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How to Regain Bank Branch Relevance

A recent BAI Banking Strategies article titled Five Tactics for Keeping Branches Relevant offered five points of advice for “turning your branch infrastructure into a strategic advantage to enhance wallet share”:

  1. Shift the focus to “higher quality” exchanges.
  2. Cast a wider net for talented staff.
  3. Approach branch design with fresh eyes.
  4. Find inspiration from other innovators.
  5. Apply smart, and safe, technological and process improvements.

Bank Branches are Swimming Upstream

Not a bad list of tactics (I’ll have better ones for you at the end of the article), but they fail to address a few questions:

1. How do you get consumers to come into branches for “higher quality” exchanges, and how much will it cost to do so?

According to the article, “some questions about financial choices are best asked and answered in person.” Prove it. I’d buy the argument that some questions are best addressed by humans, but that contact could be by phone, text, email, or videoconferencing.

Even if the article’s statement was true, the fact of the matter is that many consumers don’t turn to their banks for help making financial choices.

My point here is that it’s a whole lot easier said than done shifting the interaction composition from low-quality to higher-quality exchanges. If I were the CEO of a bank, I’d want to know how much it was going to cost me to effect this change–and what I was going to get for my investment in return.

2. Will “casting a wider net” really attract talent?

The article advocates that banks should hire candidates with sales expertise, and train them to be bankers. There are (at least) a couple of things wrong with this logic: a) What makes you think good salespeople want to go to work for a bank that pays poorly and doesn’t have a strong sales culture? and b) If your bank isn’t seeing strong traffic into the branches today, simply hiring a few good salespeople isn’t going to change that, and worse, because of that, good salespeople will leave to find more lucrative opportunities elsewhere.

3. Why should a bank do any of those five things?

The unanswered–and sadly, unasked–question underlying the whole subject of keeping (or perhaps, making) bank branches relevant is: What good will it do?

In other words, if I, as a bank CEO, were to follow all the recommendations listed in the article, what bottom line improvement would I see?

The article promises that the five recommendations will turn your branch infrastructure into a strategic advantage to enhance wallet share, but I didn’t see any proof of that.

Conclusion: What branchophiles fail to see is that a strategy that involves “keeping branches relevant” is a strategy that is swimming upstream.

The flow of the banking river is towards digital engagement. Just as there aren’t too many types of fish that can successfully swim upstream, there aren’t too many banks or credit unions that can prosper by swimming upstream, either.

For every dollar a bank invests to shift the interaction composition, hire new branch staff, redesign branches, and invest in branch-related technological and process improvement, that’s one less dollar that can be invested elsewhere.

Bank Branches Aren’t VITAL

The BAI article suggests that banks find inspiration from other innovators. OK, how about Apple?

Apple reinvented the way technology products were sold. (It took a couple of tweaks, they didn’t get it right on the first try). What Apple has got right, regarding the sale of technology products, is creating a retail experience that is:

  1. Visual. People want to see the product.
  2. Informative. People want to talk to store reps who know about the products.
  3. Tactile. People want to touch and use the product.
  4. Advocative (I made that word up). People want reps who will recommend products that are right for the customer, not just for the store.
  5. Lean. The buying process if fast, with a minimal number of steps. No waiting in cash register lines. Fast and lean.

Apple stores are successful–at least, to some extent–because they succeed at accomplishing these five things. 

Try this exercise: Create a chart with the five attributes listed above as the rows in your chart. For column headers, enter the various channels with which a bank interacts with customers in–branch, call center, online, and mobile. Using a scale of 1 to 5, where one is low and five is high (duh), score each channel by its potential to deliver on the attribute. Total each column’s score.

If the branch score is the highest, repeat the exercise after you’ve come down from your LSD trip.

How to Make Bank Branches Relevant

Investing money and management time and attention to “keep branches relevant” is not likely to be a successful strategy. But I realize that I’m not going to convince all of you of this, so let me offer some constructive thoughts on what you can do to help your bank branches regain relevance. It’s not about redesign, but reinvention. To regain relevance, bank branches need to become:

1. Bankaurants. Let’s be realistic. Many of the folks working in bank branches do nothing but “take the order” when a customer comes in. If they’re going to take my financial order–and since the author of the BAI article seems to believe it’s relatively easy to train someone to be a banker–then why not combine my food order with my checking account order? Reality is I’m helluva lot more likely to go to a restaurant to eat than go to a bank branch to do my banking. But if you combine the two…

2. Finspas. Personally, I’m not one to get my nails done, but if the Shevlin women are any gauge of the demand, a lot of people do. I imagine there are plenty of men who do, but I’d bet that women are driving the demand for mani/pedis. And since women are increasingly the primary financial decision-makers, why not train manicurists to engage customers in discussions about their financial needs?

3. Hospibanks. People who go to the hospital spend a lot of their time there heavily medicated. What better time to sell someone banking, investment, and insurance products and services?

I can’t prove that my ideas for regaining branch relevance are better than the tactics put forth in the BAI article. But you can’t prove that they’re not.

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

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Digital Banking Report | 2017 Trends & Predictions

Comments

  1. Greg Shaver says:

    I think you’re on to something here. We just need to give it up and realize that #1 is correct and that’s the way it’s going to be.

    #2 is absolutely perfect. Throw in a massage and facial and my wife would be the #1 customer.

    #3 might actually be an improvement over the process now. Results might prove you right.

  2. If we can figure out how to send a Breakfast Burrito and a cup of coffee through the Bank drive through tubes we have a.m Relevancy for branches!

  3. Greg: Thanks for commenting. Much appreciated.

    I don’t care how steep the drop in the number of bank branches is, and I don’t care if branches are “dead” or not. It’s about where and how to allocate your investment. It’s hard for me to see how an increased investment in branches pays off.

  4. Jim Marous Jim Marous says:

    Many more important priorities as I mentioned. Closing some branches can also free money for further digital investments.

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