How’s that shift from branch to advice center going?
It’s one thing for a bank to say its physical locations will focus on providing higher-value, higher-touch services, and it’s another thing to make it so.
Two pronounced trends are at work for banks when it comes to their branch networks.
The first trend is downsizing. According to the latest available numbers from S&P Global Intelligence, a net average of 160 branches were closed each month over the 12-month period ending in January 2023. These closures, which are taking place across the country, bring the number of branches nationwide down to roughly 78,800.
The second trend is repurposing. With ever more basic transactions being done digitally, the need for a large physical presence with a long line of teller windows is pretty much obsolete. The dominant vision for the branch of tomorrow is that it serve as an advice center offering services that can’t be quickly and easily provided via a mobile phone.
For this month’s BAI Executive Report, we ventured out to find a sampling of what the banks and credit unions are thinking about as they design the branch lobby of the future and how far they are down the road to making their vision a reality.
Our lead article from contributing writer Katie Kuehner-Hebert, the headline captures both the end goal and the challenge getting there: “The long, slow transition to advice.” It’s one thing for a banking institution to say that their physical locations will focus on providing higher-value, higher-touch services, and it’s entirely another thing to make it so.
“Every institution is somewhere along the spectrum of moving toward the advice center, but it has been going slower than anyone might have predicted,” an industry consultant tells Kuehner-Hebert. “The current state of most branches is still very rooted in traditional banking transactions.”
A key issue to solve is that branch staff, on the whole, have a well-ingrained transaction mindset – taking care of what this customer needs done right now, and then on to the next. The same consultant likens this posture of the branch banker to that of a farmer, whose actions are reactive based on weather and market prices. To be more effective as an advice-giver, the banker needs more of a hunter’s proactive mentality.
Kuehner-Hebert spotlights San Antonio-based Frost Bank, which has been moving toward an advice-led “concierge” model for its 150+ branches spread across Texas. The goal of its universal bankers is to develop a trusted relationship with each customer through personalized advice and services. The bank also provides branch space to community organizations for their meetings.
Offering a conference room to a small-town civic group sounds like a good marketing tactic, but is it as good as offering an on-premises donut shop?
In her article on evolving branch design, contributing writer Dawn Wotapka writes about some of the ways that banks are trying to create pleasing physical spaces, be it through embracing local culture, adding eye-catching architectural touches or supplying more basic creature comforts, like a Dunkin’ under the same roof.
A Chicago-area architect who has designed a number of locations for Wintrust Community Banks says building neighborhood-specific elements into the branch is a way to promote connection. “Customers feel comfortable in them because they feel familiar.”
In this month’s Q&A, Jon Voorhees, EVP for physical distribution strategies at Wells Fargo, shares his thoughts on the transition of the branch from primary source of connection to a more secondary, supportive role as digital banking handles more transactions. Voorhees has had a lengthy career in the branch world, including a decade and a half in retail distribution at Bank of America and as an industry consultant.
Also in this month’s Executive Report:
When less is more: William Yeomans from Brookline Branch writes about how smaller branches and sale-partial leaseback options can help banks keep a physical presence in communities in a more cost-efficient way. Other innovations include creating “multifunctional” branches that can serve as community hubs.
Focusing on the branch customer experience: Jackie Hudson from Verint tells us that a better approach to managing lobby traffic – including initiating or expanding appointment-setting programs – can help banks and credit unions build more enduring relationships with their customers.
The efficiencies of ATM-as-a-service: Steve Nogalo from Cardtronics makes a case for banking institutions outsourcing ATM networks – including more advanced interactive teller machines (ITMs) – to third parties as a way to ease staffing concerns, expand availability and promote greater customer satisfaction.
Terry Badger, CFA, is the managing editor at BAI.