You read the headline correctly. We see articles all the time about ways to make your retail banking transformation a success. But the truth is, successful transformation is as much the result of doing the right things as it is avoiding the wrong things. There are many ways financial institutions (FIs) impair their branch transformation initiatives before, during and after implementation. It can be a hard — and costly — lesson learned, so be aware of the pitfalls as you develop your strategy and kick-start a new project. It may require more time and energy upfront, but this is a job you want done right.
Our advisory services team consults FIs around the globe, and we’ve seen projects that soared — and some that flopped. The FIs that don’t see the ROI they’re looking for have usually sabotaged their own efforts, perhaps through the best of intentions. Here are some of the more egregious mistakes I’ve seen:
- They attempt too much at once.
Tempted to make large, wholesale changes at once? Even in a marquee de novo branch, piling the place up with fancy technology or trying to do too much too soon can actually backfire — especially if it’s the lead component of your strategy.
Have you conducted a SWOT analysis to determine whether your ecosystem can handle the approach?
- Will your employees understand the benefits of all that tech?
- Do your consumers have the appetite for it?
- Are your back office processes and systems prepared to support the changes?
Our advisory team often works with banks to optimize plans or aggressive timelines, because we’ve seen what can happen. An institution invests so much time and effort in their technology, they fail to develop a consumer adoption plan, and technology usage underperforms expectations (even if objectives and goals were not set beforehand).
A much more successful outcome typically occurs when an FI first identifies the top three to five consumer pain points they’re trying to solve, prioritizes the solutions/changes, and carefully implements the right solutions. Don’t make a series of arbitrary changes that you end up regretting — or worse, having to explain to the board. Make sure your team has the right strategy in place for your unique situation to drive to a particular goal.
- They think employees and consumers will go with the flow.
Change management is a huge elephant in the room. As you introduce new automation technology, redesign your branch layout, or rethink the roles of your employees, you’re undoubtedly going to rock the boat and ruffle some feathers.
Do not underestimate the amount of work it will take to get your team — and consumers — aligned around new processes and technology. You’ll need to assess your staff and your branch to determine how and where education needs to take place, how job roles and responsibilities will change, and where there may be pockets of resistance. We can help get your staff on board, but you have to have the time and willingness to facilitate that journey.
Moreover, branch transformation is not like Field of Dreams. Just because you build it, doesn’t mean customers will come. Proactive engagement with customers is critical to create awareness of new initiatives and foster customer adoption.
- They wait for “the one.”
There is never going to be a “perfect” time to initiate your branch transformation. Likewise, new technology and new ideas will never stop hitting the market; if you wait for “the one” that will solve all your bank’s woes, you risk the market passing you by.
Instead, look for flexible solutions that are compatible with your current strategy and capabilities, and engineered for the future. Consumer preferences are changing quickly, and failing to act only opens the door wider to your competitors — both from within the financial services industry and from non-bank competitors.
- They ignore their consumers.
You’re thinking, Wait, we would never do that! But have you truly considered your products and services from the perspective of the customer and worked backwards instead of starting with the product? Or have you made some assumptions, like …
- Older consumers aren’t interested in using new technology.
- Millennials aren’t going to come to my branch no matter what I do.
- Digital wallets and cardless access are just novelty toys for early adopters.
I would challenge every single one of those assumptions — and you should too.
Moreover, are your assumptions based on direct, voice of consumer conversations? Or are they internal interpretations of what you think your customers want? Involving consumers directly in the process can improve engagement, loyalty and provide invaluable insights on your customers’ preferences.
- They lose steam when the real work is just beginning.
This one is the most painful for me to see play out in a branch network. Beautiful new technology is implemented, and then everybody goes back to business as usual and the opportunity is wasted.
Shout your new capabilities and functionalities to the world — target your current consumers as well as potential consumers to let them know about the things you’re doing to differentiate their experience and make banking more convenient. Market, market, market — not just through traditional media but through your bank’s touchpoints: your employees, in-branch signage, the ATM, your online app.
You may have been focused on your new technology, design or processes for the last six months, but your consumers (and probably most of your employees) have not.
Branch transformation is not easy. There are many paths to success, and in reality it’s a path that never truly ends. Your business must continue to evolve over time, no matter what the future holds. But as I’ve outlined here, there are some mistakes you can avoid when it comes to implementing transformative solutions.
Source: Brett Rumble, Diebold Nixdorf