Banking Strategies recently interviewed David Kerstein, President of Peak Performance Consulting Group- David will moderate the BAI Retail Delivery 2010 panel discussion on October 20th,
“Building Branch Distribution for Tomorrow’s Reality.”
Banking Strategies: Banks are experimenting with branch models all the time, such as WaMu’s Occasio-experiment. What branch models in the market today contain elements that you think are worthy of emulation? Who’s doing cool things that may have staying power?
Kerstein: One of the distribution challenges we face is keeping branches relevant in an era when consumers and businesses no longer need them for their traditional role as transaction processors. There are a number of banks that have very interesting innovations that are worth watching
- and perhaps emulating.
Umpqua Bank in the Pacific Northwest has been a leader in integrating bank branches into their neighborhoods. Many of Umpqua’s branches are designed as mini community centers that attract the kind of meetings and activities that used to be associated with the local library or town center.
US Bancorp has been a leader in building branches at corporate headquarters and factories. Their on-site banking program has branches at over 60 office campuses, including Dell and Proctor & Gamble. They have also been quite innovative in the use of small spaces
- in one case transforming a space used for vending machines into a bank branch.
Citibank has teamed up with the designers of the Apple’s Retail Stores to create an innovative bank design. The first branches were opened in Japan earlier this year. Citi claims this is the prototype for a major re-design of all their retail branches worldwide.
Banking Strategies: Looking into your crystal ball, what do you think the typical bank branch will look like 10 years from now? How will it be different from what we see today?
Kerstein: Bank transaction volume has been declining for years – just look at the number of tellers we used to have in our branches 10, or 20 years ago compared to today. I really think we are nearing a tipping point where you need to question whether we’ll need a teller line at all in 10 years. So you could argue that we won’t need anywhere near the number of branches we have today.
But our physical branches play a vital role in acquiring customers and delivering service. If we look at countries that have gone even further than the U.S. in eliminating branch transactions, there are numerous examples where initial efforts to prune facilities backfired and resulted in loss of market share. The pendulum then swung in the other direction, with denser distribution supported by small, inexpensive, sales oriented branches.
Spanish banks have been particularly successful with this model, so it will be interesting to see how BBVA and Santander adapt to the U.S. market.
What do I believe the typical bank branch will look like in the future? There will still be large branches, similar to what we have today, most likely in urban centers. But most branches will be smaller, and more likely to be in a retail strip center than a stand-alone pad site. They will have fewer staff, cross-trained to handle sales, service and transactions. There will be greater use of technology for frontline CRM, cash handling, and web/call center integration.
I would encourage financial institutions to start moving in this direction now. After all, the majority of bank branches in the U.S. have six full-time employees or less. As customers write fewer checks and increasingly use Remote Capture for deposits, it is time to re-think how we train, support and utilize our staff or we risk being saddled distribution expense that cannot be supported through branch revenue growth.
A few months ago I was working with a client on a suite of new consumer and business deposit products. We were almost ready to begin roll-out training when the Director of Retail Banking resigned for another position. The CEO and I started discussing how to keep momentum moving until the position was filled. He jokingly asked, “Why don’t you run Retail for a while?” One thing led to another, and — to my surprise — I found myself signing up to be Interim Director of Retail Banking at a Texas based community bank.
Well, I guess it’s not quite so surprising. I become strongly vested in my clients’ success. And success for this bank meant getting more involved in day to day decision making.
Although I’ve managed as many as 1,000 branches in my career, I’ve spent the last 10 years helping retail banking managers and bank CEOs improve their sales management and customer profitability strategies. “This will be fun”, I thought.
But before you think that I’ve taken a sudden career change, Peak Performance Consulting Group is stronger than ever. It’s just that this project has gotten a little more hands on.
So — how have we done?
First, the details. The bank is less than $1 Billion and less than 10 branches. We didn’t change pricing. The marketing budget is miniscule — we spent only $1,000 last month on promotion.
Here are the results: new account openings grew 46% in the first month, and headed for similar results this month. Fee revenue is on track to double.
How did we do it? It was a laser focus on sales process: sales management, sales behaviors, and sales coaching.
You can get the same results in your organization. Just think of the profit impact if you attain 25-50% growth in sales in only 30 days.
As they say, its all in the details. I’ll be talking about some of the specific things we did (along with continued updates on results) in future blog postings. But you don’t have to wait. Give us a call, or send us an email and I’d be glad to tell you how we can help your organization substantially improve sales management success.