Over Q3 and Q4 of 2019, I traveled through Egypt and the UAE working with bankers at a wide range of financial institutions (FIs). As the industry grapples with new challenges like nontraditional competitors (looking at you, Apple), open banking, PSD2, omnichannel engagement, etc., 2020 offers us all a chance to hit the reset button rather than the panic button (which I’ve certainly seen some bankers doing over the past couple years).
The terms “branch transformation” and “self-service strategy” mean many different things to different people, and that can lead to feeling overwhelmed. FIs are faced with an increasing number of options for enhancing their self-service channels, from appointment setting on mobile apps to cardless access on ATMs. As a result, we frequently see bankers chasing their competitors’ projects, rather than investing the time and effort to identify critical initiatives that will move the needle with their own clients.
As you look ahead to the next decade, I encourage you to be a leader in your market, not a lemming! From quick wins to long-term plans, here are five industry-tested lessons you can apply to your successful branch and self-service transformation strategy.
- However you go about it, get a lobby strategy this year—and implement it.
This is a lesson some of the biggest banks in the U.S. have taken to heart. More than 75% of their deposits are done via ATM or mobile, and they’ve implemented. lobby management across their network of branches. They’re greeting customers at the door and educating them about self-service at every opportunity
In contrast, one bank branch I visited in Egypt felt like a movie theater: There were 18 different teller windows, probably 50-70 seats, it was huge! And yet, the experience was really lacking. Rather than a bank employee greeting customers and directing them to the appropriate location to conduct their transactions, there was a security guard who gave each person a number to wait in line and didn’t ask any questions about the purpose of their visit.
As Steve Jobs from Apple once said, “You have to start with the customer experience and work backward to the technology.” In the next decade, start with some of the key interactions you have with your clients. What is the ideal experience you would like to provide for each interaction and what are you delivering today? What are the gaps between the current state and ideal experience? From there, consider the people, process (i.e., lobby management) and technology aspects you will need to address to deliver that ideal experience.
Consider how to give clients a better experience when they enter your branch today. Which leads me to No. 2 …
- You need employee buy-in.
Are your employees prepared to offer the kind of elevated, personalized customer service today’s consumers expect? Your tellers may be on a first-name basis with some clientele, but are they able to educate customers about new channels? Do they have the tools to see the customer information they need to help advise and upsell?
Branch staff in the next decade need to spend more time as advisors and experts who can help clients with their financial needs and changing life events. And when they educate customers about new channels that make it easier for them to conduct their transactions, they’re building loyalty and deepening relationships. Yet often, branch employees see it as an attempt to cut staff. Here are two quick wins:
Drive efficiencies by encouraging transaction migration.
- Hire a specialized team with off-the-shelf training materials to come in and quickly upskill your staff to help them succeed in the omnichannel branch environment.
- Change staff incentives and performance metrics—conduct a six-month trial that encourages your employees to suggest the ATM or mobile as options, and give them the tools to educate customers about those options.
Once your staff is ready to move customers to new channels, take a look at the transaction cadence in your branches. In the UAE, we worked with a bank where customers were routinely coming in to conduct account-to-account money transfers. The bank had ATMs that could complete those transactions, but only .02% of them were being conducted through the ATM.
That’s right: less than 1%!
That’s not an efficient way to run a bank. The right staff can facilitate transaction migration, helping to dramatically cut costs. A transaction conducted at an ATM costs a fraction of the amount it costs to conduct the same transaction at the teller line.
bank kiosks can actually print cards in real time, creating a completely transformed experience for consumers. A card-issuing kiosk offers a very real value proposition in this kind of situation.
Develop a comprehensive roadmap and conduct pilots to test new processes and solutions.
One of our favorite things to do as an Advisory Services team is SWAT-team style projects. We come in to our clients’ branches for a week or two, observe what’s happening, gather data about the transaction mix, conduct analysis about their customers and develop a list of the top 10-15 things they can do to move the needle. The full list of to-dos can run into the 100s, of course—and that’s where banks can get overwhelmed. Our experience with banks around the globe helps us prioritize critical initiatives.
As I saw during my travels in the Middle East, some banks have prioritized certain lower-impact initiatives higher than others. For example, in several countries, some banks are clamoring to build a digital (self-service) branch because the leading banks in their market have already done so. Yet their existing branches, of which there are many, offer a sub-par experience that is inefficient and doesn’t promote more convenient ways of meeting customer needs. A reordering of their priorities is in order, don’t you think?
At that movie-theater-style bank I mentioned earlier, we suggested removing two teller windows and creating a self-service zone with a greeter who would actually walk a customer over to the ATM and educate them on how to conduct their transaction through self-service. But here’s the key: we encouraged them to pilot the project at that one branch for a period of time, and monitor and measure what happened. Then they could see if it was something of value that they needed to consider deploying elsewhere.
In all my travels over Q3-Q4, I didn’t hear of any instances of structured piloting programs. I think in most cases this was because there simply wasn’t a disciplined project management approach from the banks’ executives, and no measurement framework or tollgate system in place to provide the appropriate touchpoints.
We have a structured process that we share with our clients to help them activate on pilots and trial runs, so that after 90 or 120 days, they can evaluate and determine whether the project was a success or not. Without the right metrics, how will you know your new initiatives are successful?
Be ruthless about entrenched processes.
There are two things I want to highlight here. First, quit checking the checker! This was an eye-opener in the UAE, where at one branch we visited, a sales rep would take a customer’s paperwork, put it into the system, and then another person reviewed the work on the computer before it could go to the next step. Twenty years ago, those process redundancies helped ensure that humans made fewer mistakes. But today, even the most manual interactions at a bank branch still have a computerized component, and there are failsafes in place to prevent errors. Don’t waste resources with “checking the checker” activities unless it’s truly necessary—and if it is necessary, ask yourself why … is there a modern tool you could implement to alleviate that burden?
Second, I encourage you to take a fresh look this year at your strategy regarding risk. We saw banks in the UAE that were overly compliance oriented, and it was hampering their growth in an era when new fintechs are encroaching on nearly every function a bank provides. Do your risk management policies support your efforts to improve branch efficiency and encourage customers to use lower-cost channels, or are policies actually driving customers into the branch? In this decade, you will need to closely align risk management with business objectives if you want to compete with banks, neobanks, fintechs and others that are doing things in a much more progressive way.
Use the advent of an entirely new decade to rethink the way your FI operates. Your competition is playing with a new set of rules, and you can either strategize new ways to compete by harnessing and building on your organization’s current strengths, or submit to the lemming approach and simply follow the leaders, regardless of whether their strategies make sense for your business. By the end of this decade, the financial industry will look very different. With the right partner at your side, you can be prepared to offer your customers the experience they expect in our 24/7, digitized world.
Do branch transformation the right way for YOUR organization. Let’s start a conversation today.