Bank branches aren’t Blockbuster, but they’re moving in that direction. The trend solidified following the Great Recession; over 5,000 branches were lost in the last decade. In Spring City, Pennsylvania, someone has even transformed an old bank branch into a private residence, complete with two vaults that serve as a bar and a sauna. (Admittedly, we have some concerns about putting a sauna behind an armored safe door, but to each their own!)
It’s not just physical bank branches in decline; in-person experiences in many different industries have been waning, nudged aside by new virtual platforms and digital engagement opportunities. If you had talked about ‘Ghost Kitchens’ only a few years ago, for instance, you might have been mistaken for a supernatural enthusiast, but nowadays, restaurants and countless other industries are re-imagining their physical presence.
In the last decade, technology has enabled more efficient and convenient consumer experiences. In banking alone, depositing checks, opening accounts, and completing paperwork have all been digitized to the benefit of customers, bankers, and support teams. But 2021 may be a last hurrah for the physical bank branch, a chance to re-imagine the branch experience for a future that appears ever increasingly virtual and digital.
Year over year, branch traffic has declined, as has the number of total branches in operation. With forced closures, lockdowns, and other restrictions on in-person business activities, financial institutions and consumers had no choice but to press pause on branch-based banking. This shouldn’t be misinterpreted as people permanently dismissing branches, though: 62% of consumers still prefer to use banks or credit unions that have a physical presence, rather than a digital presence only.
As vaccination rates climb, pockets of the country approach herd immunity, and semblances of normalcy in consumer life and business activities return, branch traffic should also increase.
When foot traffic does return, banks and credit unions will have an opportunity to reimagine their approach according to their customers’ current and future needs. “Branches are still important, but they’re going to be less of a place where people go for transactions and more for advice and consultation,” U.S. Bank CEO Andy Cecere said at the Goldman Sachs U.S. Financial Services Virtual Conference. Especially in the wake of tumultuous economic circumstances for tens of millions of people, branches will have a vital role to play in helping consumers return normalcy to their financial lives.
While people may not be anxiously awaiting branch reopenings in the same vein as restaurants or sports arenas, there is a big opportunity for branches to serve customers and the community while tapping into digital channels to drive growth.
Bank and credit union leaders can point to a host of push-pull factors for why their customers will come into a branch. Taking care of routine transactions and needing to speak with a banker or specialist about a more complex need will remain top of mind, but other pull factors, like responding to cash offers or visiting for special events will continue to entice some consumers. Since these reasons for visiting are common and expected, though, there is little potential to transform the experience to delight consumers. Offering free coffee and donuts in the lobby probably won’t hurt anyone, but most people will probably still just opt to go to their favorite coffee shop on their morning commute.
To reimagine the branch experience, banks and credit unions need to also reimagine reasons why their customers might come back into a branch. For starters, promising and promoting the same branch experience to everyone should be sunsetted, now that digital marketing advances and AI have made micro-targeting and refined segmentation more feasible. An elderly couple who has been with a bank for 40 years will come back to see their favorite bankers and tellers, but a young college student might come in because of a special workshop on reducing student debt, for instance. Digital marketing and customer segmentation teams have a significant opportunity to refine how they promote branch visits, and those who marry data-driven insights with creative, original messaging will likely emerge ahead of the pack.
No matter which segment a customer belongs to, great financial advice and guidance always play a key role in their experience. Many banks and credit unions conflate advice and guidance with sales and service, when in reality, many customers are neither interested nor ready to have discussions about specific bank products and services. A customer might not want to talk about a ‘Platinum Checking Account,’ but they may want to talk about their own spending habits.
Those same customers may need financial advice about other matters, such as how to improve their spending and savings habits, how to improve their negotiation skills for big-ticket purchases, or how to shop more ethically and sustainably. For a lot of bankers, these topics may be a step outside of their comfort zones, since they aren’t necessarily ‘banking’ topics. But savvy bankers have already realized that what sparks someone’s interest in a conversation doesn’t necessarily equate with the outcome of that conversation. Meeting customers where they are in conversation, and providing truly relevant advice, acts as a powerful ‘relationship deposit’ that pays dividends in attentiveness and trust.
If you were a contestant on Jeopardy, you would likely have to respond, “what are the front doors?” to accurately describe where a branch begins and ends. But for customers, a branch is just another facet of their banking experience, and they don’t suddenly start thinking of their bank any differently when they pass through a set of doors.
Ideally, the branch begins and ends somewhere imperceptible to the customer, because the transitions between different engagement and interaction channels (e.g. mobile, web, phone, branch, etc.) are so seamless and coherent that the result is a ‘unified’ banking experience. To achieve this elusive and desirable outcome, banks and credit unions must carefully consider how their digital, virtual, and physical experiences blend together. Oftentimes, there are unintended redundancies and inefficiencies between engagement and interaction channels; we can all remember wondering, “didn’t I fill this out already?” sitting in a waiting room somewhere.
To make the most of the branch experience for both customers and bankers, there must be digital discovery and conversational preparation prior to a customer ever stepping foot in a physical location. By discovering customers’ unique needs – asking the hard questions about financial priorities and changing personal situations digitally – branch-based staff can be equipped with robust and actionable data that they can use to structure, tailor, and guide conversations with each customer.
Often, these check-ins can happen digitally so the customer can be quickly connected to the right department. The banker or specialist also benefits with a new lead that has just provided updated financial data. This needs discovery can be triggered from anywhere – waiting in line at a branch, online banking, or email. Win-win.
If the branch is to become a center for complex, dynamic advice and guidance – driven and informed by rich needs discovery – then the new branch banker must be a skilled generalist (a so-called ‘Universal Banker,’ fluent in many different financial topics, but also a quick study at interpreting and using data. Additionally, the new branch banker must be supported by a well-connected team of specialists and niche experts, with a clear system in place to make referrals and cross-connections.
Since the pandemic has made remote work a more prominent feature of many organizations, banks and credit unions also have an opportunity to consider how to optimize the time of their branch-based staff during quieter and slower hours. Rather than sitting around waiting for foot traffic, branch-based bankers should be able to conduct proactive, outbound outreach, using needs discovery data to personalize conversations over the phone, chat, and video.
Moreover, specialists need not be located in physical branches to serve customers effectively. By simply installing interactive video call centers in branch locations, customers can have immediate access to every single specialist in an entire bank’s ecosystem and network. For example, a customer visiting a branch in Virginia could be instantly connected via an in-branch virtual platform to the best specialist located at a peer branch in Maryland to discuss a complex need. No more schlepping around between locations or getting stuck in traffic!
For many banks and credit unions, the right solution will simply be to shutter some branches and realize operational efficiencies and cost savings. But for most, repurposing and redefining the branch – and by extension, the role of the banker – presents a unique opportunity at the right moment in time to delight customers. Perhaps the Nostradamuses of the banking world have been too pessimistic in their prognostications about branches, underestimating the creative and innovative potential of financial institutions to delight customers with fresh experiences. If there is a year to capitalize on returning branch traffic, it is undoubtedly 2021.