I’ve read many articles about the death of bank branches since I started in the industry more than 30 years ago. Since then, my position hasn’t wavered much: Bank branches aren’t going away—but they must change. Why? Three reasons:
- For most banks, branch networks are the first or second largest expense category.
- Most banks have seen human-based transactions, and the accompanying branch traffic, drop as consumers adopt online and mobile channels for routine transactions.
- Yet most banks still capture the vast majority of all sales activity in the branch.
In my experience, there is no simple answer to the question, “We know we need to change but what should we do about it at our bank?” The action plan depends on your customer base, strategy and condition of your branches.
Recent articles describe the various approaches banks take to shrink, automate or even transform the branch into a coffee shop. A 2015 FMSI study indicated that the average number of teller transactions per branch had fallen 45% since 1992. But teller transactions don’t represent the totality of why customers visit branches: Many are now done at the ATM at the same building.
Yes, total traffic is down—and banks have shrunk staffs accordingly. A Price Waterhouse Coopers study reported that average staffing levels at branches had dropped from an average of 13 to just 6. But there’s a lower limit to staff size if you’re going to continue serving your customers.
So how can banks balance the demands of customer service and still achieve a higher return on investment? As priorities go, banks must link their various digital channels to branches rather than undertake major renovations.
True: Some branches need remodeling due to age and condition, or to improve efficiency. Yet no bank can afford the capital expense of remodeling most or all of their branches−nor would extensive investment in physical facilities necessarily change the customer experience. Most banks, however, could make the required investments to alter how their customers interact with their bankers and branch.
The evolution of new alternative electronic and digital channels shouldn’t drive the demise of the branch but instead itstransformation. Just a generation ago, customers communicated with banks through traditional channels—in person, by phone and by mail, the same ways they connected with each other. Yet today, digital-savvy consumers communicate in many new ways and should be able to do the same with their bankers.
That said, integrating new channels represents much more than simply adding free Wi-Fi or public PCs so customers can perform online banking at the branch. While that may help demonstrate your service capabilities, it doesn’t get much use. Think about it: Why would you visit the branch for online banking when you can do it from your phone, tablet or computer?
How then should banks re-design the branch for the 21st century? By focusing on functionality and integrating digital technology that improves the customer experience.
Here are three strategies and scenarios to consider:
- Teller wait alerts. John Doe has to deposit a $15,000 check he received for selling his vintage 1956 Ford pickup. John works downtown at a small accounting firm and it’s the busy tax season. He can’t stay away from the office long, and the check is too big to deposit via mobile app. But that’s okay: John pulls up his bank app and after a few clicks, it tells him which branch has the shortest teller wait. If all the waits are too long, John can set up a text alert to notify him when wait times reach less than five minutes. Later, John gets a text that the branch just down the block has a short queue. He heads over and, based on John’s cell phone location indicator, the greeter gets a notice on her tablet that John just entered the branch. Later that day, John receives an electronic receipt and an offer for a special rate CD on the money he just deposited.
- On-line appointment setting. George and Martha Washington both worked as school teachers. Over the years they opened accounts at various banks. They also have multiple credit cards, investment accounts and retirement funds—all at different places. After online research, George and Martha decide to consolidate their accounts at one bank. Online, they set an appointment with a personal banker for a Saturday. Bob Banker gets the request and aligns the right business partners to join the session. Because George and Martha want to move accounts with decent balances, Bob and his team can offer a more comprehensive relationship package, set up online banking and introduce the bank’s investment management tools. Lastly, they set up a more complete financial review, an appointment they later reschedule via texts. In less than 90 minutes, George and Martha are on their way to simpler financial life.
- Pre-order services on-line and fulfill in the branch. Billy Baker runs the local artisan bakery. His staff is small, so breaking away for a bank run can pose a problem, especially if there’s a wait. Like many small retailers, Billy has a high demand for coins and small currency. At 9:45 one morning, Billy notices he’s running low—so he texts his banker with his order. About 30 minutes later, he gets a text back telling him the order is ready. Billy walks down the street and meets with his banker, who unlocks the small safe under his desk to retrieve Billy’s order. After a quick signature, Billy heads on his way.
Are we far from that kind of future experience? These capabilities exist today but haven’t been fully integrated into a consistent set of customer experiences. The reason: All too often, channels lack the proper coordination.
I live near the Canadian border. When I travel to Canada, we check the border crossing wait time on our computer or phone. If U.S. Customs can do that, why can’t banks post wait time for tellers, ATMs, or even platform staff?
There are so many things you can do to transform your branches—but how many of them can you afford? The evolution of bank branches doesn’t have to be exclusively about a new look and feel that, per branch, could cost hundreds of thousands or even several million dollars.
Integrating technological solutions to improve customer experience and can be rolled out network-wide with cost-effective, impactful results. When you integrate digital channels, you give customers better information to control their interactions with branch staff—and tackle the challenges of change head on.
Mr. Voorhees is an advisor at Austin, Tex.-based Peak Performance Consulting Group. He can be reached at email@example.com.