Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Building Branch Distribution for
Tomorrow’s Reality
Peak Performance Consulting Group®
October 20, 2010
Page 1
Challenging times!
The issues:
Consumer behavior is changing
The role of bank branches is evolving
Economics of che...
Introductions: our panelists
Jay Freeman
EVP, Sales Service & Development
Wells Fargo
Ric Carey
EVP, Community Banking
Ump...
Diverse expertise
Wells Fargo Umpqua Bank BBVA Compass
Distribution Reach 70 Million
customers (1 out of
every 3 US
househ...
Consumers are changing: they don’t use branches
the way they used to
Page 4
Still the preferred channel
for most consumers...
Branch transactions are declining
Page 5
Monthly Transaction Volume
(Seasonably Adjusted vs. Trendline)
Peak Performance C...
Preparing for the future: gradually getting out of the
“checking” business
Check volume continues to decline in US: 39% of...
Discussion Question
The historical role of branches has largely been defined by
transaction processing.
With check usage d...
Bank branches on the decline?
First decline since 1995
Is this the “tipping point” or temporary due to bank consolidation?...
Discussion Question
Some analysts are suggesting the number of bank branches
will decline dramatically. Are they correct? ...
Too many branches or still room to grow?
Differences in branch density driven by:
Self service channel usage
Cultural pref...
Discussion Question
(for BBVA Compass)
Spain has some of the highest density of branches/population
compared to other coun...
Future of branches: “Reports of my death are
greatly exaggerated”
Page 12
Branches aren’t dead, but traditional branches m...
Discussion Question
If you had a crystal ball, what would the “branch of the future”
look like?
Page 13
Is “Minority Report” in our future?
Page 14
RBS Citizens Bank, Boston:
using motion tracking,
pedestrians can interact wit...
Discussion Question
(for Wells Fargo)
What is Wells Fargo’s approach to technology in the branch
network?
Page 15
Branch as community center?
Page 16
Umpqua Bank neighborhood store,
Portland, Oregon
Discussion Question
(for Umpqua)
How does the Neighborhood Branch concept work at
Umpqua?
Umpqua has a reputation for inno...
The branch comes to you
Page 18
BBVA mobile phone
geo-location service
BBVA new ATM housing
Discussion Question
(for BBVA Compass)
In many countries, banks are further ahead in the use of
technology than their coun...
Transferring global expertise
Citigroup hires designers of Apple Stores to create new branch
prototype
Open 3 locations in...
Sometimes we just need simple solutions
You think you have security problems!
Page 21
On-line vs. physical distribution
Page 22
Discussion Question
Bank of America is experimenting with video kiosks to provide
service without staff. USAA continues to...
Changing face of the industry
Consolidation will continue, perhaps at an even more rapid pace
Page 24
0
2,000
4,000
6,000
...
Discussion Question
As branches are closed (either due to a new round of M&A or
evolution of the model) how do we manage c...
Assets concentrated in a few, large institutions
Concentration of the U.S. Banking System
| Page 26
Source: FDIC
Red line ...
What does this mean for community banks?
Page 27
Discussion Question
The big are getting bigger. How should community banks
compete in this new environment?
Page 28
Top Take-Aways: changing role of branches
Branches are still the key distribution channel, preferred by 68% of consumers
a...
Page 30
Thank you!
David Kerstein
President
Peak Performance Consulting Group
512-607-6332
dkerstein@ppcgroup.com
www.peak...
Upcoming SlideShare
Loading in …5
×

Building Branch Distribution for Tomorrow’s Reality, Presentation at BAI Retail Delivery, October 20, 2010

3,547 views

Published on

With consumers increasingly using non-branch channels, the role of bank branches is evolving.

A panel of bankers from Wells Fargo, Umpqua Bank and BBVA Compass discuss the changing role of bank branches. What type of branches do we need now? How do we transition to new models?

Published in: Business, Economy & Finance
  • Be the first to comment

Building Branch Distribution for Tomorrow’s Reality, Presentation at BAI Retail Delivery, October 20, 2010

