Critical Steps for Developing a Thinner Branch Network in 2021
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Consumer’s evolving use of both location based and digital channels is changing the way that financial institutions are thinking about the number of branch locations needed to cover a market. While convenience is still a key factor in where consumers choose to open an account, the overall concept of convenience has changed. Consumers no longer need to make frequent in-person branch visits for routine transactions. In many cases, they may only visit their branch location to open an initial account and visit again, maybe years later, to either open another account or to resolve a conflict. This is forcing network planners to rethink the traditional approach to market coverage as they ponder how to transform their networks and maintain their market position. View this on-webinar to learn: - How to identify the number of locations needed to achieve branch network targets - Whether the traditional view of the number of branch locations needed to create critical mass in a market has changed - What the impact is of consumers shifting from being dependent on branch locations to being influenced by their presence - The key Data sources needed to help determine which branches/sites provide the greatest billboard value - The impact of branch attributes on branch performance - The role of Hub and Spoke strategies
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Critical Steps for Developing a Thinner Branch Network in 2021
- 2. • • • •
- 3. • • • • • •
- 8. 50,000 60,000 70,000 80,000 90,000 100,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 - 5,000 10,000 15,000 20,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
- 9. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 USA 36 35 35 35 34 32 33 33 31 31 30 EUU 34 31 30 26 26 28 25 24 23 21 24 CAN 24 24 24 24 24 24 24 23 21 20 20 AUS 31 31 30 31 30 29 29 28 30 28 GBR 25 25 24 22 25 24 24 23 - 5 10 15 20 25 30 35 40-90% -80% -70% -60% -50% -40% -30% -20% -10% 0% 10%
- 12. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 1 2 3 4 5 10 More % of Branch Sales % Online Sales
- 17. • • • 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% DDA Savings/MMA Time/IRA Home Equity Installment Loan Mortgage Investments Bank at Home Bank at Work Location Influenced Only Digital • • • •
- 23. - 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 0 1 2 3 4 5 Time Chk & Sav Mortgage
- 25. • • • •
- 27. - 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
- 34. • • •
Editor's Notes
- Focus on international experience.
- [MD] Today is intended to be an interactive discussion, where we’ll be addressing three areas: -We’re going to talk about the current landscape in retail banking (given our Covid-19 environment), talk about trends and where there are opportunities -Steve is going to discuss the role of data and predictive analytics in making branch network decisions -We’ll be outlining some additional considerations and best practices -Finally, we’ll be opening the forum up to questions
- All of this is based on Data Integrity and ensuring the recommendations we provide and the real estate forecasts are based on the best most reliable and accurate data possible. These long standing customers trust us to help them navigate and adopt their real estate networks and channel strategies.
- The economics of retailers and restaurants are more volatile than banks so they are more susceptible to changes in foot traffic since this has a direct and immediate impact on sales and profitability.
- Migration patterns are now dynamic, NOT static! Census data dose not tell you trends in recent movement. Paul to start, pass over to Eric to discuss.
- [BOB] With all this in mind, we still know problem resolution is critical. A study by Accenture noted that 80% of customers who switched to another provider due to poor services would have stayed had their primary problem been handled on the first contact with the bank.
- Mention trying to work for a restaurant focusing on a very specific consumer segment, for daytime lunch. This questions sounds easy. It was not possible to do this before. Now dynamic demographics solves this problem.
