Report from the ABA Marketing Conference

By John Ginovsky

 

 

While alternate banking channels, including ATMs, online banking, and mobile banking, have reduced in-branch transactions, the branch remains the near-exclusive channel for customer acquisition, says Steven Reider, CEO, president of Bancography. The company provides research and consulting services to banks relating to branch, product, and brand positioning strategies.

“Suppose someone is looking for a specific feature, like free checking? He or she can’t check all 8,000 banks in the country. But he or she can check the five or so that have branches down the street,” he says. Location convenience remains the top institution selection criterion for consumers, while fraud and other security concerns also lend credence to visiting a brick-and-mortar branch, at least to set up an account.

“The key question bankers have asked in times of earnings pressure historically has been, ‘How few branches can we get away with?’ In fact, the more beneficial strategic question is, ‘How can we afford the branches we want and need?’” Reider says. He spoke during the recent ABA Bank Marketing Conference in Baltimore.

Which isn’t to say that today’s typical branch will work into the future. Those alternate banking channels are not going away. The trick, he says, is to align the cost of a branch with the market opportunity.

“Before closing branches or bypassing a potential market, it is imperative to examine the revenue potential of the customer base and then seek to devise a service model with proportionate costs,” Reider says. “This indicates that markets with higher revenue potential can employ traditional high-touch service models. But markets with lesser potential must consider alternative service delivery models.”

Ironically, technology plays a huge role in the branch of the future, he says. These include:

•    Universal agents such as teller cash recyclers, which can do away with traditional teller lines, allowing branch staff to keep transaction duties to a minimum while allowing them to interact more closely with customers.

•    Remote item capture.

•    Modular safes and self-service safe deposit boxes.

•    Coin counters and advanced function ATMs—those that do not require envelopes.

•    Centralized processing, and “circuit riders”—bank officers, including managers, who oversee several branches instead of having unique staffs for each branch, keeping track through advanced digital means.

“Technology is often the starting point for transforming branches to lower-cost operating models. However, technology is not an end objective but rather a means of enabling different sales and service behaviors,” Reider says. “Ultimately, transforming a branch to a lower-cost operating model is a function of reducing personnel costs, not by the blunt elimination of positions but by the reconfiguration of job roles to leverage new technology and design concepts.”