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Branch Distribution

This article by Peak Performance consultant Guenther Hartfeil and Brookline Branch Services associate Gianna Whitver was originally published in BAI Banking Strategies on December 1, 2016.


In an age of new channel investment, banks must restructure physical distribution and unlock value from hard assets in branches.


Almost all banks have grown by acquisition, resulting in a mix of facilities.  Many older branches are oversized and single purpose in nature: former bank headquarters or large branches built for when the industry needed many more teller stations, drive-up lanes and deposit operations space than today.


So it’s no surprise that on the cusp of 2017, we have far more invested in facilities than needed—and in an ideal world, we would reduce branch configuration and cost. This would make banks more efficient and free up capital to invest in new channels that better meet changing customer needs.


The question is not whether this should be done. It’s how. As one bank CEO told us, “I know we have facilities that aren’t suited to our needs, but given the capital investment I can’t afford to do anything about it.”


But we need to do something about it.

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This article by Peak Performance consultant Jon Voorhees was originally published in BAI Banking Strategies on October 10, 2016.  Voorhees is former head of distribution strategy and execution at Bank of America Corp.  


It seems like every week you hear about another bank’s plans to close some large number of branches. Some analysts predict (though I don’t agree) that half of all branches open today will close in the next few decades as online and mobile banking fully takes hold with consumers and small businesses.


Due to today’s very low interest rate environment, margins have been squeezed for several years.  Banks have felt unrelenting pressure to cut expenses. And branch closures represent a natural target because customers have migrated many of their transactions to the newer, more flexible e-channels rolled out over the last ten years. There are even seemingly ubiquitous phrases that CEOs and CFOs trot out when announcing closures. Like these:


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This article by Peak Performance consultant Jon Voorhees was originally published in BAI Banking Strategies on September 12, 2016.  Voorhees is former head of distribution strategy and execution at Bank of America Corp.  


I’ve read many articles about the death of bank branches since I started in the industry more than 30 years ago. Since then, my position hasn’t wavered much: Bank branches aren’t going away—but they must change. Why? Three reasons:


  1. For most banks, branch networks are the first or second largest expense category.
  2. Most banks have seen human-based transactions, and the accompanying branch traffic, drop as consumers adopt online and mobile channels for routine transactions.
  3. Yet most banks still capture the vast majority of all sales activity in the branch.


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The following article, quoting Peak Performance Consulting Group’s President David Kerstein, appeared in S&P Global Market Intelligence on August 8


By  Kate Garber and Kellsy Panno


Some of the largest U.S. banks hope to entice their customers with real-time, P2P payment capabilities like those offered by PayPal Holdings Inc. and other fintech companies.


As member banks go live on the clearXchange network, a unified payments channel, customers will be able to send and receive money in real time. So far, Bank of America Corp.Capital One Financial Corp.JPMorgan Chase & Co.U.S. Bancorp and Wells Fargo & Co. have the real-time payments capability up and running. Fellow network owners PNC Financial Services Group Inc. and BB&T Corp. have yet to go live on the network. An Early Warning spokesperson said that while all members are in the process of integrating the capability, go-live dates vary by bank.


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The Following is an edited extract from an interview with S&P Global Market Intelligence. The original can be found here 


S&P Global Market Intelligence recently spoke with Jon Voorhees, former head of distribution strategy and execution at Bank of America Corp.  During his 17-year tenure Voorhees led the transformation of BofA’s physical distribution channels including branches and ATMs. He has joined Peak Performance Consulting Group as consultant and adviser.


S&P Global Market Intelligence talked to Voorhees and Peak President David Kerstein about different distribution strategies.


By Rabia Arif


S&P Global Market Intelligence: Do you think banks are innovating enough to keep up with the current times and how important is it to change?


Voorhees: Many firms out there are aware they need to change but they don’t know how to actually do it. And they are stuck in the… analysis/paralysis mode. They just need to get on with it.


The thing about branch distribution or ATM distribution is, change doesn’t come quickly. I think most organizations today are not moving quickly enough and it’s because they are fearful of the downside of not doing it well.


Kerstein: There are legitimate issues that people are worried about. Most banks are a combination of acquisitions, which means that they have got a mishmash of real estate. They might have a paramount amount of capital invested in them, and they are not easy to reconfigure.


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Digital Payments are growing, and financial institutions have high expectations for adoption. But with usage rates stalled, is this the right time for community and regional banks to invest, or should other options be considered first?


We just finished an analysis of Mobile Wallets and P2P payments. Here’s a few key points, but read the full article for more detail.


There is wide belief among financial services executives that mobile wallets and P2P payments will shortly become basic table stakes, similar to mobile banking. According to the 2016 Debit Issuer Study, commissioned by PULSE, almost three quarters of financial institutions expect at least 15% of debit transactions will migrate to mobile in the next 5 years, and nearly half believe the migration will be in excess of 25%. They have invested accordingly: issuer adoption of mobile payments has surged and 65% of debit cards are now eligible to be loaded into mobile wallets, up from 30% in 2014.


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