Transitioning to the branch of tomorrow

Conventional wisdom calls for a shift from transactions to advice, but how do banks and credit unions get from here to there?

Among the enduring questions in banking, perhaps none is asked more frequently nor elicits more varied responses than “What does the future hold for the branch?” This query has understandably picked up momentum since the pandemic, but its persistence as a front-burner issue goes back to the 2008 financial crisis.

The answer we tend to hear most is that the branch of tomorrow will function primarily as an advice center for customers. The thinking is that processing deposits and other low-level transactions will be usurped by the mobile and online channels, and that people taking all the time and trouble (not to mention the price of gasoline) to get to a physical location will do so primarily for value-added services.

A recent BAI Banking Outlook survey supports this trend. Our research found that bank customers on average expect to do roughly 60% of their banking via digital by 2024.

If this is indeed what’s in store for the branch, how do banks and credit unions get from here to there? We explore this question in this month’s issue of the BAI Executive Report.

In our lead article, BAI contributing writer Katie Kuehner-Hebert checks in with both large and small banks to learn more about how they are reimagining their branch networks to meet changing customer wants and needs.

At one end of the size spectrum, Wells Fargo is increasingly relying on artificial intelligence to help its branch bankers know more about customers so they can better anticipate what their needs might be and where cross-selling opportunities might make sense.

At the other end, Wisconsin-based IncredibleBank is outfitting branch staff with WiFi-connected headsets that allow them to move unencumbered so they can quickly get to where they’re needed. For drive-thru customers, the bank is offering video capabilities that provide a more interactive experience while working with tellers.

CEO Todd Nagel says the evolution in features and duties “has also caused a major shift in the type of employees we recruit—we’re now looking for much more tech-savvy people.”

The hunt for the tech-savvy or other skilled employees is persistent challenge across the banking industry and, as the shift to an advisory-type branch model picks up pace, the “war for talent” stands to intensify.

Contributing writer Lauri Giesen digs into the issue of talent, including the specific skills that banks should be prioritizing and the training necessary to cultivate those skills in existing employees. A Texas bank executive quoted in her article cautions against shortchanging the training element, saying that rapid tech advances justify four to six hours of education each month because “training every once in a while will not work.”

Also in this month’s Executive Report:

Making the branch relevant by design: My interview with design visionary Jean-Pierre Lacroix on how banks and credit unions need to innovatively rethink their physical environment to connect with customers as the industry becomes increasingly digital-dominant. Lacroix points to a handful of U.S. and Canadian banks as being out front on establishing the emotional link that creates long-term loyalty.

From branch to engagement center: Jackie Hudson from Verint takes the position that channel-integrated lobbies can provides a more unified experience for customers and a more effective business model for banks and credit unions. Hudson says the answer is to convert the branch to be a “customer engagement center”—a physical location fully integrated with other channels.

What’s the future of in-person banking?: Vincent Chamasrour from Tenemos believes that, by leveraging customer insights and digital workflow to provide an enriched experience, financial institutions can breathe new life into their branch networks. Chamasrour says merging digital transactions with real-life encounters in the branch is necessary to connect with customers.

Plugging into hybrid banking: Kelly Weaver from JNRI tells us that adding virtual capabilities to the traditional branch network can better cater to customer expectations while also cutting costs. Weaver discusses a number of ways that banks can go more virtual, with one of the key areas being appointment scheduling to both increase personalization.

Banking as an on-demand experience: Steve Nogalo from NCR writes that a surcharge-free ATM network can allow any bank to put its brand in front of account holders where they live, work and play. Nogalo adds that the machines are incorporating more services, such as generating statement copies and paying bills, and even more capabilities are on the horizon.

Terry Badger, CFA, is the managing editor at BAI.

Get more actionable insights on how bank branches are evolving for the future in “Branch banking continues its radical evolution,” the April 2022 BAI Executive Report.