"Sound strategy starts with having the right goal." - Michael Porter
The future of retail banking is fraught with uncertainty. At seminars and industry events, it's not uncommon to hear speakers say that the branch is going the way of the dinosaur. Conversely, there is a strong group of proponents who maintain the branch is a vital channel and a key component of a successful financial institution.
The only certainty is that the future is not clear. The branch is undergoing a metamorphosis and it’s important that you prepare yourself to succeed.
It’s with that thought in mind that we introduce a different philosophy—branch evolution over branch transformation. Enterprise-wide decisions are difficult to make and often lock you into a strategy that may be less than ideal. Developing a step-by-step approach to the branch is the best way to move forward during this uncertain period. This provides flexibility and allows you to respond quickly to a dynamic and ever-changing banking environment.
The fundamental basis of the “Branch Evolution” concept is that a technology decision made today should provide immediate benefits while keeping options open to adapt to changes later on. Regardless of what tomorrow’s branch ultimately look likes, there are three pillars that are critical to continued branch success: design, service, and people.
Redesigning an entire branch network is not always feasible. Among the pitfalls are:
But, it doesn't mean that you shouldn’t study retail banking trends and implement technology that compliments your current (and hopefully future) branch strategy.
Digital signage, cash automation machines, and assisted self-service kiosks are just a few examples of technology updates that are minimally invasive to most current branch layouts. They give the perception of progressive change, while also having a measurable ROI. And consistent with the “Branch Evolution” strategy, each of these technologies can be repurposed if and when a more radical branch overhaul project is implemented, essentially future-proofing the branch.
Retail banking is moving away from a transaction-driven culture to a more consultative one. Technology can influence this. Utilizing roaming tellers equipped with tablets is a great example of a cost-effective, service-oriented strategy that can be scaled further down the road. For instance, during high-traffic times, a roaming teller can expedite customers to the correct part of the branch, often saving time and ultimately creating a better customer experience.
Once your branch strategy has been further defined, those same roaming tellers can be used in an assisted self-service model or even a hybrid traditional branch model with a centralized cash recycler. This approach can dramatically speed up transactions, reduce time in queues, and most importantly, result in a better end-user experience.
The most important customer is one that actually walks into a branch. Today, if a person walks by the ATM, cruises past the drive-thru, and leaves their smartphone nestled securely in their pocket there is probably a reason. They need to speak directly to a person.
In order to transition to a consultative mindset, your staff needs to be prepared to succeed. Tellers will no longer be strictly bean-counters, instead they will need to be able to assist customers with mortgage products, personal loans, or setting up a new accounts. Today, tellers are not trained for this level of service.
Transitioning away from a transactional model will require that your current employees learn new skills and get comfortable taking a more hands-on approach with customers. This fundamental change in philosophy is often the most difficult obstacle to overcome. In addition, human resources will also need to adapt hiring requirements and processes to reflect different capabilities.
The future of retail banking is uncertain, but there is strong evidence that an omnichannel experience is important. Customers want seamless experience between the banking channels and the retail branch continues to play a role. Building a scalable branch model is vital for an unclear future. In the meantime, focusing on design, service, and people will put you in a position to succeed.