Thoughts on Branch Transformation 2016
One Analyst’s Recap: The event was an engaging mix of bank-presented case studies, vendor perspectives and analyst analysis. Based on the facts presented the inescapable conclusion I draw from the event is that for most banks in most markets, careful and purposeful coordination of both physical and digital channels will be needed to provide the best experience to clients. Sure, there are and will be digital banks that enjoy a profitable business serving niche markets of digitally-driven customers. However, Poland’s highly-awarded digital superstar, mBank, presented a compelling story about why it needs a physical distribution network to continue its growth. From Capital One Bank to Shinhan Bank, branch networks are delivering value to both customers and shareholders. The key is doing it well. This challenge is the ongoing quest of branch channel transformation.
Here are several take-aways from the conference, beginning with a word cloud from the first day of presentations. I’m not a big fan of word clouds, but the one below does highlight the breadth of topics involved under the evolving “branch transformation” umbrella. It’s Complicated. Compared to managing a bank’s digital presence, optimizing the branch channel is a complex pursuit.Change is difficult. Not changing is fatal. Few things appear stable at present. Business climate, customer expectations, technology, competition, regulation – all are in a state of change. Even more challenging, the pace of this change exceeds anything most of us have experienced in our careers.
There are few easy answers. Banks don’t serve homogeneous markets. Each bank’s path forward will likely be unique. Starting points differ considerably. Proposed directions must be vetted – typically from in-market experience. Doing so is expensive and time-consuming. A/B testing on a bank’s web presence can be executed inexpensively and with relative ease. Not so with your branch network!
Old dogmas die hard. Presentations throughout the event offered a number of assertions about customers, what they do, want, and value. Some data points supporting these assertions were dated. This is increasingly dangerous. Samuel Arbesman argues for a shrinking half-life of facts in his book, The Half-Life of Facts. For banks engaged in substantive branch transformation efforts, the timeline between pilot design and implementation demands a revisiting of the original operating assumptions, lest they be found to be outdated. This adds further complexity to an otherwise difficult task.
The Digital Branch isn’t just another buzz word. Digital is no longer just a self-service delivery channel. It is becoming an omnichannel platform for both bankers and customers alike. Banks are implementing (or are planning to implement) a growing number of initiatives that require digital/physical integrations of delivery systems and customer journeys. The digital branch is one manifestation of this. They are joined by digital contact centers and digital ATMs. The days of siloed channel systems is gone forever!
Underestimate the disruptive impact of digital at your peril. Some banks in the audience (particularly those serving markets with lower mobile banking utilization) challenged the extent to which digital was to impact the relevance and functionality of branch networks. I understand the dynamic. So did hockey great, Wayne Gretzky. Digital may not appear (yet) to be disruptive among your customers. It will. Skate to where the puck is going! Hertz’ initial kiosk difficulties had nothing to do with technology
Hertz’ initial kiosk difficulties had nothing to do with technology. Some are aware of the lackluster customer acceptance of Hertz self-service kiosks. I’ll blog about this in more detail separately. A common element with Hertz’ experience and several presenting banks is this: front line staff absolutely must own and changes in the retail operating model. If changes are simply a management lay-on, bad things are likely to happen. In the case of Hertz, counter staff had no ownership in the installation of the new kiosks. As a result, they had little reason to care if customers used them. Steven Covey often cites the truism, “Without involvement, there is no ownership.” Several banks demonstrated that in-branch success of assisted self-service is best assured by involving branch staff in the design and implementation of the change.
Customers don’t visit the branch because of your technology, but it sure helps. Related to the Hertz example, more than a few case studies presented at the conference emphasized the importance of human capital. I think everyone gets this, but you wouldn’t know it by the way customers are treated in some banks. Metro Bank stands out in my mind, along with Capital One as examples of the impact culture and training can have on the customer experience.
It’s a journey, not a destination. While perhaps over-used, this idea remains painfully true. Not a single bank case study conveyed any sort of notion that they had arrived. Much work remains - even among banks well along in their branch channel transformation journey.
Much work remains for me as well. Time for a new blog post.