This article was originally published in BAI Banking Strategies on September 15, 2015
As customers migrate to digital channels, bankers need to aggressively re-configure their branch networks in terms of the number and mix of facilities, the staffing provided and the role of the contact center.
Perhaps the single most important threat facing the banking industry is the fundamental change in the way consumers and small businesses use branches. Routine service transactions are being displaced by online and mobile, causing branch transaction activity to decline at a 4% to 5% rate per year on average, with some banks such as SunTrust, experiencing declines of 8.5%. And sales productivity is low: our client benchmark data indicates the average branch opens 20 to 30 new accounts per month, and that translates to only 1 to 1.5 accounts per business day.
The steady change in channel behavior has left many bankers uncertain about how aggressively to respond. In our recent survey of industry leaders, one senior banker said, “There is still a lot of disagreement within the industry and our bank as to how quickly the shift from physical to digital is taking place. That is leading to a hesitation about committing resource investments, which could be a huge stumbling block for the prosperity of the industry longer term.”
Here are some suggestions for revamping your distribution model to evolve with the changing customer trends:
Bank-at-Work has proven to be an effective channel to acquire new clients, deepen existing relationships and generate incremental revenue. But fully leveraging the channel requires that bank’s maintain a cohesive structure around their workplace program. Get best practice tips to improve your existing program, or jump-start success for new programs. Get expert advice from Paul Corrigan, perhaps the leading expert in developing, implementing and managing Workplace Banking programs.
Register here and use Offer Code PPCG20%off
- How Bank-at-Work generates revenue growth and complements branch based sales programs.
- How Bank-at-Work is a group sales model and puts bankers in front of prospects and customers they no longer see in branch
- Define the components that drive incremental revenue and provide growth.
- Understand the dynamics behind best-in-class workplace programs and amount of new business they generate.
- The impact of inadequate program structure; error’s that will impede your workplace initiative.
- Checklist of “Top 10 Tips” to ensure that your Bank-at-Work program is successful
Who Should Attend:
- Community Bank Executives
- Retail Directors
- Sales Managers
- Marketing Managers
- Branch Managers
Learn From the Expert:
Paul Corrigan’s expertise with Workplace Banking includes 18+ years’ experience in program implementation and channel management at Citibank and RBS Citizens
- Paul’s experience includes working with community and regional banks in the U.S., and with international banks in Canada, ,Europe, Latin America, and Europe
How to Register and Special Offer: Register here and use Offer Code PPCG20%off
The numbers are clear; Branch usage is declining. Fact is transactions conducted in bank branches is dropping 5-6% per year due to direct deposit, debit, electronic bill pay and other check displacement. For example, with more and more of their customers shifting to digital, JPMChase has seen the blend of deposit transactions move from 90% teller / 10% ATM in 2007 to 42% Teller / 48% ATM / 10% mobile in 2014. A seismic change in just 7 years. The bottom line impact for Chase and everyone else is shrinking branch traffic leaves fewer sales opportunities: New accounts opened per branch FTE have declined 23% since 1997*.
At the same time, traditional media and direct response is becoming less efficient as a means of acquiring and converting prospects. In this environment, Workplace Banking can be a highly effective and efficient acquisition channel by reaching prospective customers at their workplace.
The sales recipe is timely: Workplace Banking puts bankers in front of prospects and customers they no longer see in branch with opportunity to sell, service, advise, and generate incremental revenue. The model elements are simple; marketing to employees where they congregate (at the worksite), where there’s a commonality (they work for the same firm), and where there’s an endorsement (from their employer), that the program is special. The result is a cost efficient sales and servicing model that builds an acquisition annuity stream: As company hires new employees, the bank has opportunity to acquire new customers.
Continuing the theme of efficient, timely and simple, the Workplace Banking channel provides clear benefits for all constituents:
- For companies, offer components such as Financial Education & Financial Planning provide a relevant and tangible way to enhance their employee benefits package with result being increased employee productivity with reduced financial stress. This type of workplace offering also reinforces employee/employer relationship with employees learning how to better manage personal finances with education and planning.
- Employees also receive an improved level of servicing with dedicated banking team to work with right at their worksite. At the same time, Banks get a consistent set tools and practices to drive incremental revenue, strengthen relationships with commercial and small business customers and increase branch productivity.
- For Branch Bankers, Workplace Banking helps them achieve growth goals with increased new account production. Importantly, the workplace sales and service model will also help Bankers transition from ‘transactor’ to ‘advisor’ with enhanced job knowledge and skill development – something every bank is looking to achieve as the branch model continues to evolve.
In the final analysis, Workplace Banking addresses this key industry-wide challenge: Banks need revenue growth, but customers shifting away from branches, the traditional source of acquisition and cross-selling. The time is right for Bank’s to place a renewed emphasis on building-out this important sales and service channel.
Banks are blessed with substantial customer information. One way to use that information to drive sales is to categorize customers into groups with similar product demand. Why do that? To compare the performance of sales people on an apple to apple basis. That type of comparison holds employees accountable and guides the action of sales managers. Let’s look at an example of that.
As consumers and small businesses shift to alternative channels, it is critical that financial institutions improve the operational and sales efficiency of the brick and mortar channel. That means fine tuning every point of contact to optimize effectiveness.
Financial institutions of all sizes are facing challenges to their retail branch system. Technological innovation, starting with the introduction of ATMs, then internet banking, and most recently mobile banking, has resulted in declining branch usage. Consumers and businesses don’t need to go to the bank as frequently as they did in the past now that routine monetary and service transactions can be easily handled on a personal computer or smartphone.
Consumers want branches, but declining usage is reducing sales opportunities and revenue growth. As routine servicing and monetary transactions continue to migrate out of the retail branch, the fundamental nature of bank branches must undergo a dramatic transformation.
The bottom line is that, with fewer teller transactions, branches must become more efficient as sales and marketing centers. This can be achieved through greater micro-market targeting of marketing messages in order to maximize the sales opportunity from limited branch traffic and to optimize trade area sales penetration.
Up to now, many financial institutions have employed a one-size-fits-all strategy. Branches are often similar in size and style with limited differentiation. More importantly, marketing strategies are frequently implemented uniformly across the network with limited variation of messaging based on unique branch or trade area characteristics.
Improve Revenue with Targeted Strategies
According to American Banker, 82% of the top 50 banks in the US offer workplace banking. Most community and regional banks also have a program, but few banks are successfully cross-selling Workplace Banking into their Commercial and Business Banking client base. Instead, many banks resort to branch discretion for targeting accounts. Branches often default to calling on local targets, such as retailers and other companies with a high mix of lower wage, more transient employees.
The net result is in smaller average account balances, acquired with discounted bank-at-work pricing, which is not a prescription for success.
So here’s the question: Why do we so many of us settle for a “Two Bank” approach when it comes to Workplace Banking when the benefits of “One Bank” are so clear? Maybe we need to baseline why “One Bank” is worth striving for.