Many financial institutions have their hands tied with outdated, transaction-centric branch delivery models. Here's what needs to change.
This much is certain: online and mobile banking are driving transactions out of the branch, pushing financial institutions deep into the digital ecosystem where other technology-centric companies — like Apple, Google and a number of Silicon Valley fintech startups — are playing an ever-increasing role in the financial lives of consumers.
A significant portion of consumers — including Millennials — are not completely satisfied interacting with their financial institution only through digital channels. When they need more complex financial advice, they head to branches for face-to-face interactions. However, many institutions still haven’t transformed their branch network to maximize these more complex interactions. They need to make a major shift in retail delivery from the historical deposit-centric focus to a more sales-centric model.
All too often the “old way of doing things” prevents change and thwarts progress, especially at institutions with decades of success under the traditional branch model. In that context, this article will review five obsolete practices that are holding the performance of bank and credit union branches back.
1. Staff Focus on Transactions and Traditional Accountholders
FMSI’s 2015 Teller Line Study clearly establishes that the volume of in-branch transactions are dropping. But that doesn’t mean branches are dead — far from it. While simple deposits and withdrawals still make up the majority of interactions in branches, institutions that maintain a deposit-centric approach to staffing will fall behind.
One of the biggest advantages of branches comes from the interactions that occur when accountholders want to discuss high-value services with branch staff. Institutions that have the right employees in place to handle these in-person conversations will see significant increases in product sales. (You can learn more about implementing universal branch associates by clicking here.)
Furthermore, just like car dealerships are seeing with robust online automobile resources available in the marketplace, financial consumers are coming into branches with a much clearer understanding of what they want. And yet all too often, financial institutions settle for simplistic product webpages, limiting the consumer’s ability to conduct thorough DIY research. How do your product webpages look? Put yourself in their shoes and ask yourself, “Am I getting all the information I need, want and expect from this page?” If not, would you go to another institution’s website?
Staffing the right employees at the branch — and making the right online and mobile product/service materials available beforehand — will help shift your branch focus from traditional transactions to a more sales-centric model, and help position your brand as a resource when consumers need quality face-to-face advice.
Management Tip: Optimize Deposit-Centric Branches. Most branches continue to handle a substantial number of simple deposit transactions, and probably will be for some time. Consider implementing staff scheduling software to help put the right number of employees at the right place during the right times. This leads to significant labor cost savings, and reduces staff scheduling headaches.
2. Only Hiring Individuals With Banking Experience
In the typical job search, an HR manager looks for candidates with industry experience. In banking, this seems like it would make sense — to reduce the learning curve, specifically around industry knowledge. But if your HR manager places too much emphasis on prior financial experience, they might be excluding a huge pool of potential all-stars who are better equipped to handle high-value sales interactions.
Simply put, some people are good at sales and some people are not. It’s much easier to teach a confident and capable salesperson about banking and financial products than it is to turn a former branch employee with zero sales experience into a skilled seller who’s comfortable in their role.
Key Question: What skills do you need to be successful in the future? Teller/transaction capabilities? Or people with the right personality and presence to engage with consumers in a sales capacity?
Consider candidates with any and all types of sales experience. Searching specifically in the retail industry is a great place to start. These individuals are adept at working with typical, everyday consumers, and oftentimes are accustomed to working on Saturdays.
Management Tip: Detailed Tracking of Branch Employee Performance. Make sure you have the right employees for the job, and ensure they’re performing at an optimal level. But this can be very challenging if you don’t have the right performance data. Consider tracking other sales and service metrics for individual staff members that you may not be measuring currently, including:
- Assist time per account holder
- Cross-sell ratio
- Assist time per product/service type
- Sales per account holder seen
- Account holders and prospects seen per day
3. Sticking With Traditional Branch Designs
Through employing a deliberate systematic approach leveraging the right blend of technologies, training and architectural designs, financial institutions can make significant strides towards creating profitable sales-centric branches today and, most importantly, sustainable locations that remain viable in the future.
Other than putting the right type of employees in these branches, leveraging technology like self-service kiosks, smart ATMs, cash recyclers and sophisticated branch reporting systems are what make these types of branches successful.
An area around reporting capabilities for these branches that can be extremely beneficial is forecasting and measuring staff productivity, especially universal associates.
