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Will be or will not be, that is the question!

Will it, wont it? Speculation on the fate of the bank branch is similar to the Loch Ness monster debate in at least one way - no one knows for sure.

Branches can only try to prolong their survival and then hope for the best. Luckily for them, with some refocus and redefinition, they have more than a fair chance of making it through the next few years. At least.

This calls for a bit of unthink, a change of role from the operational to the advisory.

Branches need to think of themselves as high-impact sales engines. And why not? They have the advantage of face-to-face interaction, and a personal rapport with customers that no other channel can match. These are valuable assets in closing a sale. For the same reasons, branches are also best placed to prevent customers from leaving. 

Branches must become the trusted advisors of their customers. Given the beating that banks' images have taken during and after the crisis, this will take some doing. Such as staffing the branches with well-trained, knowledgeable staff, who put the interest of customers above all else.

Branches must function as inbound touch-points. The branch is the strongest spoke in the know-your-customer wheel. It collects customer information first hand. It is capable of instant fulfillment. Some banks have capitalized upon these advantages by transforming their branches into "stores", with an ambience to rival that of any high-end lounge.  These measures cost, but also pay back with prestige, branding and differentiation.

The teller is the new seller. Tellers must be trained and empowered to do other things, like handle a business request or waive a fee if a sticky situation calls for it. Above all, they must be taught to always be on the lookout for an opportunity to sell. A study found that half of retail mortgage and branded card sales in the U.S. still comes from bank branches. Performance - that's the best ticket to survival!

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Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 31 August, 2012, 11:00Be the first to give this comment the thumbs up 0 likes

Props for such a balanced view about the role of bank branches. While many digital pundits and research analysts may find it fashionable to write branches off, contrasting actions by banks serve as beacons for the future. SBI, India's largest bank, recently decided to keep branches open on Sundays to handle the extra volume of business - despite offering Internet Banking for close to 10 years and mobile banking for around three. Both M&S and Metro, latest entrants to the UK banking scene, have put their weight behind plush and welcoming branches.

A Finextra member
A Finextra member 05 September, 2012, 06:31Be the first to give this comment the thumbs up 0 likes

Good article with a view on the direction of how branch banking is evolving. It is nothing about branches die or being written off. Globally including Indian market see role of branches to mature from being transactional to relationship building and advisory. This is seen clearly when banks in certain markets are re-visiting how their branches function and look, such as branches having lounges, touch screen enabled, segregated areas, etc.

It also makes a business value proposition to see low revenue generating transactions to be supported in channels that are low cost digital channels by making them mainstream channels and have branches to focus on value delivering and revenue creating transactions. Wouldn't we want see long queues minimised on a Sunday when we visit a branch for a banking need that needs expert based service rather than just withdraw some cash?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 September, 2012, 11:15Be the first to give this comment the thumbs up 0 likes

The cliche of people visiting bank branches to withdraw cash is largely outdated. On the contrary, cash deposit transactions of the following types seem to account for the bulk of queues in branches: (a) Cash deposit into accounts by individuals and SMBs with large cash businesses (b) Sending money home by migrant workers across different states within the country (c) Purchase of Demand Drafts.

It could be argued that technologies are available to move all these transactions to electronic channels. However, their adoption is hobbled by several issues: (i) Let's take the example of ATM Bunch Note Acceptor in the context of the aforementioned transaction (a). If it took a decade or two for people to get used to withdrawing money from an ATM, it shouldn't be surprising that it will take them at least as much time to deposit money into a machine. (ii) For security or whatever reason, electronic channels have upper limits of transaction value (e.g. Visa CardPay permits only INR 50K per day for credit card settlement), compelling branch visits for payments above this threshold. (iii) As I'd pointed out in My Bank Does Right To Scrap Cheque Deposit Systems, certain technologies are simply bad tradeoffs between cost reduction and customer convenience.

You could blame technology, technology providers, bankers' mindsets or regulators for the current state-of-affairs. But, under the circumstances, it's virtually impossible to move all mundane transactions to digital channels. IMHO, while their superior capabilities in the areas of relationships and customer complaint redressal are obvious, branches won't lose relevance even for handling low value, everyday transactions for the forseeable future.