Using the word ‘automation’ in the context of retail branch staffing seems like another way of trying to ask “Can I eliminate a staff position through automation?” The short answer is—it’s complicated. While automation offers significant efficiency gains, the decision to reduce staff isn’t straightforward and depends on various factors unique to each financial institution.
The Changing Landscape of Retail Banking
Recent data indicates that the retail banking sector has experienced a substantial decline in branch transaction volumes. According to a 2022 report by the Federal Deposit Insurance Corporation (FDIC), in-person transactions have decreased by approximately 35% over the past five years due to the growing adoption of digital banking services.
Simultaneously, branch labor costs have continued to rise. The Bureau of Labor Statistics reported a 4.2% increase in wages and benefits for banking employees in 2023 alone, contributing to the escalating operational costs.
These trends illustrate the rising labor cost per transaction and make it imperative for banks and credit unions to find ways to optimize branch teller performance and reduce branch operating expenses without compromising customer service.
The Role of Cash Automation Technologies
Implementing cash automation technologies, such as teller cash recyclers (TCRs), can dramatically improve operational efficiency. Branch analysis indicates that with a cash recycler, two employees can handle the workload previously managed by three.
Teller cash recyclers automate cash transactions and other cash-handling processes, improving speed and accuracy and adding security and accountability to cash management. These efficiency gains not only enhance teller performance but also alleviate constraints like peak-hour staffing and time-consuming vault transactions.
Reduce Staff or Repurpose Roles?
While cash automation makes a tempting case for bank teller reductions, the decision isn’t so straightforward. Should you use cash automation to reduce staff? The immediate thought might be yes, but there’s a compelling argument for repurposing existing employees into other roles.
Investing in Your Existing Team
Experienced bank tellers are valuable assets. They have in-depth knowledge of branch processes and more specifically, your products, services, and customer base. Repurposing staff into revenue-generating or customer-focused roles capitalizes on their experience with your products and services and can add significant value to your institution.
For example, you might:
- Cross-Train Tellers: Empower tellers to become universal bankers who can handle a wider range of services, such as opening new accounts or providing basic financial advice.
- Enhance Customer Experience: Assign staff to focus on building relationships with customers, offering personalized assistance, and improving overall customer satisfaction and loyalty.
- Support Digital Services: Utilize branch tellers to help customers adopt and navigate your digital banking platforms, bridging the gap between traditional and online services.
The Benefits of Repurposing Over Reduction
The benefits of retaining and repurposing experienced branch staff far outweigh short-term headcount savings. In committing to a culture that supports employees and repurposes valuable staff, financial institutions can:
- Maintain High Service Levels: Ensure customer experience doesn’t suffer due to reduced staffing or high turnover.
- Increase Revenue Opportunities: Staff engaged in sales and advisory roles can contribute to the bottom line.
- Boost Employee Morale While Reducing Turnover: Retaining and investing in employees fosters loyalty and reduces turnover costs.
Finding the Right Balance
The banking industry’s shift toward a more personalized customer experience means that staff roles are evolving. Customers still value human interaction, especially for complex transactions or financial advice. By reinvesting in their existing human resources, banks and credit unions can meet customer needs more effectively.
The possibilities for staff optimization are extensive, and the best approach depends on your institution’s specific goals and customer demographics. Whether through staff reduction, repurposing, or a combination of both, the key is to leverage cash automation technology to enhance teller performance and operational efficiency.
Before making a decision, consider conducting a thorough analysis of your branch operations, customer needs, and long-term strategic objectives. Investing in your existing team by providing them with new opportunities may yield better returns than immediate cost-cutting measures.
Our branch cash experts are ready to listen. Contact us for a free branch analysis.