Customer Experience Dominates the Branch vs. Digital Banking Debate

Too much focus on the back and forth debate over branch and digital preferences of consumers diverts attention from providing a superior customer experience. People expect hassle-free interactions and a satisfactory result no matter how they do business with an institution. If bank and credit union branches increasingly shift to an advisory role, as many expect, the critical point will be: Can they deliver on that vision?

Countless words and pictures have been published about the design and layout of banking facilities. And with very good reason. Who would want to visit an ugly branch, with a confusing layout and yesterday’s technology?

Even with the most attractive branch, however, if consumers must still spend over half an hour applying for a personal loan — when it can be done in minutes on a phone — then that facility doesn’t have much of a future.

Unfortunately, that scenario still seems to be the case more often than not. Digital technologies certainly exist that can make in-branch account opening as quick and simple as can be done online, and likewise artificial intelligence or analytics software can assist branch staff in giving personalized advice. Yet, as Alex Jimenez observes in Fintech Futures, many retail banking brands have not extended such digital capabilities to today’s branch. The VP and Senior Strategist for Zions Bancorporation points out that call centers have knowledge bases at their disposal that are not often available to branch staff at the same institution.

Alex Jimenez call centers have knowledge bases quotes

While many financial institutions have been upgrading their branches, often the investment is focused only on certain areas, such as teller cash recyclers, and is uneven across the institution’s entire network. Celent finds that digital appointment booking, for example, is only used by about a third of financial institutions and only a quarter of them equip frontline staff with tablets. The greatest obstacle among institutions of all sizes to bringing modern tools to branches is legacy constraints, the research firm finds.

The branch experience shortfall is not simply a matter of technology any more than it is of design. As Bancography founder Steve Reider observes, the key to branch relevance is “keeping the bankers relevant.”

Statistics Clash, But Retail Banking Execs Agree: Branches Are Changing

Making technology more widely available in the branch will not reverse the overall trend towards digital transactions. That horse is long out of the barn. Mobile banking transactions increased 56% over the past two years, according to Cornerstone Advisors. Now, upgrading branch capabilities is a matter of providing a good experience for consumers and business owners that come in. Increasingly, financial institution strategists see that every channel must provide a superior customer experience.

Many studies underscore that access to a physical facility remains important to consumers — and not only to older consumers. Some observers dispute the findings of such research, maintaining that too often what consumers say on a survey and do in real life don’t match. Declining branch-traffic figures suggests that these skeptics may be right.

“Using fewer, more highly trained people to be advisors rather than order takers in the branches, helps us be high-tech and high-touch.”
— Darlyne Keller, Rock Valley Credit Union

Many, if not most, bank and credit union leaders recognize that the role of the physical facility has changed. Illinois-based Rock Valley Credit Union, for example, is reducing branches to support its digital strategy. “It’s necessary to focus on digital channels to expand membership and stay relevant in our market,” says CEO Darlyne Keller. “At the same time, using fewer, more highly trained people to be advisors rather than order takers in the branches that we keep, helps us be high-tech and high-touch.” Branches are still necessary, Keller concludes, “but not to the scale or availability (hours) seen in the past.”

The credit union CEO’s comments echo those of some consultants who maintain that the capital tied up in branches could be better used elsewhere. Yet others point to the benefits of a physical presence. Among the pluses is that branches remain the primary place where accounts are opened, establish market presence and help build trust.

Retail brands understand that there’s real value in the consumer journey that travels from digital to physical and back again, observes Sean Keathley, CEO of Adrenaline Agency. And some functions, such as cash deposits, require a physical presence, which is why digital-only banks such as Chime and Varo had to make arrangements with Green Dot merchants.

Since 2012, 1,200 U.S. financial institutions have expanded their branch networks, states Anthony Burnett, Customer Experience Officer, Level5, and most of the institutions doing so have been below $2 billion in assets. Branch count overall is down by a little over 9,000 since 2012 in the U.S., but the bulk of the reduction has come from large institutions closing low-performing, rural, and overlapping branches as they consolidated and optimized their networks. Burnett points out that the biggest banks still believe in branches despite culling so many of them.

