Feb 15 2017

What Is the State of the Local Bank Branch as IT Evolves?

What can banks do to enhance the customer branch experience while also driving down costs and increasing efficiency, especially when tech-savvy consumers expect a top-notch omnichannel experience?

As digitization in financial services increases, it is no surprise that branch location numbers continue to decline. Analysts at Citi predicted last year that the number of U.S. bank branches could shrink by a third by 2025. Likewise, credit union branches have been decreasing since 2012, with a total loss of 1,656 credit union branches.

Despite their declining numbers, consumers still find value in branches. In fact, nearly half of Americans (45 percent) visited a bank branch for personal business within the past 30 days, according to financial publisher Bankrate. That loyalty to branches also cuts across demographic lines, considering 62 percent of millennials still use and value branches (although they may not visit them as frequently).

Yet branch performance is trending in the wrong direction. Lobby wait times have risen steadily since 2011 in many branches. On average, the time that customers wait for initial contact with a service representative after signing in the queue management system has increased from 4 minutes 46 seconds to 7 minutes 6 seconds over four years, according to the FMSI Retail Branch Lobby Study.

Acting to Enhance Customer Relationships

What can banks do to improve customers’ experiences at their branches? At a time when customers are using technology and apps to make their lives more efficient and get goods and services faster, banks are being expected to deliver more.

Banking executives are taking action to transform the physical bank experience. According to a 2016 KPMG survey, their primary priorities include deploying digitally enabled self-service capabilities for teller transactions (37 percent) and account opening and maintenance (35 percent). Banking executives are also looking to invest in branch technology to increase operational efficiencies and redefine banker roles.

Getting Data into the Right Hands

Financial services executives also realize the value of data for increasing revenue. More than four in five (83 percent) agree that fully leveraging financial and customer data into analytical insights would represent an increase of at least 5 percent in their annual revenue, according to a survey conducted by WSJ. Insights. But less than one out of five companies allows access to information and data consistently across all departments or teams, including customer-facing employees who would benefit from having the information to better serve customers.

Cross-Sell Systems and Training

Customer relationship management systems can supply frontline staff with the data they need about customers as well as suggestions for “next best products” to recommend. When the data and technology are enhanced with needs-based training, it encourages sales and service staff to uncover sales opportunities by asking the right questions at the right time.

Given that an average of 52 percent of customer encounters in 2015 involved services, with 48 percent focusing on products, there is a compelling reason to devote time and effort to cross-selling, according to the FMSI Retail Branch Lobby Study.

The Video Strategy

Video services are yet one more way to modernize the branch. Customers can gain access to a broader network of experts to help them meet their financial objectives.

A recent survey from Vidyo and Efma shows that video deployment plans are picking up in the banking industry:

  • 10 percent of banks have already deployed a video banking service
  • 50 percent of banks plan to launch a video banking service within 12 months (2017)
  • 80 percent plan to launch a video banking service in the longer term (2018)
  • 70 percent of banks prioritize video banking availability via mobile and desktop over in-branch or ATM availability
  • 93 percent of banking providers say they think customer satisfaction would improve if a high-quality video banking service for mobile devices were to be implemented

Conduct Research and Take Action

Alex Jimenez, a digital banking and payments strategist, gives wise counsel: “Bankers need to ask themselves, ‘Do we know how consumers prefer to use our branches?’ Once that question is answered, it’s time to think about how digital technology can improve those processes.”

Then start taking action. Your customers and members are expecting it.

Read more about the fintech market in this CDW report.