What is branch transformation?

There are a lot of reasons for a financial institution to rethink their branch strategy: consumers who prefer digital experiences. Rising costs. Non-bank competition. Even a global health crisis that’s made people cagey about close contact.

So, while the branch is still relevant, its form factor is evolving. No longer a flagship of a financial institution, the branch of the future is where consumers will go specifically for the personal touch and financial advice on important decisions—not routine transactions. And the experience consumers have there will be critical to building profitable relationships and long-term loyalty.

As branch traffic declines, financial institutions are seeking ways to make their bricks-and-mortar experience relevant. Those that are winning are refining their services as well as redesigning the physical layout of their locations to better address the needs of customers who are always changing. Using new, connected technologies, financial institutions can expand their services, cultivate better customer experiences and reinvent the branch as a hub for financial advice and new interactions.   

What does branch transformation mean for retail banks?    

Of course, there’s no one-size-fits-all when it comes to branch transformation. What’s key is identifying what type of branch design transformation can help you achieve your business goals and strategic initiatives. Branch transformation typically involves digitally supplementing and improving the experience you provide to your customers, while creating more efficiencies that free tellers to provide tailored assistance and reducing cost.

There are a few ways to approach this.

Shift the customer experience. Focus more on the relationship you have with your customers and understanding their financial needs. There is no longer a universal approach. Customers have come to expect connected, hyper-personalized experiences—on demand. They want their go-to brands to know them and serve offers and solutions that meet them in the moment. And while this is table stakes for other industries, banking has been slow to keep up. Today, it’s crucial for financial institutions to catch up by investing in technology that can deliver those personalized experiences at scale and benefit the bottom line.

Technology integration. Choose technologies that integrate easily with your infrastructure to help your branch expand faster and become more efficient, such as modern self-service solutions. Start with the customer experience and what your institution can to do enhance how they interact with you. Navigate the latest technologies such as ATM cash recyclers, interactive teller machines with two-way video, self-service coin counters, or automated solutions for small business cash pickup.

Seamless online experiences. Today’s tech-savvy consumers have set high standards around digital user experiences. This means that, as financial institutions invest in technology with online and mobile banking tools, only the best will do. As the user experience continues to evolve customers will expect to be able to do more and more digitally, making it mission critical for banks to invest in mobile technology.

The sole purpose of branch transformation is to maximize customer experience while optimizing footprint and cost. How can your financial institution ensure your branches are efficient and profitable?

• Merge physical with digital: Ensuring a seamless transition between online, mobile and branch experience is vital. Customers expect their financial institution to know how they want to engage and what channels they want to engage in—with a connected experience that follows them from online to the branch and back. Incorporating digital services in the branch and integrating your channels—and your back office—is one of the most important components in branch transformation.
• Behavior analytics: Use customer data to better understand your customers’ preferences, allowing you to provide a more personalized experience based on previous transaction history, spending behavior and customer needs.
• Empowered, engaged staff: Branch staff are the face of your financial institution; they need to feel empowered and engaged with your culture.  In light of declining transaction volumes and rising automation, they engage with customers in a way that no machine can. Customers crave a 1:1 or more personal approach when it comes to discussions about their finances.

How branch transformation brings value to customers    

Branches tend to be a symbol of trust. And because people’s money is complex and personal, trust is a huge factor for customers. Branches also provide easy access to banking services and guidance. Due to the complexity of some transactions, such as account opening or resolving problems, customers are more likely to seek personal advice with a human touch by visiting a branch.

So the branch will continue to be very important in the financial landscape and will continue to add value to the services you provide. There are two key things to think about as you begin your branch transformation.

#1. Digital-first banking

There are many channels of communication for modern financial institutions and customers want to use all of them seamlessly at the same time. In the past, serving customers meant a siloed approach. But that's no longer as effective or efficient. Customers can freely use all the different available channels, but their interactions on each channel remain siloed there.

This creates a fragmented experience for them and you—imagine you’re a customer starting a loan application on your phone and then arriving at a branch for additional help, but there was no record of you starting that application. You have to explain what you need and start the process all over again. Frustrating, right?

A connected, single channel approach is much more effective, agile and efficient. In this model, all communications and transactions are combined into one comprehensive customer history that’s seamless no matter how they engage: branch, call center, self-service or digital.

This means that a customer can start a loan application online, continue it over the phone and conclude it at the branch without having to tell the same story multiple times to different people. Merging traditional and digital channels into one stream of communication not only increases convenience but is also critical for a consistent experience, for customers and your bank staff.

#2. Technology tools

Along with the traditional ATM, financial institutions are outfitting their branches with additional self-service terminals. These devices offer enhanced capabilities that enable customers to perform more transactions without teller assistance. To further improve the customer experience, FIs are also adopting new technologies for employees. Tablets provide another engagement strategy while cash automation devices like cash recyclers can speed transaction times, increase accuracy and improve security. 

How staffing decisions can impact branch transformation    

Many modern financial institutions are changing the way their employees engage with customers and have adopted a universal banker model, where bank staff are cross trained to handle a variety of tasks and services. This helps curb any frustration arising from customers who have to deal with multiple staff members to get assistance, and can improve customer satisfaction and strengthen customer relationships by adding value to every transaction.  

However, successful transformation can only take place when the impacted employees truly understand and embrace the new way of working. So, to be successful under this model, financial organizations must get buy in from their entire staff. So when it comes to transforming your branch, how can you minimize disruption to daily operations, maintain service to customers and provide a positive experience for everyone?

Leading institutions are succeeding by taking three key approaches.

1. Look inside first

Take time to conduct a thorough assessment of your financial institution’s current state and capacity to change. A successful transformation needs to align with your organization’s business goals and customer demands. Take time to understand your employee culture, appetite for change, stakeholder needs and potential resistance points.

2. Let employees co-create change

Share the transformation strategy with your employees. Ask for their input and test ideas through surveys, focus groups and other feedback methods. Gathering employee input increases the likelihood of a successful outcome by driving engagement and helping create shared ownership.

3. Sharing knowledge

Make sure you empower employees with both education and training. Education focuses on why the change is important to your financial institution and the potential impacts to employees and customers. Training focuses on developing skills and abilities needed to perform successfully in the new environment.

When a financial institution should start a transformation    

Very few financial institutions have the necessary resources – financial, human and technology – to be able to transform all at once. The most effective way to start a branch transformation project is to work with a strategic technology partner that offers expert consulting services, innovative technology integrations and a strong track record of executing such transformations end to end. They can help you direct a laser focus on your customer experience while helping you optimize your business processes and plan for the future.

So, when is the right time to begin a branch transformation? Truly, the time is now:

• Customers are turning to digital in unprecedented numbers; they’re using online and mobile like never before
• Frictionless, connected experiences from other industries are creating pressure for banks to follow suit
• Banking regulations have reduced the profit margin on banking products and services, increasing the need for all areas of the bank to generate new sales in new ways
• Brick-and-mortar locations are expensive to staff, operate and maintain
• Through self-service, it’s possible to automate more than 95% of routine teller transactions

Branch transformation will help you blend your physical and digital banking channels so you can drive loyalty at a lower cost and deliver modern, innovative services that strengthen your competitive edge.