  1. 1. Building Branch Distribution for Tomorrow’s Reality Peak Performance Consulting Group® October 20, 2010
  2. 2. Page 1 Challenging times! The issues: Consumer behavior is changing The role of bank branches is evolving Economics of checking accounts has changed The challenges: What type of branches do we need now? How do we transition to new models?
  3. 3. Introductions: our panelists Jay Freeman EVP, Sales Service & Development Wells Fargo Ric Carey EVP, Community Banking Umpqua Bank Jeff Talpas EVP, Retail Network BBVA Compass Page 2
  4. 4. Diverse expertise Wells Fargo Umpqua Bank BBVA Compass Distribution Reach 70 Million customers (1 out of every 3 US households) Pacific Northwest (WA, OR, CA, NV) Sunbelt region (TX, AL, AZ, CA, FL, CO, NM) Branches (stores) 6,445 176 720 Recent acquisitions Wachovia Bank Evergreen Bank, Rainier Pacific, Bank of Clark County, Nevada Security Guaranty Bank Other Subsidiary of BBVA, headquartered in Spain with operations in 30 countries Page 3
  5. 5. Consumers are changing: they don’t use branches the way they used to Page 4 Still the preferred channel for most consumers and small business Transaction activity is shifting out of the branch  Fewer checks  More direct deposit and remote capture Greater use of online payment and debit point of sale Online bill payment and Mobile payments growing rapidly
  6. 6. Branch transactions are declining Page 5 Monthly Transaction Volume (Seasonably Adjusted vs. Trendline) Peak Performance Consulting Group client data
  7. 7. Preparing for the future: gradually getting out of the “checking” business Check volume continues to decline in US: 39% of consumers expect to decrease their check writing UK has already set deadline for elimination of checks as payment mechanism Page 6 Decrease Significantly 19% Decrease Somewhat 20%About the Same 53% Increase Somewhat 6% Increase Significantly 2% Expected Changes in Consumer Check Writing, 2008-2011 Source: Federal Reserve Bank of Boston Survey of Consumer Payment Choices, January 2010
  8. 8. Discussion Question The historical role of branches has largely been defined by transaction processing. With check usage declining, how do you see the role of branches changing? Page 7
  9. 9. Bank branches on the decline? First decline since 1995 Is this the “tipping point” or temporary due to bank consolidation? Page 8 75,000 80,000 85,000 90,000 95,000 100,000 105,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total Offices: FDIC Insured Financial Institutions Source: FDIC. Data as of June 30 each year.
  10. 10. Discussion Question Some analysts are suggesting the number of bank branches will decline dramatically. Are they correct? Do we still need as many branches? Page 9
  11. 11. Too many branches or still room to grow? Differences in branch density driven by: Self service channel usage Cultural preferences for face-to-face Branch formats: smaller, more community oriented vs. hub locations Competitive environment Page 10 0 200 400 600 800 1000 1200 Room to Grow? Bank Offices per Million Residents Source: Bank for International Settlements, Peak Performance analysis
  12. 12. Discussion Question (for BBVA Compass) Spain has some of the highest density of branches/population compared to other countries – but many branches are smaller, more sales oriented and less transaction oriented. Does that suggest that in the US branches may not decrease, but increase in number? Page 11
  13. 13. Future of branches: “Reports of my death are greatly exaggerated” Page 12 Branches aren’t dead, but traditional branches must evolve!
  14. 14. Discussion Question If you had a crystal ball, what would the “branch of the future” look like? Page 13
  15. 15. Is “Minority Report” in our future? Page 14 RBS Citizens Bank, Boston: using motion tracking, pedestrians can interact with the display.
  16. 16. Discussion Question (for Wells Fargo) What is Wells Fargo’s approach to technology in the branch network? Page 15
  17. 17. Branch as community center? Page 16 Umpqua Bank neighborhood store, Portland, Oregon
  18. 18. Discussion Question (for Umpqua) How does the Neighborhood Branch concept work at Umpqua? Umpqua has a reputation for innovation. Can you describe your Innovation Lab? Page 17
  19. 19. The branch comes to you Page 18 BBVA mobile phone geo-location service BBVA new ATM housing
  20. 20. Discussion Question (for BBVA Compass) In many countries, banks are further ahead in the use of technology than their counterparts in the US. You’ve been acquired by a bank headquartered in Spain, and have had a chance to observe the landscape in Europe and other countries. What do you think US bankers can learn from their European counterparts, and vice versa? Page 19
  21. 21. Transferring global expertise Citigroup hires designers of Apple Stores to create new branch prototype Open 3 locations in Tokyo, expand to US and locations around the world Page 20
  22. 22. Sometimes we just need simple solutions You think you have security problems! Page 21
  23. 23. On-line vs. physical distribution Page 22
  24. 24. Discussion Question Bank of America is experimenting with video kiosks to provide service without staff. USAA continues to expand their distribution without branches through consumer remote check scan technology and their alliance with the UPS stores. Will banks be like Blockbuster (tied to physical stores – just declared bankruptcy) or will survivors be more like Netflix, which has aggressively moved into technology based delivery? How do banks integrate traditional branch banking with new channels such as mobile/internet/call center, etc? Page 23
  25. 25. Changing face of the industry Consolidation will continue, perhaps at an even more rapid pace Page 24 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 FDIC Insured Institutions Commercial Banks Savings Inst. Total FDIC Inst. (Forecast) Source: FDIC, Peak Performance analysis
  26. 26. Discussion Question As branches are closed (either due to a new round of M&A or evolution of the model) how do we manage consolidation without losing customers and share? Page 25
  27. 27. Assets concentrated in a few, large institutions Concentration of the U.S. Banking System | Page 26 Source: FDIC Red line represents the Gramm-Leach-Bliley Act (1999) which revoked restrictions of Glass-Steagall
  28. 28. What does this mean for community banks? Page 27
  29. 29. Discussion Question The big are getting bigger. How should community banks compete in this new environment? Page 28
  30. 30. Top Take-Aways: changing role of branches Branches are still the key distribution channel, preferred by 68% of consumers and small business. Branches aren’t going away, but the model will evolve. The branch of the future will have less emphasis on teller functions and more emphasis on sales and service.  Branches will be designed differently. They will be smaller, and fit into typical retail footprints. There will be fewer free standing branches (less need for large branches with drive-ups).  Branches will be staffed differently. There will be greater utilization of universal staff who can handle sales, service and transactions -- we won’t need as many tellers.  Branch managers will need improved market management skills. Branches will be more like sales centers than transaction centers, and this means greater micro-market knowledge and calling skills to improve trade area sales penetration.  Banks will implement tighter cross-channel integration with hub branches and call centers, especially for expert support and customer advisory functions. Leading banks are already experimenting with video conferencing and similar technologies.  Successful financial institutions will have more robust front-line relationship management technology to enable staff to deliver better customer service, stronger profitable cross-sell, and achieve greater share of wallet. Page 29
  31. 31. Page 30 Thank you! David Kerstein President Peak Performance Consulting Group 512-607-6332 dkerstein@ppcgroup.com www.peakconsultinggroup.com

×