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Redefine the Branch to Build Sustainability in the Future of Banking

The banking industry has been beset with questions such as–Is the branch still relevant? What role does the branch play in light of changing technology, market and consumer dynamics? To put it simply, the relevance of the branch as a servicing outpost is over. To tap a future up for grabs, the bank branch must be redefined into a branch of the future.

What does this branch of the future do differently? This redefined branch will shift from a center of service to a center of sales that will accelerate revenue growth and strengthen customer relationships. The branch of the future will attract customers for service, and help establish trust, but from the get go it will be designed and operated for sales and growth.

Digital Focus

For most of ‘banking’ history, the bank branch has been the cornerstone of banking. However, rapidly evolving business and technology dynamics have led banks to leverage several new digital channels. Banks have funneled a majority of their investments into digital and customer facing technologies to tap new opportunities and remain competitive. The rise of digital only banks and non-financial digital competitors has further spurred the drive towards digital.

The branch is often viewed as an expensive channel that delivers a sub-par experience. Key reasons include high workload on branch staff, limitations of legacy systems and an outdated operating model. A model that has forced branches to become end points in a factory set-up that centers on transactional servicing. This approach neglected the core competencies of the branch and has further reduced its effectiveness to improve experiences not just for the customer, but branch staff as well.

Renewed Reality

Contrary to popular belief, research continues to show that most retail banking customers still prefer branches for more complex financial needs and advice. According to the World Branch Report, 52% of customers cite a branch or office as a critical factor that instills more trust in banks. In another study by J.D. Power and the Financial Brand, a majority of customers score advice received through face to face interactions significantly higher than advice received over digital channels, especially in terms of whether the advice was personalized and whether it met their needs. An even greater majority of 68% act on the advice they receive face to face when compared to just 44% who do so with the advice received over digital channels. Additionally, 78% of bankers feel their bank could not survive without a branch network.

Personalized face to face engagement and advice to customers is something that pure play digital challengers also struggle to offer. And in the complex and often intangible world of financial products, such a capability is a competitive advantage. In fact, digital challengers in the financial services space are encountering the limits of their pure digital approach to drive sustained growth. Case in point being one of the pioneer digital only banks, has tied up with the UK Post Office to leverage over 11,500 branches across the country.

It is clear that branches are critical to a bank’s success. Instead of viewing branches as a costly overhead, banks must re-imagine the branch as a core channel to drive higher revenue and better customer relationships. To achieve this, the focus of the branch must shift from transactions to sales and engagement. And the branch does not have to be dichotomous to digital channels. The two can complement and reinforce each other to maximize value for both the customer and the bank. Leading banks are fast accepting this renewed reality.  

Designed for Sales, Designed for the Future  

Firstly, let’s get the notion clear that the branch of the future must provide all-round service. A customer has to leave the branch with everything they need, done promptly and to their satisfaction. Responsiveness, efficiency and broad functional capability are table stake requirements that must be met. However that’s not where things end. It is actually where the story begins, where operations must be designed to center on sales and growth.

To do so, we must revisit the dominant days of the branch. Branch staff then understood the customer, family and community well. They had deep knowledge of different products and processes. They were trusted for financial advice and guidance and personally managed customer relationships that drove the bank’s business.

The branch of the future must replicate these capabilities across branches. Scaling this across the banking enterprise can be a challenge. A new approach that empowers branch staff is critical to doing so effectively and efficiently. Every teller and front line banker must be empowered with the resources to enable them to engage better right from the first moment of truth. They must understand every customer at a personal level and be empowered to become a relationship manager to each one of them. They must drive meaningful and beneficial conversations with customers and provide them with personalized and contextual offers, advice and guidance.

To achieve this, each branch staff member must be equipped to manage time and resources to help them more effectively and efficiently manage transactions. Today’s digital native branch staff is also looking for newer technology experiences, tools and aids that help them engage with the customer better. Banks must invest in next generation customer engagement systems that offer digital first experiences for branch staff, along with streamlined and flexible processes. Intelligent automation must be deployed to relieve branch staff from mundane and repetitive tasks, freeing up valuable time. Technologies like embedded machine learning in branch systems can detect new patterns and offer new insights and predictions that can help branch staff understand customers with unprecedented depth.

Empowered staff with the requisite insights and tools can power the new branch of the future. They can drive the shift from transaction servicing to engaging with customers across the complete life cycle, increasing sales, customer lifetime value and driving growth for the bank. In today’s hyper competitive banking industry, a designed for sales branch is critical to building sustainability in the future of banking.

 

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