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How Financial Institutions Must Rethink Their Branch Experience

What is the future for branches? Here are three emerging roles for branches, and how banks and credit unions must leverage the human touch in the Digital Age.

Subscribe TodayMost retail financial institutions know that they must reposition their traditional branch model. Many banks and credit unions have already closed (or plan to close) at least some of their branches. After all branch networks are costly to operate and, increasingly, customers choose to purchase financial products through digital channels.

But according to Accenture, reducing their branch footprint or adopting an entire branchless model may not be the right solution.

Why? Consumers value branch interactions. 78% of US consumers in Accenture’s research said they expect to visit their local branch just as much or more frequently in the next five years. If their local branch closes, 43% say they would simply use another branch location of their primary bank.

Millennials in particular have a noticeably greater bias towards physical interaction, reflecting their need for face-to-face contact, advice and reassurance in their financial journey. In fact, consumers ages 18 to 24 make the greatest use of branches and in-branch value-added activities, with many of them engaging in at least one value-added service during their last visit.

“While customers in this segment may be the most vocal in wanting exceptional online and mobile banking, they do not view digital as a complete substitution for branches,” Accenture says in a report on branch transformation strategies.By taking advantage of digital innovation, Accenture says banks can transform the branch network to offer banking services that are more personal, immersive, and relevant for their role as an everyday bank.

Here are three emerging roles for branches that Accenture says will be critical if banking providers are to attract and retain future customers.

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1. The Branch as Digital Ambassador

Most consumers now use some form of digital banking. Research shows that 80% of the digital generation embrace digital for daily banking needs, but only 22% are completely self-directed. The majority of Gen D consider digital advisor tools of relatively low value. Accenture says branches can help increase the digital penetration within a financial institution’s customer base and lower transaction costs by educating digital laggards.

Branch employees can offer advice on using digital tools for everyday banking needs and invest in in-branch digital capabilities. More than one-half of consumers rank interactive screens as the most important in-branch technology, highlighting the potential for staff to teach, train and educate.

2. The Branch as Advisory Hub

Although the use of online banking services continues to grow, the offline demand for complex and high-value products is still high within branches. Globally, two-thirds of complex, high-margin products such as mortgages and retirement products are sold within branch networks. As an example, Accenture says a customer who might be uncomfortable getting a mortgage entirely online could first use an online calculator to assess what they can afford, then follow up with a visit to a branch. According to Accenture, branches should play their strengths by becoming a full-service advisory hub for complex products, long-term financial planning and other highly-specialized services. In this way, Accenture says financial institutions can:

  • Center full sales and service support around customer preferences and needs.
  • Provide the “human touch” through specialist staff that are on-hand to advise on different or complex services.
  • Offer extended hours — weekends, late nights or on-demand remote services via video conferencing.
  • Initiate conversations, setting up and closing business in the branch, then maintaining the dialogue online.
  • Enable value aggregation with other providers in the everyday bank ecosystem.

3. The Branch as Problem Solver

First-contact resolution is key to retention. Of consumers who switched to another provider due to poor service, more than four out of five said they could have been retained if their issue had been resolved on their first contact. While consumers very frequently use digital tools and services, 65% of them return to branches when it’s time to fix problems.

Accenture’s research has shown that 34% of customers who switched financial providers in the last year did so because of a poor customer service experience. By comparison, only 7% defected because of the quality of a bank’s digital interactions or services.

“Modern branches need to convert issue resolution to a competitive advantage, particularly for payments errors, new portfolio scenario modeling in the bank’s app and other content-driven problems,” says Accenture. “To do so, branches must integrate seamlessly with digital channels.”

Providing faster, better first-contact resolutions requires continuous training of branch staff and equipping them to excel in solving customer problems—such as specialist advice around mortgages and pensions.

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The Importance of the Human Touch in the Digital Age

Consumers can now carry out most of the transactions that were traditionally handled by branch staff. Accenture says that leaves branches as differentiating physical assets, and branch talent, much like Apple Store associates, to act as the human face of the brand.

In the digital world, branch employees will no longer be transaction specialists. They will be professionals focused on helping customers manage wealth and long-term goals. These employees will support customers’ use of digital interactions. That means frontline staff require the right combination of “soft skills” and technology capabilities to engage consumers today… and in the future.

