If you are a regular reader of this blog, you know I strongly advocate for financial institutions to address the question of why a customer would make a visit to the retail branch. Given that there is absolutely no compelling reason to visit a branch for any transactions (and I literally mean nothing …), the fact that nearly every retail branch is still oriented around transactions seems outdated and counterproductive.  Outside of shutting down a branch and building a smaller one in its place (expensive but doable) or sharing your retail space with a symbiotic business (which is actually a really good idea but the subject of a separate blog post…), you cannot shrink the size of your branch.  So, with branch traffic at a historic low, it is past time to reimagine the purpose of the retail branch.

I was reminded of the timeliness and importance of this topic by an article in the Financial Brand that highlighted there was a higher purpose that could be imagined for the branch, which definitely got my attention.  In reading through the article, the author highlighted five ways banks can shift branches from “Transaction Centers to Value Centers.”  The five ways are: 1) Shift from transactions to trust, 2) Get managers out from behind their desks, 3) Bring back-office technology into the future, 4) Make sure experts are available, and 5) Remember the importance of cash.  Now while I generally agree with the premise of this article, I found myself shaking my head at the details associated with these five ways.  Let’s examine each of these ways in detail.

Shift from Transactions to Trust – The article suggested that the focus of the branch could be giving expert advice and problem solving.  Now, both of these are certainly worth addressing, but it is much more likely that our future customers (think young millennials and Gen Zs) will want financial wisdom and problem solving integrated into their everyday financial journey. They need to know that a purchase will overdraw their account or ask in real time about why they should open a primary banking account instead of using Venmo.  This wisdom will need to be available via online and mobile devices. While it is a good idea to have a problem-solving element as a part of the retail branch, customers are more likely to access it remotely than setting up an appointment. This is one of the reasons that FNBB is experimenting with a Generative AI agent that can be trained to be interactive with younger customers via mobile to provide financial wisdom.

Get Managers Out from Behind Their Desks – The article suggests the physical nature of sitting across from customers and prospects decreases engagement.  However, the issue isn’t the desks, although I am an advocate of getting rid of them. The problem is the aptitude and attitude of the staff that currently sit behind those desks. We need teachers and salespeople not order takers.  I want consultative selling and education to add to the aforementioned problem-solving as a key focus of a branch visit. Many of the teller and customer service representatives currently working at banks can transition to these more engaging activities, but in the end the bank should look to hire sales professionals and formally trained teachers to staff their branches.  The branch should be all about engagement as the primary reason for its existence.

Bring Back-Office Technology into the Future – The article highlights that many FIs have software that doesn’t integrate which causes problems. True, but the answer is integrating all that legacy software.  Everything you need to do to open an account and transact is available on the customer’s phone. So, get rid of all of the legacy systems and conduct all account opening and account servicing on the customers’ phone. There will always be back-office services, but let’s keep those in the back-office and leave the branch to focus on engagement.

Make Sure Experts Are Available – This one I agree with, but the answer is to allow the customer to make an appointment to ensure the person that they need to interact with is at a specific location at the chosen date and time.  Also, every office needs to have multiple small meeting spaces where a customer or prospect can interact with an expert who might office in another location.  Come to think of it, if you can do that, you make all those expert appointments available online or via mobile. Even better.

Remember the Importance of Cash – This one completely baffles me.  More businesses are starting to not offer an option to purchase with cash.  I just finished six weeks of domestic and international travel. Know what I needed cash for? Tips. The article quotes a 2022 survey of US and Canadian consumers that showed that 36% of respondents indicated having access to ATMs was a factor in influencing a branch visit. That would only make sense if the 1/3 of those surveyed were going to the bank specifically to get cash.  Cash is not a driver of branch visits; I can get money from ATMs all across the world or get cash back from a retail purchase.  It’s true that some businesses are more cash intensive, but a cash recycler can manage that much less expensively than a full-service branch.

It is clear to me that bankers know they need to do…something with their branches but can’t seem to pull the trigger on the innovative ways to shift from transactions to engagement.  My recommendation is a crawl, walk, run transformation. Start by getting rid of the desks occupying space in the lobby where no one sits and replace those with tables that allow staff to highlight the virtual branch tools that the bank provides. Plus, a space where periodic classes are held in a wide variety of topics that focus on the education on “how” and “why” topics.  Branch transformation doesn’t have to be painful, and it certainly doesn’t have to be expensive. But it takes a strategic focus to reimagine the role of the retail branch and then the diligence to see the transformation through.

If you are struggling with how to reimagine your branches, reach out to me at dpeterson@bankers-bank.com and let’s talk about how FNBB can provide strategic insight into this important innovation initiative.

Resources

https://thefinancialbrand.com/news/banking-branch-transformation/five-ways-banks-can-shift-branches-from-transaction-centers-to-value-drivers-176398/

The views expressed in this blog are for informational purposes. All information shared should be independently evaluated as to its applicability or efficacy.  FNBB does not endorse, recommend or promote any specific service or company that may be named or implied in any blog post.