Reexamining the Branch of the Future

Much has been said about the importance of a bank branch and how to tweak it to make it more effective. Clearly, the branch’s presence in some form seems to be important for now. Branches have been central to the bank business model and serve important confidence building and customer intimacy needs. They also complement and leverage recent advances in digital innovation, such as wearables, mobile, social, robotics and automation.

On the other hand, in our quest to save costs, optimize the experience, and add digital capabilities, are customers actually being delivered a suboptimal experience? To help answer that question, let’s reexamine some of our definitions of the branch concept itself:

Sales through the branch. When we think of a branch, what comes to mind? Some of the top needs are servicing basic transactions, opening accounts, helping with product selection and overall customer service. Research points to how customers value and appreciate these interactions at a physical branch. The trouble with that picture is that most of these are activities that are in the process of being replaced by the web, phone and mobile channels. In fact, plenty of (comprehensive) product advice is already available through third party aggregators. Sophisticated artificial intelligence based algorithms, robots and virtual agents are being developed every day to meet basic advisory needs, and multi-channel integration is improving customer experience every day.

Previously, these capabilities were provided in the bank branch because there was not another way to do them. The branch was the customer interaction medium; it was the bank. That’s not true anymore. In today’s digital age, we are at a point that we approach a branch for complex needs only after we’ve already narrowed the available options through our own research. The fact that self-research is becoming prevalent in this digital age should be considered carefully before we draw conclusions on customer behavior.

We need to think about what we expect from the branch; is it a sales engine, or merely a sales support engine? If customers are being reached and influenced online even before they reach a branch, how do we create engagement and stickiness by enabling that goal for the branch? Further, are we equipping our branches to help customers accomplish what they can probably do themselves anywhere (digital self-service capabilities), or are we adding additional dimensions customers won’t get anywhere else?

Converting the branch to be an active customer engagement engine requires an active re-thinking of its purpose and what the facility enables customers to do.

Customer at the center; building the right ecosystem. Is the branch now expected to serve a very different, much more profitable and mutually beneficial business? To answer this question effectively, we should think of the customer as a person instead of simply a user of our products. And we must think of the branch as part of the local community instead of a satellite sales and servicing office. An average retail, small business or commercial customer has several needs that are all interrelated but addressed in an isolated fashion. A branch can serve as an invaluable tool for bringing this network together.

To achieve this gaping need in a digital world, where there is much more noise than real information, a branch can take the lead to become the place where customers and providers come to discuss and address their needs. The branch is in a unique position of being able to enable and build a community. The possibilities are endless if we look beyond our products to what customers are trying to accomplish.

Thinking beyond the traditional branch definition leads us to facilitate partnerships, build trust and also drive transactions. The transition is not easy. But we must take inspiration from the many supermarkets that are bringing banks, nutritionists and even doctors within their stores. In today’s digital world, if we are not where the transactions originate, we’ll be a back end operator and rapidly commoditized.

Building the right customer experience, with digital at the core. The concept of the omni-channel customer experience has changed for a bank. The traditional definition of channels and the urge to sacrifice customer experience in an effort to achieve sales must give way. In the new age, it’s really about being at the front of the customer engagement cycle and omni-channel relationships, with the data, transactions, and motivations available centrally for “multiple stakeholders” to contextually access.

Think of a customer looking up a lending product online. What can be done to provide this context to the contact center, to the branch, and to also initiate a dialogue with the customer to help them meet the customer’s needs in the most comprehensive manner? Selling a lending product happens by default. What also should happen is the creation of a reference position in the customer’s mind wherein they want to engage with us, rather than we trying to engage them. That’s where the branch as a community center can fit in brilliantly. The branch can create a transaction from a first-class customer experience based on true partnership focused on customer goals, not only the product under consideration.

We are in a world where advantages of information asymmetry and lack-of-access are disappearing. And the traditional definition of channel is really just becoming a roadblock. The real advantage is in creating a partnership with the customer, not just a provider relationship.

Based on the above analysis, here are some tangible and practical steps that can be taken to reinvent the branch:

Investing in the real consumer. This is the first step and will determine the strategic nature of branch transformation. The real consumer is looking for solutions that address their specific needs. While customers receive education and self-help guidance from digital channels such as online calculators for retirement, the real obstacles customers face can also be the branch’s biggest opportunities.

For example, in case of retirement, do we help customers with detailed information on our own products, or do we help them plan the actual investment vehicles they need even if those products are not offered by the bank? This is also the biggest gap with respect to customer centricity because we give up control of the customer engagement to external facilitators. Providing associates and advisors with predefined products information based on customer scoring, third party ratings etc. can be an initial way to operationalize this model.

Connecting branches tightly with digital experiences. The strategy of investing in the real consumer can only come true if branches can link seamlessly to the inevitable online experiences customers are going through even before they get in touch with the bank. For example, as customers engage with retirement or lending calculators online, they can then be handed off to a branch. The branch can provide the human element to help customers holistically with the entire need. During the course of this process, customers will also be followed up with through online, email and contact center channels.

However, our traditional channel model has created data and process silos. Designing technology and data models to enable seamless handoff between channels is critical and will enable this next step of the transition. Financial decisions need a lot of handholding, which should be the centerpiece of this digital redesign.

Transforming branches into community centers. The final step in creating a scalable and sustainable branch model is transforming it into a local community center. This also alleviates much of the risk inherent in a customer-centric advisory model. Letting customers choose their own advisors, inviting non-bank professionals to assist clients, and linking with non-financial community needs are examples. Some key scenarios include wealth and retirement planning, home ownership, education planning for children, retail loyalty programs aligned to the community, small business advisory services and estate planning.

Similarly, apparently non-financial activities such as environmental campaigns, sporting marathons and other community service activities are all ultimately linked to fund raising and financial management. Becoming a community center will be the final step to reinstate the branch as a community anchor, instead of being relegated to a back end services provider position.

In this new order of things, the most dazzling innovation will be to create transactions from experiences, which is a complete about-turn from trying to create experiences from transactions.