Finding value in bank branches
As an industry we’ve done a great job of moving transactions out of the branch along with the associated expense. Over the past 20 years we’ve conducted a full on assault of repetitive teller transactions thus reducing the need for clients to come into the branch. I know these programs intimately as I was responsible for a program across a 1,200 branch bank where we were able to reduce 500 teller FTE, saving $10 Million in yearly expense. Customer use of direct deposit, mobile remote deposit capture and ATM’s has created engagement in digital channels, and significantly reduced the value of branches.
While the number of clients that use a bank branch regularly has gone down, *45% of clients are still coming into the branch within a 30 day period. Even with millennials, who are much more likely to conduct transactions on line, more than **60% of them would not open an account unless there was a branch nearby. The challenge we face as an industry is how do we create greater value to clients other than the idea of having a physical branch “in case there is a problem with my account”. I was recently at an industry conference and I can’t tell you how many times I heard that a particular bank was going to have a coffee barista in the branch and that’s how they were going to increase traffic. In my opinion, it didn’t work for Barnes and Noble, why would it work for a bank?
Data from Accenture "Banking Shaped by the Customer", 2015
We need to drastically change the way we do business and provide a richer, deeper client experience in the branch. Tellers and Personal Bankers need to become Universal Bankers. Teller lines and desks need to be replaced by kiosks and more informal, yet effective seating areas, which lend themselves to needs based sales conversations and mobile technology. While each bank is going to have to find their own value proposition, leveraging branch associates who have the ability to be consultative, flexible and mobile within the branch, is going to be key. When a customer comes into a branch, associates are going to have to do at minimum three things:
Assist the client with any potential servicing request that they may have. It will also be important to transition these conversations into a more consultative conversation regarding the client's overall financial need once the servicing request has been satisfied.
Associates will need to help clients who need assistance in learning how to use the myriad of technology that is now available to them. The teaching component will aid the customer in becoming fully engaged in the bank’s digital tools, while creating a bond with the branch for future needs.
Finally, associates will need to execute flawlessly around consultative sales. Not over a desk, but in a “living room” like area where clients and bankers can have a conversation about their long-term financial goals and objectives. Not only will they need to be able to ask the open ended questions to learn about the client, but they will also need to have strong referral skills. This may involve bringing in a partner remotely via video for conversations with a mortgage loan officer, investment consultant, small business banker etc.
Overall, the change in the retail branch presents both challenges and opportunities for us an industry to reinvent ourselves so that we can provide value to clients, while growing our business despite potential challenges from digital only banks.
*Bankrate Survey 2016
** Bank Mobile