A wise man once said, a revolution is the beginning not the ending. While the banking industry may be in the midst of a revolution brought on by disruption, it’s the progress made along the way that is surely defining the customer banking journey today. After presenting these concepts at Future Branches, we know that the branch banking channel is either an asset to your brand – an important touch point with a customer who, realistically, may not visit all that often – or is a major liability because you haven’t maintained it. The banking industry’s most pressing problem today is how to optimize this physical channel of experience.
Market dynamics complicate matters. Regulatory relief has led to more mergers and acquisitions in the banking industry. While this is a positive marker for a healthy industry, the impact on a bank brand can be problematic. How do you manage the branded consult-based experience of an evolving network in a world where it's all about mergers and acquisitions? Even if a bank made major progress updating their branch networks, now they’ve suddenly just doubled their branch size. Those new branches have to be brought up to brand standards in both operational and visual manifestations. So, where do you start?
For an industry in flux, banking’s fundamental first step for transitioning its physical branch network is to define, develop and deploy its North Star. The concept of a “future branch” implies a state of being, something to arrive at or achieve. But when imagined holistically, a future branch is less a final destination, and more of a road map that helps chart your course. A North Star is a constantly-evolving guiding principle that will help banks create the ideal embodiment of the branch experience at any time. This framework for innovation cannot be leapfrogged or pushed aside because it will inform and influence everything that comes after.
As more transactions migrate away from the branch, what to do with the physical branch has some in the industry scratching their heads. Banks have all of this physical space that they may not necessarily need for the amount of foot traffic they’re seeing, but closing down branches seems reactionary and may not reflect a bank’s future state. While the number of in-branch transactions may be on the decline, the high value, consultative experiences still take place inside the branch. Banks also use their physical presence in a geographic area as a branding beacon, showing that they are an embedded part of the community. What we recommend here is tenaciously assessing network formats and purpose.
What are the key considerations as banks evaluate their physical networks? As the industry changes, we see branch sizes trending toward smaller spaces. At the same time, we see processes shifting because of automation – things that banks don’t really need people doing, like processing routine transactions in the branch. One exciting development that is trending up is new purpose and functionality of space as the industry iterates such as community rooms, cafés and the like. It’s not just a singular location, but an array of branches with different formats and purposes you’re evaluating. That’s where the North Star comes back again. It helps banks define the optimum experience among varying formats and functions.
When assessing your branch network, you’re balancing experience with efficiency, essentially asking, “How do I get the best experience possible with the least amount of spend?” On the efficiency side, you have the size of the branch format helping to define what can take place there – how much staffing, automation or enhancement you will have in this location. On the experience side, you have brand essentials – interior and exterior elements – staffing and culture and in-branch innovation and enhancement. The biggest consideration in this assessment is size, because the amount of available and utilized space affects all other efficiency and experience elements and has an outsize effect on cost.
In Part II of Optimizing + Transforming Your Branch Network, we will look at zones of experience and tiers of transformation for branch network environments. From refreshing an existing space to transitioning and transforming them, enhancement opportunities exist in all shapes and sizes.
If you’d like to talk with one of our bank optimization and transformation experts, contact us at email@example.com.