- We can now take our existing datasets and redistribute them based on flows of mobile trace data Each trace is tagged with residential data – in this case the CAMEO geodemographic classification These data are then re-aggregated at their location – in this example for weekdays (daytime) during March 9-13 Note the different patterns of distribution
- Explain the DIF data Explain that within our model we can test different scenarios of… If digital demand increases If the Bank at work decreases The impact of thinner networks………If Location influence increases
- About Half of the 102K Branches Reside in Trade Areas That Have 25% Or More of Their Total Deposit Demand Comprised of Bank Near Work (Workers)
- Add context. At first you have nothing. Then you know the extend of the high street retail area. Then you layer in traffic Left panel adds context Then you add in mobile trace (all traffic) Show you are in a key high traffic area. But is that traffic good for you if you specifically target med disposable income customers? View the weekday/weekend visitation trends to see if it fits your business. View the time of day visitation trends to see if it fits your business. On the right panel – filter digital activity (surrogate for foot traffic/foot fall) to select your target (medium disposable income). Now the digital activity becomes more meaningful and you can eliminate some areas and focus on others for a potential new site.
- Migration patterns are now dynamic, NOT static! Census data dose not tell you trends in recent movement. Paul to start, pass over to Eric to discuss.
- Steve We talked a bit about the drive-up earlier. It has served a critical role during the pandemic, allowing for in-person servicing at the branch--so it has had a resurgence of late. Prior to the pandemic, I was having quite a few discussions as to whether or not a drive-up was necessary. We happen to visit thousands of branches each year and collect their facility characteristics. At this point we have probably look at 40-50K locations. And, I was curious so I took a look back at markets that we surveyed 10 years ago and in one large metro market we found that 61% of total branches had a drive up capability. A 2019 survey of branches in that same market showed that now only 52% of the branches had drive-up capability. The graph up above shows the relative impact of the drive-up within our model. Primarily the impact is to extend the reach of the branch or draw….there fore the branch’s market area expands. Depending on the location a drive can increase performance 20%...with the biggest impact for just having the drive-up and a diminishment as you add lanes. In terms of the current situation….having drive-up capability conveniently spaced through your network gives some adaptability for the future…….
- Steve We talked a bit about the drive-up earlier. It has served a critical role during the pandemic, allowing for in-person servicing at the branch--so it has had a resurgence of late. Prior to the pandemic, I was having quite a few discussions as to whether or not a drive-up was necessary. We happen to visit thousands of branches each year and collect their facility characteristics. At this point we have probably look at 40-50K locations. And, I was curious so I took a look back at markets that we surveyed 10 years ago and in one large metro market we found that 61% of total branches had a drive up capability. A 2019 survey of branches in that same market showed that now only 52% of the branches had drive-up capability. The graph up above shows the relative impact of the drive-up within our model. Primarily the impact is to extend the reach of the branch or draw….there fore the branch’s market area expands. Depending on the location a drive can increase performance 20%...with the biggest impact for just having the drive-up and a diminishment as you add lanes. In terms of the current situation….having drive-up capability conveniently spaced through your network gives some adaptability for the future…….
- Migration patterns are now dynamic, NOT static! Census data dose not tell you trends in recent movement. Paul to start, pass over to Eric to discuss.
- Migration patterns are now dynamic, NOT static! Census data dose not tell you trends in recent movement. Paul to start, pass over to Eric to discuss.
- Migration patterns are now dynamic, NOT static! Census data dose not tell you trends in recent movement. Paul to start, pass over to Eric to discuss.
- Represented a Critical Mass Necessary to Achieve Network Synergy Typically Needed 8-10% of Branches for Market Coverage Approach Relied on Sheer Numbers
- So within our WinSITE software we have the ability to quickly look at consolidations. The model will iterate through the branch network, closing each branch on a one off basis and and reporting back an estimate of the amount of cannibalization and feeding that information into a cash flow analysis.
- [BOB] With all this in mind, we still know problem resolution is critical. A study by Accenture noted that 80% of customers who switched to another provider due to poor services would have stayed had their primary problem been handled on the first contact with the bank.
- Add ATMS or ITMS that help to extend the reach of the network by identify coverage gaps in the amongst the branches. Lisa, so developing a long term plan can be quite involved and cause a lot of disruption for the customer…what are some of the ways in which we help companies communicate those changes to their customers?
- We certainly encourage your comments and questions and for any follow up inquiries, we welcome hearing form you.