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Selecting a property, hiring an architect, building designers, interiors, vendors and technology providers all encompass a project that amounts to a two-year business interruption. It does nothing to attract a client base.
October 8 -
Branch numbers will grow again while the industrys total branch square footage goes down. More customers will choose their banks based on the availability of a branch they wont use all that much.
July 16
Reading the reports and presentations coming out of retail banking today, you'd think the industry as a whole had split into separate personalities. One half says branch banking is dying, not with a bang but a whimper. Others declare that the reports of its demise have been greatly exaggerated.
At a recent Barclays conference in New York, Kelly King, chief executive of BB&T, underplayed the mass branch exodus, but asserted that his bank had continued a "kind of natural pruning process" by closing 3% of its stores. Timothy Sloan, CFO at Wells Fargo, conversely, trumpeted their "9,000 stores" with no plans for significant reductions. Bank of America has been
Let's discuss exactly what we know. First, transaction volumes are going down in-store and increasing in self-service channels. Foot traffic, according
While bankers value that a transaction costing $4.25 in a branch costs less than a dime on a smartphone, firms of all sizes are concerned that as customers perform more transactions themselves, opportunities to deepen relationships become scarce. From my own experience, I can tell you that once you get the self-service ball rolling, customer adoption often outpaces projections due to its simplicity and convenience for the customer.
Second, while branch transaction volumes have declined, "branch-based new account sales have increased slightly" over the past five years, according
Javelin
There's a famous story about Walt Disney that could be instructive for the industry. Disneyland had recently opened and Disney arrived for a tour. The executive showing him around was horrified to see a newly worn path in the grass where customers had ignored the paved sidewalks and beaten their own trail. When the executive told Disney he'd put up fences and replant the grass, Disney said "Don't replant the grass, rather pave the path the customer has made."
There's actually a term in landscaping for this behavior: desire path. It's the path that wasn't designed by a landscape architect but created by people making their own way along the most convenient route to their destination. Today's retail banking customers have clearly beaten their "desire path." The data tell us that customers want to bank in the most convenient way for them. That could be on a smartphone. That could be at an ATM or that could be in a branch, depending on which is easiest at the given moment. The very fact that banks haven't addressed these fundamental shifts in customer behavior has led to the industry's discordant voices. Banks don't need to close their branches necessarily, but they certainly must transform them.
ESRI published a
I'd suggest that most branch processes and technologies are also outdated based on customer preferences. Let's face it, while amazing progress has been made in online and mobile banking capabilities and one could argue in ATM a branch in 2013 doesn't look a lot different from a branch in 1973: a teller line, personal banker offices, a branch manager and an ATM.
I know the solution isn't as simple as "pave the dirt path." But if the questions about branch processes, people and technology are asked and answered in light of what today's customer is saying and doing, the next decade should be one of the most transformative for the retail bank industry. And that gives me hope for tomorrow's retail banking experience.
John Berry is a former channel integration and sales and service executive at Bank of America's retail bank. He can be reached at
