Not all that long ago—and perhaps it’s still the case in some corners—bank branches were targeted by cost cutters, who viewed physical space as hopelessly outdated in the digital world. But a problem emerged: “You can only cut so much cost before you basically lose your customers,” says Kerim Tumay, vice president of marketing for Kiran Analytics. “Banks have become more efficient, yet they realize the face-to-face interactions are critically important for them to retain their customers or expand their relationships.”
That’s right: The world might have gone digital but the bank branch, a staple of Main Street for decades, endures, albeit not in the same form. Check deposits might be electronic, but in-person customer service still counts when it comes to more complex topics. “There are still things you need to do face to face with a banker,” Tumay says. “That is actually key with creating a sticky relationship with your customer.”
That’s the main theme of the BAI Featured Innovation, “Branch Transformation Rolls On,” a study sponsored by Kiran Analytics, a Verint Company. The results of the comprehensive study—which includes responses from large banks, regionals and smaller players with less than 100 branches and credit unions—found seven key takeaways essential for relevancy in the current banking environment:
- Improving in-branch customer service remains the top priority for banks of all sizes. Bluntly, “The branch model that we relied on for the last 30 years needed to be tweaked to be more effective going forward,” says Stacy Regnier, vice president for business transformation at Commerce Bank, which has about 170 branches.
To succeed today, a bank needs to optimize and engage its branch workforce to serve as brand builders. Central Pacific Bank, which has 35 branches throughout the Hawaiian Islands, took this to heart by training its branch employees on digital banking solutions. Employees became digital ambassadors for technologies that include online and mobile banking, and bill pay.
- The in-person customer experience still needs work. Despite its priority position, transformation is easier said than done. Bankers reported that only 16 percent of their branch associates (18 percent at large banks and 11 percent at smaller ones) qualified as “true and strong brand ambassadors.”
Yikes. “These surprisingly low numbers should be a wake-up call for an industry whose branch networks are differentiated by service and customer experience,” notes Kiran Analytics CEO Jim DeLapa.
- Surveys assess customer experience and workforce engagement. When it comes to measuring customer experience, nearly 70 percent of financial services organizations use surveys, according to the study. Coming in next was mystery shopping, followed by focus groups.
Central Pacific conducts regular email and phone surveys of customers. With a goal of capturing service at each branch, the financial institution asks customers whether they are satisfied with their branch services and would recommend the bank to friends and family.
Surveys also represent the most popular method to assess workforce engagement. Commerce Bank also does an annual employee effectiveness survey. Performance scorecards are the second popular method: 65 percent of larger banks use them compared to 31 percent of smaller banks.
- Banks of all sizes are turning to the universal banker model. As customers change how they use branches, it can be tricky to meet service levels and manage non-customer facing tasks. Universal bankers answer workforce alignment challenges even as they meet market opportunities. Forty percent of respondents report success in deploying the universal banker model at some or all branches. One quarter reported they were in the early investigation stage while 15 percent have deployed universal bankers in some or all branches but encountered some issues. A mere 5 percent have run a pilot and are ready to implement.
Respondents say consumers like the model because they can have the same banker help with transactions, complex service issues and financial questions—while employees favor it because it provides a career path. At Regions Bank, for example, there are five tiers in the position: Tier 1 is a transaction-heavy banker while tier 5 is more specialty/interaction-centric, the company reports.
- Forecasting tools could be more widespread. Some 40 percent of bankers don’t use forecasting tools to anticipate customer demand and thus align resources with work content. Larger banks reported higher usage than their smaller peers. “Forecasting customer demand is too risky to leave to gut instinct,” says Commerce’s Regnier.
Regions, meanwhile, taps predictive analytics and advanced scheduling to optimize its workforce. That’s wise, given it helps to place the “right bankers with the right training in the right branches to handle higher-value transactions,” says Regions executive vice president Shawn Bradley.
- Banks are ramping up investments in branch technology. As much as in-person interactions remain essential, branch technology continues to play an essential role in making things smooth and quick. Teller cash recyclers topped the list, followed by workforce management and digital adoption training. Not surprisingly, the survey found that larger players led the way with technology adoptions, though teller cash recyclers topped the list for both.
How’s this for innovation? At Regions, the teller line—part of the banking experience for generations, to the chagrin of many customers—has been replaced by workstations or pods where side by-side transactions take place. Branch bankers also help customers migrate to digital channels, demonstrating in real time just how well the physical and digital worlds can complement each other.
- Locations and formats must align with market opportunity. Finally, those at large and small banks agree that no one model works across the board. Adding new locations or redesigning existing ones presents an ideal time to design and test smaller, more efficient branches with stronger branding and use of technology. Regions has a “menu of formats” that provide flexibility to match the market’s needs, Bradley reports in the study.
Dawn Wotapka is a communicator who lives for a great story, no matter how it is told. An Army brat who graduated from N.C. State University and NYU, Dawn covered the housing crash and public companies for The Wall Street Journal. She enjoys running, overnight oats and business books.