Management Tip: Beware of Technologies That Interfere With Cross-Selling Opportunities. It’s not always a good idea to automate everything with technology. For example, one financial institution said that they were going to discontinue having accountholders call in for their new user name and password, opting instead to automate the process. But before they made the change, one of their top agents in the call center spoke up and said, “Hey wait, this is typically a golden opportunity to cross-sell!” They wisely abandoned the idea, and continue using these password interactions in a cross-selling capacity.
4. Only Following What Other Financial Institutions Are Doing
Generally speaking, most financial institutions stay in the herd when it comes to technology adoption and process improvement. With a whole world full of great ideas and best practices spread throughout other industries, it’s a missed opportunity to ignore them. The following are a few examples from other industries that banks can consider implementing:
- Restaurants like Chili’s have rolled out tabletop ordering, entertainment and payment solutions from Ziosk. Similar devices can be tailored for branch waiting areas where account holders can play games, look up product/service information and take customer service surveys. Their waits will seem shorter — they’ll learn more about the institution’s offerings and much needed service data will be collected.
- Preferred customer programs like Delta SkyMiles and Hilton Honors are popular in the hospitality and transportation industries. Financial institutions can also benefit from treating their highest valued account holders with white gloves, especially in the branch. Have an express line, a dedicated account specialist and offer exclusive special offers to these preferred customers. Make sure to utilize “smart data” to best align offers with the individual’s needs. This program goes hand-in-hand with a more sales-centric branch where “higher-quality” interactions are more frequent. Would your most profitable account holders visit the branch more often if they received the red carpet treatment every time they came?
- Some retail stores like Sprint now offer the ability for consumers to set appointments through smartphone applications. As consumers grow accustomed to setting appointments for their retail visits, they’ll expect the same capability from their bank or credit union.
The more sophisticated appointment applications should understand each of your individual employee’s availability and skill sets — making sure to schedule the appointment with the right person at the right time.
5. Using Risk, Regulations and Compliance Policies as Cop Outs
While risk and compliance are extremely important in the financial services industry, it can also often be a major roadblock for many high-potential projects. Today’s compliance requirements impact a myriad of activities from mortgage servicing to marketing, but regulatory objections are frequently used as an excuse to slow the pace of innovation.
The following are two branch practices that some institutions may want to revisit:
- Replacing tellers with self-service technologies is too risky, because tellers are the first line of defense and help to mitigate fraud. Considering the long-term profitability gains that can be realized from self-service solutions — especially with respect to routine transactions — financial institutions should implement a pilot program that helps establish the actual number of fraud cases that stem from self-service technologies vs. tellers. For instance, branch technologies like cash recyclers are very effective at preventing front-line fraud.
- Many financial institutions mandate that they must always have at least two employees open/close branches for dual control security reasons and fraud protection. Many daily forecasts of branch staffing models reveal the opportunity to improve optimization by having only one employee open/close branches, particularly in low-volume branches.
Management Tip: Find Technology Solutions That Improve Security With Mitigating Security and Fraud Risks. One financial institution has one employee closing their branch. This employee phones the call center while they lock up the branch, then stays on the phone with the call center until they get in their car. Others rely on more sophisticated security camera systems, with actual humans monitoring the branch during openings and closings.
Conclusion & Takeaways
In the ever-changing financial services industry, it will be those banks and credit unions that adapt to consumer needs that will have the greatest success in the future. Competing more in a virtual world will likely force many financial institutions into a desperate situation, while those that re-examine their branch strategy to maximize interactions and cross-selling opportunities will steal a bigger slice of the revenue pie.
Financial institutions should strongly consider adapting the design of their branches to a more sales-centric model, because a significant portion of consumers, including Millennials, are not satisfied with interacting with their institution exclusively through mobile devices — particularly when seeking more advice concerning financial products that are more complex.
Other industries are deploying more technologies that enhance their face-to-face service experience every day, conditioning consumers to have higher expectations in the brick-and-mortar channel. With these other industries raising the service bar, it puts an undesirable spotlight on shortcomings of aging branch delivery models. Financial institutions must rise to the challenge, and not allow the “old way of doing things” to get in the way of change. The dated transaction-centric approach to retail delivery in the banking industry must go. It’s time for a streamlined, optimized branch model built around high-value interactions and maximizing face-to-face cross-selling opportunities.
You can download this entire white paper — and many others — directly from FMSI’s website by clicking here.