Karen Epper Hoffman Jan 29, 2018

Branches hold key to deposit growth, customer service

So, then: Was 2017 a triumph or a trash fire? In at least one sector, it was a literal fire sale—as the precipitous (if long-predicted) demise of the retail store made headlines, even as e-commerce titans such as Amazon made a mint.

To wit: Brick-and-mortar was hit with mortar fire.

It got so bad that longtime powerhouses such as Macy’s, J.C. Penney, Kmart, Gap, GameStop and Staples closed more than 5,000 stores last year. And even as consumers increasingly head online for their everyday needs, they now conduct more banking there, too.

But despite U.S. bank branches shrinking in number by about 8 percent over the last decade—from roughly 97,000 to about 90,000—those physical locations still boast some staying power. What else would explain JPMorgan Chase’s recent decision to build up to 400 new branches over the next five years?

One answer: Deposit growth. Chase says that while customers now perform four in five transactions online, 75 percent of its deposit growth comes from people who visit branches. In fact, 78 percent of new accounts overall are still opened at branches, according to a study from J.D. Power.

In an increasingly competitive market where the role of the branch is continually morphing, how can retail banks up their customer service game—and in the process, stake that coveted claim for deposit growth? Here are five suggestions:

Appeal to the retail banking ‘omnivore’

Branches still play a crucial role in retail delivery, even in this mad-for-mobile world, because customers demand a spectrum of choices to fit diverse needs.

While nearly half of millennials (49 percent) and more than three out of 10 Gen Xers use mobile banking, a full 71 percent of all bank customers (including twenty- to thirtysomethings) visited a branch an average of 14 times in the past year, according to the J.D. Power 2017 U.S. Retail Banking Satisfaction Study.

In fact, retail bank satisfaction ranges much higher among customers who’ve visited a branch in the past 12 months—with millennials most satisfied when they can combine branch and digital channels. An example: Online or by phone, Bank of America customers can pre-set their usual ATM withdrawal amount or schedule an in-person appointment at one of the bank’s 4700 U.S. financial centers, says Charles Liu, the bank’s head of financial center and ATM strategy.

Integrate tech with branch personnel

Arguably, branch-bound customers want to engage with a human. But given the advantages of high-tech, it only makes sense to incorporate more digital options with education.

“We’re doing a lot of work around combining high-tech and high-touch,” Liu says, pointing out that BoA also uses in-branch video conferencing to connect customers with specialists. The major bank took a page from the Apple Genius Bar playbook by staffing branches with more than 3,000 digital ambassadors. They teach and train customers to get more from their mobile and online experiences.

“We know it’s not for every customer,” Liu adds, “but it’s another way to offer more services in our branches.”

Provide more specialist access

Customers typically use digital channels for basic banking: to transfer funds or remotely deposit checks. For branches, that adds up to a growing focus on walking customers through more complex financial products (such as mortgages), to offer advice—or open those all-important new accounts.

Banks and clients “have much more valuable conversations in the branch,” says Bob Neuhaus, J.SD. Power’s senior director for the banking and credit card practice. “But the challenge is doing these things at scale.”

Thus in 2018, banks should focus more frontline employee hiring and training to meet growing customer needs for specialized financial and tech support—and not just to field basic traditional teller transactions. Close to half the questions bank call centers get are tech-related, according Al Rosenbaum, executive vice president of customer success at SilverCloud, which works with financial institutions on branch strategy.

Banks could also deepen customer relationships by ratcheting up the “trusted advisor” role. Providing better in-person insight especially pertains to consumers and small businesses concerned about the new federal tax laws and frequent data breaches, Neuhaus suggests.

Use analytics and segmentation better

Customers who like visiting a branch for the “personal” touch could appreciate the experience even more if their bank (and its staff) knew and understood them on a personal level. In this instance especially, the opening of a new account offers a prime opportunity to establish this connection and exert a sublime influence on growing deposits.

Financial customer service reps have long pursued a holy grail of analyzing and integrating customer and transaction data. This way, branch representatives know what that customer has done in the recent past—and what might interest them in the future. And while many banks utilize big data to pitch new products and offer better digital services, branch-based customers and prospects can also benefit from a more customized, granular focus, according to Neuhaus.

“Banks could offer a much higher level of personalization based on the data the bank already has in-house or can purchase from a third party,” he adds. “But it’s still very much a work in progress.”

Needed feedback

Even as the longest standing retail banking channel, branches must change, experts say. And their changing nature in a digital age demands that bankers stay attuned to what customers expect. That’s no easy feat, given that consumers want to have their mobile banking/branch location cake and eat it, too.

Liu notes that Bank of America, like many other retail banks, reaches out to customers with online surveys moments after they conduct business in a branch. “We definitely measure our client satisfaction here,” he says. “And we pay attention. There’s obviously room for improvement, but [our results] have increased tremendously.”

Yet what will entice consumers to keep answering these surveys, especially when it takes up increasingly scarce time, remains to be seen. Meanwhile, expect the big story of 2018 to be how branch centricity increases deposits and builds new business: the mortar, if you will, that sticks the bricks together.

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Karen Epper Hoffman is a contributor to BAI Banking Strategies and has written about banking and technology issues for nearly a quarter century. 

If you enjoyed this article, check out: Podcast: Branches, branch tech and the future of banking in 2018 and Podcast: How to create winning employee engagement.


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