Using analytics to drive branch channel evolution and realignment

So many aspects of the branch channel have been deeply affected by the coronavirus crisis. Customers who need in-person service find themselves dealing with limited options, while bank employees are handling a sharp spike in customers’ use of digital and contact center channels.  and vulnerable small businesses urgently need help from their bankers.

Going forward, banking leaders have a unique opportunity to redefine the customer and workforce experiences in the branch channel. As they formulate their strategy, they will be faced with two key strategic challenges:

  • How can we assess the direction and magnitude of the shifts in customers’ use of the branch network?
  • How can we proactively make branch resource and capacity allocation decisions to align to these changes?

Evolution: Incremental changes

The evolution of the branch channel has been underway for the past decade. Leading financial institutions have transformed their branch functionality from teller transaction touchpoints to complex service and advice centers staffed with relationship bankers. They have deployed technologies such as teller cash recyclers, interactive teller machines, appointment scheduling and digital activation. They have implemented a minimum staffing model in most branches while pooling branch resources for improved efficiency and better workforce engagement.

A 2020 Kiran Analytics survey of bankers representing over 28,000 branches validates the staffing model transformations: Nearly half of the respondents said the teller role is either eliminated or will be eliminated in most or all of their branches. And three-quarters of the bankers said they implemented a universal banker model in some or all of their branches.

The evolution of branch resources will accelerate as the need to maintain safe branch interactions continues and the pressure to increase operational efficiency intensifies.

Realignment: Opportunity for significant changes

Prior to the COVID-19 pandemic, banking leaders had the benefit of time to evolve the branch channel and resources. That approach had advantages and drawbacks, the primary drawback being a resistance to making drastic changes quickly. Bankers just didn’t believe they could change things as quickly as they have this year.

Today, prudent banking leaders view the current situation as an opportunity to realign their branch delivery and resources. Closing 10 to 20 percent of branches temporarily is one thing – closing them permanently is a massive change that raises questions like:

  • Which branches in which markets are the best candidates for closing?
  • How much customer activity and work content will migrate to which nearby branches?
  • How much work content will move to other channels or competitors?

Temporary operating-hour reductions and service restrictions are necessary to address customer and associate safety now, but what happens post-pandemic? Permanent changes require addressing questions like:

  • How will the transaction volumes change?
  • What adjustments to the open hours will produce the greatest efficiency?
  • What are the optimal queue configurations in each branch?

Will the drop in branch transactions due to COVID-19 become permanent? Or will the demands of financially challenged consumers and small businesses drive increased demand for complex service and advisory services in branches? No matter what the shifts are, making large-scale workforce reductions will need answers to questions like:

  • How should FTEs be optimally distributed, by position, to the branches with the greatest potential and opportunity?
  • How much excess branch resource capacity will be available to allocate work content from other channels?

Realignment agility driven by data and analytics

Branch channel and resource realignment will have a unique meaning for each financial institution. No matter what the realignment strategy, the complexity of the decisions will require data, proper modeling and advanced analytics.

Some financial institutions may accelerate consolidations and significantly reduce branch staffing levels. Others may slightly reduce branch counts and use strategies including open hours adjustments, work content reallocations from other channels, and outbound customer engagement as ways to effectively utilize their available branch resource capacity.

Every financial institution is looking to the new era as an opportunity to redefine its branch channel for its customers and communities. Prudent banking leaders will realign their branch channel and resource capacity using data, modeling and agility driven by analytics.

Kerim Tumay is vice president of marketing with Kiran Analytics.

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