Among the big banks opening branches are JPMorgan Chase, Bank of America, and Fifth Third. They maintain that branches drive new business, especially in markets that they are targeting for growth. “Whenever we move into a new location it’s the branch that drives all of the business that we do,” says Gordon Smith, Co-President and COO of JPMorgan Chase, which is in the process of opening up as many as 400 branches over several years.

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How Realistic is the Branch Advice Model?

One of Chase’s new branches is a humongous 12,000 sq. ft. New York City flagship branch. Chase created numerous places within the branch for formal and informal consultations between consumers, small business people and bankers. While the giant size of that branch won’t be typical of the others it is opening, Chase executives stated, the advisory concept will. A recent Chase email informed customers in a New York City suburb that a redesigned branch would no longer offer teller services. Instead, it would have ATMs and “bankers and specialists” available to “open new accounts” and “provide financial guidance.”

Chase is far from alone in this. Many banking executives now believe that branches in the future will be places where consumers and small business owners go for advice. But, can they deliver on that vision?

Retail financial institutions have spent many years developing marketing strategies and sales cultures designed to push product disguised as “consultative selling,” David Kerstein of Peak Performance Consulting Group and Nick Miller of Clarity Advantage observe in a BAI post. Over time, they say, employee coaching diminished and investment in customer service and sales training was reduced, leading to high branch-staff turnover, particularly at larger institutions. All this, the consultants point out, led to an outcome expressed bluntly by one bank customer:

“Why would I want to go to a place where I know more than they do?”

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Achilles’ Heel of Branches: Detailed Consumer Data

Bringing branch staff up to speed, to deliver on the consultative promise, will be difficult, state Kerstein and Miller. They and others point to the need for relevant data and the tools to use that data, to empower staff to act in a more consultative role. However, very few banks and credit unions collect and analyze branch-level interactions beyond teller transactions. Digital channels, by contrast, are an information-rich environment. Branches must become more like that to remain an important channel.


Banking executives from the smallest to the largest institutions recognize this need for better branch-level data. “Armed with information we can tailor our branches to meet the needs and demands of the unique demographics they service,” Julie Thurlow, CEO of Reading Cooperative Bank, tells The Financial Brand.

“Financial institutions have never been able to know more about the consumer as now,” states Adrenaline’s Keathley. “Banks and credit unions have the ability to be more bespoke around how they serve a product and create more community-minded and thematic and curated elements in branches that fit market demographics.”

That outcome doesn’t depend completely on technology, the marketing executive maintains. “If average-size banks are going to take on the big guys without all of the resources,” Keathley states, “their brand has to be unimpeachably authentic, local and community-minded.”

“Consumers have shown they will bypass the most convenient branch in the world — their smartphone — and come to a branch.”— Anthony Burnett, Level5

Certainly the “community-minded” element Keathley cites is baked into most community financial institutions. The ability to extract and analyze information, however — both internal and external — represents a greater challenge. But an ever-growing number of specialized vendors, as well as the bank technology companies, can provide data tools to assist branch-based staff to respond to consumer questions.

This kind of personalized data will be critical to bring about a transformation of branches from transactional to advisory. Regional banks such as Citizens Financial and Regions Bank are already using artificial intelligence software to assist branch personnel to speak with consumers in a more personalized and relevant way, prompting staffers to offer the “next best action.”

In addition to installation of data technology software, banks and credit unions can take several other steps to develop their branch advisory capabilities:

  • Identify which consumer segments you want to provide guidance for.
  • Define which types of guidance are most relevant to those segments — i.e. consumer credit, mortgage/homebuying, budgeting/saving, investing, retirement, small business.
  • Consider the various options for providing guidance, including: in-person experts, universal tellers, roving or video-connected specialists, or self-service advice.
  • Determine what tools can assist staff to identify consumer needs, suggest appropriate options, and present supporting information.
  • Select, train and regularly coach branch personnel who will be involved in dealing with consumer questions.
  • Look to retailers for inspiration, possibly even collaborating. Banks and credit unions could emulate Apple Stores’ well-known “Genius Bars” with in-branch “digital banking advocates.”

“Consumers have shown they will bypass the most convenient branch in the world — their smartphone — and come to a branch,” observes Level5’s Anthony Burnett.

“Make every customer who walks in want to come back. The key path to maximizing the branch is to focus on function, experience and technology. But the real gold in the branch is the staff.”

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