In our recent perspective piece Dispatches from Banking’s Frontline, we looked at the forces of change challenging retail banking and financial services – both from inside and outside the industry. Comparing two U.S.-based retail banking reports, we assessed the inside need for change and the outside challenger coming in to fill that need. Now, we’re sitting down with international banking expert David Cavell to go a little deeper into some of the international banking trends and themes he is seeing across the globe. Author of the esteemed branch banking executive report series for RBR London, David’s insights are sought-after worldwide. Early in 2019, he took the time to chat with us by phone.
On bank branches, David thinks that what banks get wrong about their network is that they focus too much on transactions. He believes, “A branch has never really been about transactions. A branch has been about building profitable relationships. So, we've had bankers over here putting the branch in too hard a box, listening to some of the hyperbole in the market, and in my estimation, taking quite a wrong view. This frequently leaves gaps in the market for competitors to come in.” He points to big banks like Chase as examples of a thoughtful approach to relationship-building through their branches and seeing opportunities in their target markets.
About Chase he says, “They're looking at their network, and they're saying they don't necessarily need all of those branches to build relationships. But on the other hand, there are gaps in the marketplace where they're not represented, and they do need branches to stay competitive in those areas.” Believing that branch banking can’t be one-size-fits-all, David tells us, “I’ve followed Chase, and certainly their initiative is typically how on the one side, they may need to be refining and rationalizing their network. Whereas on the other side, they can still look at voids or opportunities in the marketplace where the branch would be the natural lead channel.”
Pointing to a landmark 2017 study Beyond Digital: How Can Banks Meet Customer Demands?, David describes how banks are missing the mark. He told us, “Accenture did this seminal piece of work, and broadly speaking they said something like half of the customers in the United States and two-thirds in Canada view their relationship with their bank as merely transactional. That was the expression: merely transactional. [Branches] are very much [at the heart] of acquiring the relationship first of all, of strengthening it, and developing it. If after a period of time your customers still regard their relationship with you as ‘merely transactional’ then that's a fundamental failure.”
What seems to be missing on a fundamental level is a deeper connection with people that banks can foster. David describes a number of ways of addressing this through leveraging opportunities, but one in particular, is vital to branch success. He finds, “The issue of brand is of great significance to me. I've spent a lot of time with people who really understand what brand is. It's not a label over the door. It's a set of intrinsic values that your consumers form an emotional bond with…That is something that you can create if you have the values in your organization and you have the practical approach to representing those in the branch.”
What better representation for a brand is there than its people? As we’ve often said in banking, your staff is your first brand ambassador. David describes the types of soft skills needed in the bank brand environment. He begins, “Let's start with staff. [You need] strong interpersonal skills. My view is that these interpersonal skills need to more properly reflect the sort of skills that would be required of staff working in the hospitality industry. They should be modeled to be brand compliant. They should be monitored by a qualified [brand] player coach. Then you go through all of the process of when you demonstrate it, you're certified, and then you're allowed to go into the live environment.”
Staffing with the right people and the right skills is as much a vital business concern as where to locate your branch or what technology to deploy. David says, “If you don't put the right staff in [the branch], if you don't put staff in who are capable of dealing with people, recognizing the opportunity, relating to those individuals, not pursuing the product push but pursuing genuine needs-based sales… If you don't take that line, than you're compromising your ability to acquire, strengthen and develop those relationships. [Staff] needs to understand how to manage relationships… how to spot the next sales opportunity, and how to harvest it in a way that builds a relationship rather than damages it.”
In our next installment, we talk with David about technology deployment in banking and how the best banks are coordinating multiple channels of experience for their customers. For more information on trends in banking and the financial services sector, contact us firstname.lastname@example.org.