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Branch Distribution

business woman in warehouseThe 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.

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market-SegmentBanks 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.

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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. j0177737Technological 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

 

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012415701-businessman-ideaAccording 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.

 

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I was reading the obituary of Paul Amos, who founded American Family Life Assurance Company with his brothers. You know the company – it’s the one with the talking duck who repeats the abbreviated name “Aflac.”

 

Here’s what struck me in the NY Times obituary:

 

While most insurers sold policies by knocking on doors, Paul had the company emphasize cluster selling and worksite marketing. Instead of making presentations to individuals, the company’s sales representatives often went to companies to make sales pitches to groups of employees. Today, most of Aflac’s United States policies are bought through payroll deductions.

 

Sounds like Bank at Work, or perhaps Insurance at Work. Aflac built a $121 billion company on this strategy.

 

We’ve been saying for a long time that Bank at Work can be a highly effective and efficient acquisition channel by reaching prospective customers at their workplace. And it’s a natural fit for banks that have commercial relationships with employers, or credit unions based on their historical SEG (Select Employer Group) heritage.

 

But before you charge headlong into this program, read our articles and presentations: Ten Myths about Workplace Banking, Keys to a Successful Workplace Banking Program, and Banking on Bank at Work.

 

And to know more, reach out to Paul Corrigan who is one of the leading experts on Workplace Banking. He managed the very successful programs at Citibank and RBS Citizens, and has consulted with credit unions, community banks, and national banks in the United States, Canada, and around the world. His expertise with Workplace Banking initiatives covers the full range from strategy to execution and includes considerable experience in program implementation and channel management. Paul can be reached at paul.corrigan@ppcgroup.com

 

 

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This article was originally published in The Financial Brand on March 6, 2014 and was co-authored by David Kerstein, President of Peak Performance Consulting Group, and Nancy Radermecher, President of JohnRyan

 

Here’s how to make use of sophisticated branch data analysis in the creation of targeted marketing messages, and why this is important in adapting the branch for the future.

 

The Branch Transformation Imperative

Consumers are changing the way they bank. Research by the Philadelphia Federal Reserve Bank and others indicates check-writing activity has been declining at a rate of 5-7% annually, creating less demand for branch monetary transactions. Meanwhile, routine transactions that had been branch-centric are being disintermediated by the Internet, mobile and call centers.

 

According to a report by FMSI, branches process roughly half the transactions they did 20 years ago, with branch transaction volumes declining by 45.3% since 1992. This figure is likely to be considerably higher for banks that have aggressively implemented alternative channel delivery strategies.

 

Although consumers are using branches less, they still place a high value on bank branch convenience. Local branch presence is a primary reason consumers choose a bank, while customers consider easy access to branches and ATMs one of the features they value most.

 

Financial institutions face a basic conundrum: 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.

 

Branches will still be the primary vehicle for customer acquisition and consultative sales, but they must adapt to focus less on teller transactions and more on more complex advisory services. Successful financial institutions will implement more robust front line tools to enable staff to deliver better customer service, stronger profitable cross-sell, and achieve greater share of wallet.

 

The bottom line is that, with fewer teller transactions, branches must become more efficient as sales 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.

 

Improve Revenue With Targeted Strategies

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.

 

Usually, messaging is two-dimensional (for example, Spanish language signage in selected locations). But “best practice” institutions are improving revenue by tailoring messaging in a more efficient and impactful ways.

 

Moving forward, financial institutions need to adopt a more sophisticated “Rubik’s Cube” approach where messages are specific to the trade area market opportunity. This should form part of a comprehensive system that uses both market and internal data to create a sales and marketing protocols.

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