscoring the fact that this obvious
priority is not being met, IDC Meridien Research Inc.
estimates that one of every five customers switched banks
last year, with 45% of defectors complaining about poor
service and another 20% citing perceived indifference
by the provider. In that light, the return to the branch
marks a return to all of the customer-related challenges
that faced the industry before it got so distracted by
the Internet, such as product-centricity, one-size-fits-all
strategies, and a transaction orientation that shortchanges
service and consultative sales. But will the larger issues
be bypassed in pursuit of a quick fix?
In their rush to strengthen customer
connections, there's a risk that providers will commit
some of the same errors with their branch investments
that they made with their Internet ventures, such as overestimating
the potential for customer acquisition, taking an overly
narrow approach that underplays other channels, and building
homogenous capacity that goes searching for an audience.
That is why the larger customer view must start with an
acknowledgement that the branch is but one part of a multi-dimensional
interaction that includes the call center, automated teller
machines and the Internet.
Orchestrating these touch-points will
require an integrated customer information system that
operates in real time, a level of functionality that remains
elusive for many institutions. Even when a platform does
make the grade, a provider merely can call itself transactionally
integrated; the all-important relationship factor still
largely hinges on face-to-face interactions inside the
branch.
The need to make the most of every encounter
is underscored by surveys from Synergistics Research Corp.
showing that the frequency of lobby visits per customer
has fallen sharply in recent years. Clearly, outlets must
evolve in such a way that high-value activities such as
service and consultative sales take center stage, which
is why continued effort will be needed to upgrade the
knowledge and deportment of staff. And standing behind
the customer service representative must be an institution
that knows how to play to its strengths and target the
customers who will be most receptive to its market positioning.
The interrelatedness of these requirements
suggests there are a lot of ways to fall short, despite
the deployment of substantial resources to the branch
environment. And it raises questions about the potential
effectiveness of expansion campaigns predicated on the
opening of significant numbers of branches as a means
to penetrate new markets and boost revenues, especially
given the reputation of branches as being the single most
expensive method for customer interaction.
The baseline for branch investments
is a unifying vision of the institution's overall approach
to the customer, and the dot-com lessons about the need
for disciplined targeted marketing and rigorous expense
control should be taken to heart. Anything less will disappoint.
Mr.
Klinkerman is editor-in-chief of Banking
Strategies.
Copyright © 2003 by Banking
Strategies, published by BAI.
back
to top |
