The Objective Is Service
The debate continues about the future of branch networks for financial institutions. Among the many conflicting opinions, conflicting data to support the opinions, and initiatives involving both technology and staff, there are common threads of agreement.
- The overall number of branches in the U.S. is declining. However, most of the reduction is associated with the top 10 institutions that arguably over-built, or consolidation after acquisition of institutions.
- The overall volume of monetary transactions performed by branch staff is declining. There are wide discrepancies about how steep the decline is, but not disagreement that the direction is downward.
- Most new relationships and products are still initiated by interaction between customers and branch staff. Again, there is disagreement about the specific percentage, but studies show that branches are still where most customer relationships are incubated.
If branches are still where new customer relationships and products start, then branch networks are going to be around for the foreseeable future. That does not mean they will, or should, look and operate the way they have for the past 30 years.
Many articles have been published about different strategies for branch transformation: universal staff, self-service kiosks, open floor plans, cash automation, flex staffing, digital signage, "smart" ATMs, data analytics, remote tellers, etc. This article does not discuss any specific technology or strategy, but rather poses the following question.
Why do customers still look to branches to begin or expand product relationships, when there are so many alternatives?
It's About Relationships
It may be as simple as when it comes to their relationship with a financial institution, people prefer personal service. Online, mobile, self-service and other digital options are fine for a growing percentage of transaction activity, but a relationship is a relationship. Branch personnel are the primary face of a financial institution, so they most closely represent the relationship for the consumer.
If you even partially agree with the above statement, then the true objective of branch transformation is to deliver the best service as efficiently and cost effectively as possible. Best service is the objective. Efficient and cost effective are benefits to be achieved as long as they do not jeopardize the objective.
What does that mean for branch transformation initiatives? All of the technologies and strategies being written about and/or tried may be valid in the right context, but may be detrimental in the wrong context. Any specific option may be spot on for one financial institution or market, and a poor fit for another. A strategy may work for certain markets and branches within the same institution, but not necessarily for all branches.
The key is to always independently evaluate if an idea enhances quality of service for the customer. At minimum it must be neutral to the customer experience. This is not rocket science, but rather the discipline to ask and honestly answer a couple of questions.
- Does the change add any steps or time to the customer's experience? If steps are added, is there a benefit to the customer's experience that outweighs the added effort?
- Would I prefer this experience myself if I walked into a place of business?
The answers to these questions may be completely different based on the overall volume of activity. That means it is important to know with precision what is going on, when, by whom and what the trends are for each branch. For example:
- In a consistently busy urban branch self-service kiosks may look to customers like an attractive option to avoid wait times. In a lower volume branch they may look like thin cover for cutting staff.
- Asking customers to sign into a tablet or kiosk when they enter a branch may aid analytics, but it is only beneficial to the customer if the branch is so busy that staff cannot maintain first come first served on their own. Otherwise it is additional overhead for the customer.
- Universal staff makes great sense from a staffing efficiency perspective. If the long term result is average quality teller and customer service delivery, the real objective is not being met. Performance measurement, training, culture and technology such as cash automation can help prevent mediocrity. A decision has to be made to be aware and proactive.
Other strategies may apply only internally. If procedural overhead can be reduced by automating tasks or improving the flow of information, then employees can direct more attention to serving customers. The drumbeat that service is the objective needs to be steady. Few things are more annoying to a customer than standing and waiting in a lobby while employees are busy on their computers, but not with customers. It does not matter if the employees are finishing a task for another customer. The customer's perception is that computers and paperwork are more important than I am.
Keep It Simple
The objective is to get, keep and expand the customer relationship. Branches are still a primary driver in that process. If customers use ATMs, mobile payments, online banking, RDC, or any other channel besides a branch to conduct business, that is good. As long as each visit to a branch leaves the warm glow of, "That was great service", the branch is contributing to the long term health of the institution.