Tomorrow’s banking customer will take advantage of both digital and physical channels in managing their finances. According to Accenture, consumers that combine digital and physical channels:

  • Undertake detailed research online to compare services.
  • Visit the branch to validate their online findings and sign up to products or services.
  • Tend to have more products and be more profitable over the customer life cycle.

Digital consumers expect and demand high-touch, human-touch services that complement and build upon their digital interactions. They rely on access to financial experts who can help them understand their options and finalize the transactions they may have started online. They need trusted advisors who can guide them in developing sound financial strategies. And they may even want highly skilled bank representatives to manage their finances.

“It is doubtful that digital players — with their limited physical presence and their focus on automating transactions — will ever be able to deliver the high-touch, personalized customer services that branch talent can,” Accenture points out in, The Case for the Human Touch in Banking, a report about branch transformation strategy.

To successfully transition their branch experience, Accenture says banks and credit unions must equip branch employees with skills to make every customer interaction a differentiated and profitable banking experience. Specifically, Accenture offers the following three recommendations:

1. Shift the currency of branch talent. As trusted financial consultants, Accenture says branch employees will be charged with helping customers achieve their financial goals in radically different ways. They need to be able to deliver strategic advisory services, communicate the intricacies of complex financial products, and identify solutions that best match the needs of each customer. This means moving beyond product mastery and developing active listening and assessment skills. Social skills like these will be increasingly important, since financial products don’t spark the same emotional connection as a new Apple gadget might. Branch talent needs to generate excitement among customers — not necessarily about banking services per se, but about the goals and lifestyles that those complex financial instruments will support.

2. Create a hyper-personalized experience. Having access to comprehensive customer information in real time — and knowing how to use it — will be key to creating a personalized and seamless interaction… one that may have begun in a different channel. Accenture says digital technologies will play a critical role in extending the human touch consumers demand. Social media and video conferencing, for example, can bring the branch experience into the customer’s home or place of work. While these formats may not replace a true face-to-face branch encounter, Accenture says they can help build personal relationships and meaningful experiences.

3. Treat branch staff like the strategic asset they are. In the Digital Age, customer satisfaction will become the critical metric. Other key performance indicators will include branch employees’ use of digital and human engagement channels, the number of relationships created, the quality of the advisory services delivered, and customers’ excitement once the interaction is over. Incentives and talent development programs need to be aligned to these new indicators of success. The same is true of rewards. Branch employees who develop the requisite social, digital and advisory skills will enjoy a more satisfying work experience. But that’s not enough. Banks should be willing to compensate them for the strategic role they play and the critical skills they bring to the table.

Download the Reports

Readers of The Financial Brand can download both reports Accenture has published on branch transformation strategies at their website.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

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Comments

  1. Several banks around the globe are closing branches without taking in account attrition rates; this is a common mistake as a result of a misleading idea of transaction migration to digital channels.

    The migration is real, however, branches are still very relevant for the two most critical parts of the customer journey (sales and problem solving), and those interactions at branch level are the ones with the highest ROI, therefore, financials institutions are losing value with their branch network optimisation plans.

  2. Rob Aulebach says:

    Branches are still important to the customer experience but you must examine how many are necessary when traffic is declining Double digits each year. Those banks that carefully study attrition and apply there finds to an optimizing strategy will find very few customers will leave especially when you have the proper staff at the remaining banking centers.

  3. Rob,

    The branch strategy question isn’t simply one of numbers — how many branches you have. It’s also a question of size — how big are the branches you have?

  4. A very well articulated trends assessment of Accenture’s research into this major inflection point for branches and relational/human capital relevance – amidst a disruptive digital shockwave. The evolution and improvement of this often neglected, shrinking and high cost channel is long overdue for most banks and credit unions.

    While Amazon’s savvy online shopping experience will forever disrupt and replace ineffective retailers, it doesn’t spell the end of well focused retail stores who quantify their target customers and design relevant brand – and linked digital experiences to compete in the right markets. It’s why Apple hired Angela Ehrandts from Burberry to redesign Apple stores: http://fortune.com/2016/10/18/apple-angela-ahrendts-stores/

    The one ingredient I would add to this story is the dire need for harnessing big data analytics, financial market data, and customer behavioral analytics to quantify engaged and profitable branch user segments. By forecasting ideal market growth opportunities and tailoring them to a tightly defined set of targets and niche markets, leaders can then reallocate, resize, replace and redesign branch networks optimized for an integrated digital, relational and advisory future business model. Thinking more strategically requires leveraging the digital information in front of you – and the courage to innovate and adapt.

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