Let’s begin with an understatement: A lot has changed since March 2020. The way we live, work, and carry out our day-to-day activities has changed. Understandably, all industries have seen varying degrees of change.
Customer banking behaviors have changed out of necessity. As financial institutions were required to limit availability of branches, adoption of digital tools soared, and customers became less branch-dependent. Now that branches are increasing their capacity for in-person visits, traffic has yet to return to pre-March levels. In a study by Novantas, 40% of people indicated they would be unlikely to return to pre-lockdown behaviors. They still need their branches for more involved transactions, but customers are understanding and accepting of the limited availability offered to them and, are increasingly more comfortable with the digital alternatives to everyday banking needs.
However, decreasing traffic doesn’t translate to decreasing importance. Branches remain a differentiator for banks. In fact, 98% of customers who switched banks in 2019 chose a bank with branches nearby.
Recent upheaval highlights the fact that it’s time to fix and shine a spotlight on your branch network. Redesign your branches based on the needs of your customers. Customers generally come to your branches for one of three reasons:
They’re forced to: Whether customers aren’t able to open an account online, or don’t have internet access, some folks will need to visit the branch because they don’t have a viable alternative for completing their banking needs.
Self-directed transactions: The customer knows what they need and just wants to get it done. With efficient self-service tools, you can accommodate these customers.
They need support: When it comes to more complex endeavors, customers still prefer human interaction and expert advice over bots and screens.
By understanding what customers expect to accomplish when they arrive at your branch, you can tailor your branch experience to aid them in more efficiently achieving those tasks.
Network Optimization
Optimizing distribution networks has been a priority for retail banking for over a decade. Branches haven’t disappeared and mobile channel usage hasn’t become ubiquitous. So how do you put into context what’s happened during the COVID-enforced lockdown and craft an effective channel strategy? First, continue to enhance digital capabilities to allow for safe, fast, self-service of transactional banking needs. It’s efficient, customers want it, and you need to deliver a good experience for customers who prefer these channels. Second: align your branch network to your customers’ needs and to the market opportunity for growth. By analyzing customer transaction volumes by customer value, you can determine the relative value of the transactions that each branch services and assign a value to each branch. Similarly, by analyzing the composition of each trade area served by a branch, you can quantify the relative new business potential of each location. Between these two criteria, a relative ranking of each branch can be decided and used to guide how to invest moving forward. For example: Placing a sales office in a trade area densely populated by prospects and customer segments likely to need advisory services to meet their needs; or consolidating two or more offices currently servicing transactions for low-value customers.
As the role of each branch is defined, design and staffing can be adjusted accordingly – emphasizing self-service tools, enhancing advisory services, or increasing the integration of community activity. In each case, the goal is to link the visibility and value of the branch to the needs and expectations of your different customer segments and thus, deliver a better customer experience.
Is your channel strategy just to grow digital? Is your branch network as efficient as it could be? Are your distribution channels optimized for a COVID-19 environment and beyond? Contact Galapagos to get the ball rolling on analyzing and optimizing your distribution channels.