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Why 'Branch of the Future' must be a Priority

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Celent have reviewed this profile and believe it to be accurate.
7 August 2014

Comments

  • Bob,

    Thanks for engaging on this. My issue is that there's a dramatic imbalance between investing in branch distribution, and investing in digital engagement. You said "North American banks..neglect the branch channel at their peril"

    Here's the rub. They aren't neglecting the branch. They are downsizing, they are struggling with economics, and they are investing, but they aren't neglecting the branch. Comparatively they are neglecting digital. Digital gets a fraction of the investment branch networks do, and is statistically far more engaged now and in the future than branch. So there is an imbalance.

    While I often reference the research work Celent does, I would challenge you on your recent survey. The data you have put here doesn't correlate with ACTUAL branch activity. For the last 8 years I've been working with a number of major bank brands and have been tracking two primary branch related statistics that are critical to this argument:

    1. No of average annual visits per customer per year to the branch, and
    2. No of average annual visits per customer per year to the branch that results in a cross-sell/up-sell event

    Both have been in steady decline since 1995. There is nothing you've suggested here that might change that. Granted, it might flatten out, but that's not what the data is showing - it's shows right now the decline in activity is speeding up.

    While Moven has a distinct advantage in engagement prioritization I'll grant you, we are rapidly approaching a time with HCE and mobile dominance where the majority of new bank accounts will be simply downloaded, just as we see with the Kindle for books and with iTunes/Spotify for music today. Once that instinct for opening an account changes, the branch will become further marginalized.

    This is the real peril. Not neglecting branch networks.

    BK

  • We can absolutely agree on the need to redesign and downsize branch networks to an optimal footprint. But prioritization was the issue I was getting at in my original post. However, on the need for face-to-face, I'm not sure - it feels like a psychological imperative (what happens if I can't get my money) more than a demonstrated overarching need (i.e. disparity between actually footfall and what people say they will do).

    Branch will still be the least interacted channel in the bank arsenal, and will be inordinately expensive - so it behooves banks to really think about revenue capture in more efficient ways. Once we break the back of the revenue problem, then my guess is that the branch rationalization issue will be a much more balanced discussion point. I think it is not just about branch redesign as much as revenue capture redesign - and that's why I pointed to process and compliance as the holdouts on solving the issue.

  • I'm glad to see you've moved from duck-hunting metaphors to hockey metaphors Bob. :)

  • Thank you for your thoughts, Brett.

    We agree on the symtoms, but not the remedy. The consumer survey information (a single point in time smapshot) doesn't contradict the steadily declining branch foot traffic observed globally. It does, however, suggest a significant segment of consumers have a preference for face-to-face engagement under certain circumstances highly correlated to selling financial services.

    Celent recently surveyed a hundred NA financial institutions (July 2014) and found, no surprize, that mobile channel development was among bank's highest technology priorities and there was broad concensus that mobile efficacy was critical to achieving bank's strategic priorities. Where there isn't concensus is what to do about an increasingly inefficient and ineffective branch network. From our research, a small minority of financial institutions are investing in meaningful operating model redesign. Both are imperatives in my opinion.

  • Thank you, Sir. Thought the latter would resonate with a wider audience.