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The experts who predicted the disappearance of the brick and mortar branches must do new work in the field. Traffic can be moved to mobile devices, but branches always get the lion's share of valuable interactions. Here's What Banking Managers Think of Branches, Digital Channels, and Relationships
Subscribe to The Financial Brand by email for FREE! We have all heard the parables – edifying tales on Netflix killing Blockbuster, and the retail takeover of Amazon. And yes, more and more Americans are doing digital banking. But branches remain an essential part of the retail banking model. Banks and credit unions just need to find ways to create a digital-physical synergy. Complementary roles for digital and physical channels must play on each other's strengths.
Financial institutions now process many more transactions digitally than in branches. And according to McKinsey & Co, more than 10,000 US bank branches have closed since the financial crisis of the late 2000s, averaging three per day.
"Despite such systemic changes," branches remain an essential part of bank operations and client advisory functions. The rental of brick and mortar is still one of the main sales channels. "
" Most bank and credit union executives laugh at the idea that branches are dead or irrelevant. "
make fun of the idea that branches are dead or irrelevant – a grindstone.The brick-and-mortar channel remains a vital link for a good service to consumers and can actually help to build the l & # 39; 39, digital audience of an institution By eliminating branch transactions, digital channels are returning the favor by allowing agencies to do the heavy lifting when it comes to advising consumers on the decisions they make. still want a human touch
More and more banking executives seem to agree – digital and physical – work together.Regional player BBVA Compass, for example, insists on operating from a P & B Because the digital and the physical work together.
As the branch networks consolidate, the branch experience is also reinvented. Today's branches offer a "visa". "Consumer awareness" that strengthens the digital channel when consumers search the Web, the App Store and Google Play to find options. And when branch consolidation reduces costs, it provides more fuel to improve the digital.
According to Samsung, retail banks and credit unions need to use technology to deliver a more compelling customer experience. Samsung responds to the need to "digitally turn branch offices into an immersive, advice-based financial center that gives customers what they can not access on their own."
Increasingly, banks and credit unions are grasping this reality. and the scope of the service and the options at the table that the fintech disruptors closest can not match – now or in the future. It's like comparing restaurants with a full menu against a hamburger stand that specializes in just one thing.
"Some experts say that the only reason customers visit your branch is because you force them to do it, not true."
"Some experts say the only reason customers visit your agency is because you force them to do it, "says Bob Meara, Celent's consultant. "This is not true." Meara draws similarities between the state of mind of consumers and his own experience when he recently decided to have his kitchen replaced. He studied costs and others online. He also looked for entrepreneurs on the web. However, before he allows anyone to empty his house, said Meara, "I wanted to meet the last two entrepreneurs in person.I did not settle for digital interactions."
PwC invented a term to specifically capture marriage and the symbiosis between physical and digital channels. Their expression "phygitale" literally represents the mix of digital and physical in a unique strategy.
"Many banks still analyze the customer's journey within a single channel," the report says. "But we live more and more in this phygital world, where travel is more complicated."
Here is how the five largest retail banks, a large region and the largest credit union in the country see the digital dilemma and the relevance of the branches
Read more:
Why Megabanks Did not Avoid Branches in Favor of Digital
The history of financial institutions with branches seems to bring out the skepticism of Jamie Dimon, President and Chief of the direction of ] JPMorgan Chase . Speaking with analysts, Dimon recalled his days at Bank One, later acquired by Chase.
"Bank One and Chase were closing branches that were earning $ 1 million a year," said Dimon, while relying on "the hypothetical thinking you did not may not need branches. "
" Bank One and Chase closed branches that earned $ 1 million a year, hypothetically thinking that maybe you do not need branches. "[19659007] Dimon will not respect such a thought. "Our branches make a lot of money," said Dimon. "They open accounts for a million people a day."
While branch deals have fallen, these places are where lucrative deals such as mortgages and investment relationships are starting, said Dimon. In the end, he said, what players do is "must work for the client, not our line of expense."
Two relevant Chase statistics: three-quarters of the growth in deposits come from branches and half of all households that do business with Chase are branch or multi-channel centric.
The actual results of the company are therefore an important part of Jamie Dimon's intention to open 400 new branches in 15-20 new markets over the next five years. This, and two additional factors. First, Mr Dimon said the regulators have made it clear that they do not want institutions like his to end up without agencies. Secondly, "big banks can not buy anymore, so we need to open branches," he says.
Could an exclusively digital national institution work? Dimon believes that it is an interesting concept to test, and it can first be tried in already oversaturated markets with branch offices. One could say that Dimon puts chips on both lines
Switch to thinking "mobile-first"
The ongoing evolution between the mixing of digital and human touch via branches as financial institutions have today varies among banks and credit unions. philosophy, budget and consumers that each institution serves. According to Courbe, chief financial officer at PwC, models will continue to deform more and more in the digital world, according to Courbe, a continuous cultural shift will have to occur within financial institutions themselves to what PwC calls "mobile" . first "think". In a PwC report, the company advocates starting product design with the mobile channel, in recognition of its expected longevity. But Mr. Courbe says branch employees must first become familiar with mobile services. The more comfortable they are, the easier they can convince consumers to use the mobile. It also helps to erode the walls between the branches and the digital.
Other analysts and consultants specializing in retail banking have heard similar themes from other large, digitally advanced banks. For example, Bank of America J.D. Power's best "digital bank" closes branches in some markets, but pursues a high-tech / high-touch model combining digital and physical. BofA leverages technology to increase customer engagement, such as using the bank's mobile app to set appointments with professionals in branch offices (1.5 million appointments were made in 2017.) "Digital Ambassadors? In the branches, consumers have access to digital channels.
