Bank branch traffic has declined precipitously over the last decade as businesses and people adopted new digital channels for routine transactions. As that traffic declined, most financial institutions responded by reducing branch staffing proportionately. Many of the 100,000+ branches in the U.S. today operate with minimum staffing of four full-time equivalents.
The COVID-19 pandemic is having a further impact on traffic. First, there’s the short-term effect, initially under stay-at-home orders and then under social distancing rules as states attempt to reopen. Even as such precautions lift, the industry expects that pre-pandemic traffic levels will not return. The traffic that does return will likely show up at different locations than pre-COVID, due to the high number of workers continuing to work remotely. History may no longer be a great guide to staffing as the “new normal” sorts itself out.
About 105,000 bank and credit union branches were open in the U.S. in 2019. In the last ten years, banks and credit union branch counts fell by about 16%, and more recently about 2% annually. Certainly, many financial institutions will close more branches in response to the current economic downturn as they search for expense savings.
But are more branch closures the only way forward when four out of five new accounts are still opened at the branch, and many people still want to have face-to-face advice for complex issues?
Universal banker staffing has been used in bank and credit union branches for more than a decade, although most branches still operate with traditional staffing of tellers who perform routine account transactions, and customer service representatives or personal bankers who perform more complex transactions including new account openings.
In my experience, more potential can be squeezed from this concept. The universal banker programs in place today have not been consistently effective due to poor training, among other factors. But many successful models have been documented as well (e.g. Umpqua Bank and Frost Bank).
Let’s take a look at the advantages of this staffing approach, as well as some arguments against the model.
Advantages of Adopting Universal Bankers
Some of the many advantages to operating with a universal banker model in your branches are obvious, while other benefits are less so:
Better customer experience. For customers who need to perform multiple transactions there are no more hand-offs, either “cold” or “warm.” One staff member can handle all the person’s needs, creating a more in-depth conversation and an improved relationship-building moment.
“One universal banker can handle all the person’s needs, creating a more in-depth conversation and an improved relationship-building moment.”
When well-executed, I compare this experience with the original Nordstrom retail model, where the first person you encountered or engaged helped you through your entire shopping experience — all the way through checkout.
A frequent complaint banks and credit unions hear: “I had to explain my issue to multiple people.” This often stems from those aforementioned handoffs. A well-trained universal banker can eliminate that pain point.
Increased staff flexibility. When every staff member can handle any transaction, you maximize staff flexibility in the branch. If traffic swings to more routine transactions, staff can adjust their focus to efficient handling of those tasks. Alternatively, if customers are waiting to see a staff member for more complex transactions or new account opening, the manager may choose to pull someone from the teller line to handle such “higher-value” needs.
Customers will often abandon their visit, whether on the phone or in person, if they have to wait too long. Complex issues may take 20-30 minutes to resolve, while routine transactions only last 2-3 minutes. Therefore, throughput is greater on the teller line. If your goal is to minimize customer wait times it makes sense to put your resources where they can best achieve that goal without excessive staffing levels.
Better career options for branch staff. Teller turnover is high and always has been, leading to high training costs. Creating a more challenging and engaging role that leverages relationship-building skills rather than rote transactional skills will appeal to certain employees. Universal banker roles can offer a greater variety of activities and experiences for staff members, reducing boredom and burnout.
While it may take longer for staffers to master the diverse skills required to be a universal banker, the outcome could be a more rewarding role. The broad skills learned as a universal banker can help staff transition to management roles as well.
Lower branch expense levels. In a 2018 study, Bancography indicated that the average branch staffing level was 6.4 FTE (7.1 for credit unions and 6.1 for community banks). Staff levels vary with branch traffic and individual firms’ business models.
Many credit unions I work with today have overstaffed, in order to minimize any member wait time. But there is generally a lower limit on staffing levels of about 4 FTE, with one manager, one relationship/service person, and two teller FTE.
For most branches, these two tellers are required, due to policies for dual control over cash handling. With many branches, especially in more rural areas, at those minimum levels there is no room to reduce staff expenses further.
According to the 2019 Kronos Teller Line study, the average branch handles 6,900 teller transactions per month. Assuming branch operations of 22 days (Monday-Friday plus half-day Saturdays), that translates into about 314 transactions each business day.
Let’s assume 3.4 of those 6.4 staff members (from the Bancography study) are traditional tellers. Given the average teller volumes, then, tellers will average 92 daily transactions, or about 12 per hour. Breaking this down further, with an average transaction time of about two minutes per transaction, the average teller is busy 24 minutes per hour.
In other words, traditional tellers are waiting for another customer 60% of the time. Any operating model where your staff is idle 60% of the time is unsustainable.
The Other Side of the Universal Banker Model
Like any business model or approach there are always some cons to offset the pros, which any institution considering switching to the universal banker approach should consider:
“Successful universal banker programs are implemented with the conscious decision to invest heavily in training.”
Longer onboarding process for new staff. Onboarding a universal banker, especially an inexperienced one, will take longer than a more narrowly defined role. These roles require not only the accuracy skills of tellers, but also the operational and product skills to handle account maintenance and sales skills for growing the business.
Given this greater investment in upfront training, the need for staff sustainment becomes even more important. The role must be meaningful and manageable — otherwise turnover will continue.
Increased ongoing training costs. Not only does the universal banker role require more upfront training, but more ongoing training is also required. Products change. Policies change. Regulations change. Sales skills must be sharpened.
Successful programs are implemented with the conscious decision to invest heavily in training. The associated increased costs may seem daunting but prove worthwhile long-term.
Potentially slower transaction times for routine transactions. Universal bankers are generalists by definition. During busier times requiring them to work the teller line, they may be slower and less confident in performing routine transactions than dedicated tellers might be. Recurring training could alleviate this issue.
COVID-19’s Aftermath: Time for a Fresh Look at Branch Methodologies
The retail banking world continues to change at an ever-increasing pace. The pandemic is driving significant new challenges: decreased demand due to high unemployment, decreased branch traffic due to stay-at-home restrictions, and changing traffic patterns due to a large remote workforce that commutes less frequently.
The number of branches will continue to decrease but the key question isn’t about how many branches there are for customers, but more about the activities that occur within the four walls. Implementing a successful universal banker model is not an easy proposition but may be worth your investment in the new lower branch traffic world.