Increasing Engagement by Decreasing Transactions
Few of us would rate a visit to our bank branch as an enjoyable experience. Some of us find it satisfactory, while others view the branch experience with a blend of indifference, anxiety, and even irritation. Though branch visits have dropped, there are many indications this decline is slowing or even stagnating. The time is here for banks to think big about how to use their greatest assets to their best advantage: the physical branch and their frontline staff.
For years now banks have been driving transactions toward digital, ATM, and mobile banking. While this has served well to reduce the overhead costs of a branch network, it has created a mindset that is not serving banks well at all. The astonishing fact is that most people will ask a friend or family member for financial advice rather than head to their branch manager. The bank branch has become a place that is necessary to complete transactions, apply for new services, or resolve a problem – but not somewhere customers can find useful information or speak to someone who cares about their financial future. The physical branch and frontline staff are the key differentiators separating retail banks and online only or other non-traditional competitors but with the push to digital, their value has been overlooked.
Our 2017 study on the stealth attrition of banking customers revealed that banks are in a strong position to leverage the branch as a key benefit to consumers. Our research shows successful engagement in the branch will require a shift in thinking that may challenge financial institutions’ biases: banks must move away from a transaction-focused model to one that places advice and the customer’s financial well-being at the heart of the branch experience.
A transactional focus increases the risk of losing customers
The study identified that the cohort at the highest risk for switching to another financial institution is the most transaction centric. This group is disinterested or even skeptical of banking, and finds a visit to the branch unhelpful and unenjoyable. They are higher earners than more loyal cohorts, with an average annual household income higher than $100,000, making them desirable customers for banks. Therefore, their potential loss represents an enormous risk.
A key complaint amongst the respondents of our study in every cohort was that bank staff are not knowledgeable or helpful enough, with only 17% identifying the branch as their primary source of financial advice. Those who demonstrated a higher degree of satisfaction with the advice dispensed by their financial institution were 10 percent more likely to bank with a credit union. The big takeaway is that 46% of the respondents indicated they would be willing to pay more if they were able to access experts. There is a huge opportunity for banks to reclaim the role of the trusted financial advisor, which the study identifies as a gap in service that is waiting to be filled.
Shifting focus to financial well-being for customers
The big points-of-difference banks have over online-only competition are the branch and their staff. Rather than seeing these as costly disadvantages, banks need to leverage these assets to fill unmet customer needs in ways online only banks simply cannot. Seventy-eight percent of customers indicate that they will come into the branch as often as they do now for at least five years into the future, according to this study by Accenture which supports our findings. In spite of the convenience of digital technology, people still want to talk to other human beings face-to-face (imagine that!), and according to Accenture, Millennials are making the most of added-value services in comparison to older cohorts. This is good news for big banks, but they must leverage these differentiating factors more strategically. Six key ways banks can better utilize the branch and their staff through an advice-driven model and create deeper connections with customers are:
1. Raise the profile of financial advisors within the branch.
The level of service that customers are looking for will require a completely different skill set from the current in-branch personnel status quo. Staff must be empowered to actively listen, recognize key customer personas, and respond empathetically. They must move away from being sales people and become advocates for banking clients’ financial well-being.
2. Move away from a transaction-focused branch layout.
For the fearless, this could mean ditching teller lines altogether. But at the very least, moving simple transactions away from the center of the branch indicates that these simple transactions are not the bank’s main priority. Changing the way customers move through the branch will disrupt thinking about what happens there – which is exactly the kind of transformation that banks should be aiming for.
3. Create a VIP area for highly desirable customers.
Customer recognition is an area where banks are lagging behind in comparison to other industries. We created a VIP zone for CZ Bank with a separate waiting area to comfortably accommodate the bank’s most important clients.
4. Rethink regular business hours.
The percentage of the population who can take time out in the middle of the day to meet with a consultant has dwindled. Although many banks have extended hours for regular services, specialized consultations after regular business hours are harder to come by. Our study identified that longer hours and shorter wait times were key concerns across all demographics.
5. Collaborate with small business owners.
There are two ways to prioritize collaboration with underserviced small businesses; the first is to create a small business hub with advisors on hand to help business owners in the branch. These hubs could offer services such as bookkeeping, tax filing, and financial planning within a bundled program that might also offer perks such as shared office space and coaching sessions. The second approach is to offer up space welcoming small business owners to collaborate on their own. Seminars and coaching for both personal and business finances were rated as highly desirable by the respondents in our study in every cohort, with 30% saying it would be a key reason they would visit the branch and pay more for products and services.
6. Make it personal.
Staff and data are being underutilized by banks. Transaction centric respondents in our study indicated they would visit a branch more frequently if the experience were more personalized. Thirty-five percent of respondents see their relationship with their bank as purely transactional or, even worse, do not think about the relationship at all. Staff needs to be trained and engaged with customers and data needs to be leveraged whenever possible to customize products and the experience.
The branch can become an asset that disruptive competition will not be able to replicate. Banks need to take bold steps to assert themselves back into customers’ lives in a more meaningful way if they are to stop the slow attrition of disengaged customers to online-only and non-traditional financial services.