A recent study on the state of banking by Kasasa identified that customer happiness depended on where you bank, with local banking building better relationships. The statistics are pretty startling. One of the key reasons for the enormous discrepancy is the fees larger banks charge for a range of services, when customers are focused on the opposite: rewards. In addition, community banks and credit unions tend to have higher appeal amongst consumers versus their larger megabuck rivals. At the heart of this challenge for leading financial institutions is how to provide scale and operational efficiencies, while also reflecting the needs and dynamics of local markets. We have identified five factors larger bank networks need to consider when leveraging a sense of community within their branch network, namely:
1. Individual community has a strong identity
Every community has its own unique traits, driven by the age of the community, the type of residents and businesses, in addition to its location within the trading area. When banks are considering developing a community strategy, they should determine whether there is a strong local identity, typically ascertained through a series of factors, namely:
Strong branding and name awareness:
Communities that put a greater emphasis on branding tend to have a stronger sense of place. Making an investment in defining what unites the area is a clear indication of a strong community presence. Identifying the community name as part of the branch exterior signing should be considered.
Strong heritage and landmarks are other factors that lead to a strong sense of community:
Financial institutions may be able to leverage some of the geographical and historical nuances of the community within the branch design. Heritage and landmarks can vary from a historical artifact or the home of a well-known individual, to a major natural landmark such as a river or mountain. For TD Bank, we created a community wall supported by digital, reinforcing the historical heritage of the immediate trading area around the branch. This has allowed the bank to cost-effectively reflect the values of each community, while maintaining consistency.
Town center or a central gathering place for major events:
This urban planning feature tends to be another indicator that the community has a strong sense of place and could be leveraged by the financial institution. Key centralized events can be cost-effectively shared by numerous branch locations within the area.
2. Fierce local competition by community or credit unions
Each market provides its own dynamics from a competitive standpoint, with varying degrees of national and regional competitors. As financial institutions review their growth strategy and areas to drive greater marketshare, they need to understand the specific make-up of competitors. In markets where there is a significant presence of credit unions and community banks, a stronger, more regionalized, local community initiative needs to be considered. The promotion of local staff, social responsibility initiatives targeting the specific community, and local business support needs to form part of any communication strategy.
3. Urban versus suburban locations
Population growth is occurring in urban settings, bringing a new sense of community to downtown neighborhoods. With the gentrification of major urban centers, financial institutions will need to establish neighborhood strategies that reflect a given need within the area, rather than reflecting its surroundings. Consideration should be given to how the physical branch can provide additional services, such as a place to find out what is playing in the local theaters if the branches are located in the entertainment district, to other type of services that bring relevancy to a strong sense of place.
4. Strong local story to share
Knowledge has been shared over the centuries through storytelling, and considering a story line as it relates to reflecting the community can be a useful strategy in creating a sense of place. Stories can be woven into interior signing and decor that capture the history of the given branch, some interesting facts about employees and their contribution to the neighborhood. The question financial institutions need to ask is, “What interesting, untold story do we have that is not being shared and would bring value to both the community and the branch?”
5. Strong push on smart branches
Technology is one of the largest investments in retail banks today, ranging from multitasking ATMS to video ATMs. These technologies were introduced by financial institutions to reduce transaction costs, while providing a greater level of convenience for customers who may not need or want to speak to a teller. However, the over-reliance on technology to create a meaningful customer relationship may have created a gap in the emotional connection customers want, leaving an opportunity for banks to address. I have witnessed firsthand the impact of replacing staff with technology, where customers become upset when the live person they expected to see, which may have been the reason they visited the branch in person, has been replaced with technology that requires a new way of transacting. Humanizing the branch experience through place branding and leveraging a sense of community is vital in maintaining strong emotional connections with customers. The barriers to switching are rapidly decreasing, due to alternative channels and the arrival of Millennial consumers. However, longterm customer value can only be achieved by properly balancing the “people” dimension with technology.
There is an increasing need for large national bank networks to provide personalized service to their customers, not only in the range of products or services, but more importantly by reflecting the values of customers through their interactions. Creating a strong sense of place that reflects the identity and personality of the neighborhood is a strong platform to provide a more intimate and personal relationship that reinforces the message that every customer is different and important.
Read more about the Rising Importance of Community in the Bank Branch.