Bank branches are in the throes of the same seismic shift taking place across the retail sector. Mohamed Dabo reports on a new research about reinventing the retail bank branch
Beyond Covid-19, banks’ physical branch networks are being impacted by trends including the shift to digital transactions, customers’ continuing demand for a “human touch” and consumers’ rising expectations set by other retail experiences.
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But while the pressure will continue, research by technology consulting firm Accenture suggests the best response isn’t to cut back towards zero branches.
Instead, the solution lies in transforming the branch network – a strategy that can take out significant cost while improving revenue through the network.
In Accenture’s view, what’s needed is to turn traditional branches into “experience stores”: an agile, integrated network of environments that are multi-format, geographically-tailored and digitally-enabled.
These new branches will be experience-led and empower the front line with convenient technology.
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By GlobalDataThey’ll also emphasise the human touch that customers still demand at key financial moments, by complementing the technology with empathy.
Erstwhile focus on branch revamping
In the past, many projects undertaken by banks to “restructure” their branch networks have really been closure programmes aimed simply at reducing the number of outlets to hit a cost target.
But despite these efforts, there’s still a clear sense across the industry that branch networks have not reached their optimal size or format.
For example, average cost per transaction at branch locations tends to remain several times greater than through other channels, leading to decreased monthly transaction volume and increased transaction costs.
Shifting focus to experience stores
The Accenture research indicates that the solution lies in transforming the branch network into “experience stores”.
“Modelling the impact of this transformation on a large bank’s bottom line, we’ve revealed an opportunity to take out about 13% of cost that can then be reinvested in growth initiatives, while also improving revenue through the network by around 11%,” the researchers say.
The traditional physical bank branch network may not be dead, but it’s becoming increasingly outdated. Times – and customers – have moved on, and it’s time to catch up by making the branch fit for purpose again.
Welcome to the era of the experience store.
Blending the physical and the digital
Following the rapid advances of recent years, banking customers now take the speed and convenience of digital services as a given.
To revitalise growth through improved customer engagement, trust and loyalty, firms now need to ‘change the conversation’ with their customers. The way to do this is by interacting with customers in a way that blends the best of the digital and physical experience.
The following is Accenture’s blueprint for “transforming the branch network into experience stores”:
The physical
- Driving the re-invention of digital channels and branch and contact centre networks to take on their changing roles in the new digitised economy (including re-inventing the branch network to provide places where customers can seek education, guidance and advice around their wider financial wellbeing).
- Enabling connected customer experiences, both physical and digital.
- Optimising interactions for customers by blending the best of the digital and physical experience.
Data-Driven Experiences
- Fast tracking the sensible and appropriate use of customer data to help improve experiences (such as not filling out the same form repeatedly) to create an integrated end-to-end approach.
- Using our Finance & Risk expertise to ensure a full understanding of the regulatory aspects of the GDPR.
- Investing in new ways to help manage ‘customer wellbeing’ (including our Life Cloud assets) to help financial services organisations move away from passive measures such as ‘satisfaction’.
- Applying our open banking and API expertise and experience to help providers design new offerings that customers find compelling and deliver them in more relevant ways.
Integrated and Transparent Interactions
- Assessing and understanding the ‘moments that matter’ when only a human will do, to help providers deliver offerings in a timely and hyper-personalised way.
- Implementing end-to-end re-invention of customer interactions which blend the best of FinTech, process simplification, regulatory compliance and digital decoupling—getting the best from legacy and new systems by running them together in smart ways.
Seizing the opportunity
To create an experience store network successfully, banks will need to take a modular, globally standardised and locally-flexible approach to customer offerings and experiences based on a ‘kit of parts’.
They’ll also need to manage the overall business and systems architectures on a cross-channel global basis and drive employees’ behavioural change starting from the customer experience mindset, not a procedural or regulatory standpoint.
Accenture believes that those banks who undertake this type of transformation will succeed in addressing the long-standing “problem” of their branch network and turn it into a positive asset – as well as a source of differentiation and competitive advantage with customers compared to their digital-only challengers.
Those players who move earliest to seize this opportunity will have a head-start in realising the benefits.