Today, digital generates about a consumer sale at BofA, and today's # Only about a quarter of the deposits reach the bank through the box office, says Dean Athanasia, the consumer division at the bank.
Overall, the volume of branches is down. about 25%, but "there is" a good volume "and" not so good volume, "said Athanasia." A good volume, "she says, consists of visits that can lead to sales, rather than "transaction volume." This "good volume" is up 70%, Athanasia says. [1 9659004] That's why BofA is opening some 500 new branches and renovations are planned for another 1,500 locations in the next few years.
Similarly, U.S. Bancorp takes a mixed approach that Bank Number Five uses. According to Andrew Cecere, president and CEO of the US bank, 70% of consumer services transactions are now on mobile devices and 20% of sales are on mobile phones. With numbers like this, "all the calculation around the acquisition of a traditional bank has changed a lot," he explained. "It does not just happen physically."
Cecere says that he personally checks the rating on the bank's mobile app every week (4.8 out of 5.0, the last time he's checked). "The good deals are great," he says, "but the US Bank is also saving money to make loan decisions in ten minutes or more."
"When you close a branch without solution, you will lose … and you do not want to lose deposits. "
" The branch will always be important for consultation, "warns Cecere." People still want to talk to other people when they have questions about the type of mortgage and about retirement. "
"The branch is still an important part of the equation," added Terrance Dolan, of the Bank of the United States Vice President and Chief Financial Officer. "It's all about how you end up integrating digital capabilities with physical assets. "
Cecere noted that his bank has been slower to downsize its branch system than others." When you close a branch without a solution, you'll lose deposits … and you do not want to lose deposits.
More Citicorp, executives in charge of retail trade see digital banking nationwide as its next big step. But John Gerspach, CFO of Citi, says branches are still important.
"The adoption of mobile technologies is greater than we had expected," Gerspach said. "But we still need branches, there's still a lot of value in the branches, they're going to be big, but there's going to be less, and they're going to be smaller."
As he matures his network so drastically, Citi has concentrated its branches in the metropolitan areas where they have the greatest impact, and "we have asked the branches to leverage more technology." [19659004] Then there is Wells Fargo . John Shrewsbury, Senior Vice President and Chief Financial Officer, said that all retail businesses are driven by a single unified consumption strategy. This is part of an effort to continue to improve the customer experience of the bank's digital channels and expand the self-service capabilities available to consumers.
Shrewsbury said the bank was aiming for a menu of what it is possible to do. numerically. One of the goals is to dramatically reduce the number of new data entries, resulting in fewer human errors and greater overall accuracy, he told analysts. "These data can then be redeployed," said Shrewsbury
. A banking analyst asked whether the planned closure of hundreds of branches that will cut the Wells Fargo network to about 5,000 locations announced further closures in the future. But Shrewsbury characterized the movement as "one and finite."
Read More:
BBVA Compass is a known digital challenger, but management sees branch offices and digital services as two-sided. the same room.
"We are seeing in all segments that no matter how digital and self-service our customers are, human contact is always needed. says Pepe Olalla, Business Development Manager at BBVA Compass
Olalla says he predicted 10 years ago the disappearance of branches in favor of digital services. "And I would have been wrong."
Olalla says that the goal of BBVA Compass is to find the right balance between human and digital service. Branches concern both real estate and people, he says, but mostly people. The combination of branch and digital is in use.
At BBVA Compass, branches are seen as an increasingly important part of the adoption of digital techniques by the bank. It boils down to consumer education and face-to-face sales. Branches, says Olalla, are where many customers adapt and adopt growing digital services.
"The branch is the hinge ", explains Olalla. The bank's internal research has revealed that most of the digital customers that BBVA Compass earns come from within an eight-kilometer radius of a branch and that markets with more branches generate more digital sales.
As branch offices are redesigned, the layout and design days for cookie cutter branches can end. Jeffrey Winter, Senior Vice President, Business Development at Newground, says the star pattern seems to be growing in popularity. Small branches – perhaps as small as 200 square feet – with limited but live service can power a larger and more complete location.
"Hubs are deliberately designed to be a great billboard at night and day." Winter said. "They are built almost like a beacon."
The reset, as called Winter, also affects the human element. Increasingly, he says, branch employees are universal bankers, able to handle all the challenges that arise. He compares this to the typical "cell phone shop," where a receptionist comes directly to the consumer and speeds them up to what they need. Or simply to hear their problems.
This responds to something as basic as it is often forgotten, says Winter: "Often people just want to be listened to."
Olalla says there are two reasons . "Travel is an angle," he says, as customers closest to a branch are more likely to subscribe to digital services.
However, Olalla emphasizes that brand awareness is more important for results. There is really something to the ability of "branch-like billboard" to penetrate consumer consciousness in an increasingly noisy environment
"For people who search online, the brand is always relevant. Olalla. "We do not run huge campaigns." As a result, having seen a local branch establishes a connection for the customer online. "We saw this behavior," says Olalla
. Consumers who use more of the bank's channels tend to be more profitable, more engaged and have higher net scores for promoters, Olalla continues
. the connections / brands are the "Blue Mavericks" of BBVA Compass. These branch employees "are the ones who are up-to-date on all of our digital services," says Olalla. In addition to helping consumers in the branches, the Blue Mavericks are keeping their connected counterparts updated on BBVA's offerings.
Olalla doubts that the need for human touch is reduced. With time, he says, the branch could be supplanted by digital assistants, video or other digital technologies, but the "touch" will still be there. touching the scale, without opening the branches, "says Olalla. "The means may not always be human, but they look like humans, for human customers."
This article was published on July 30, 2018. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.
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