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Is The Bank Branch Dead


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A brief analysis and discussion of bank branches. Changing the paradigm from transactions to interactions/customer experience.

Published in: Economy & Finance
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Is The Bank Branch Dead

  1. 1. Is the bank branch Dead?
  2. 2. Key Trends <ul><li>Branch-generated revenue growth is becoming more challenging. </li></ul><ul><li>Transactions processing and customer service are becoming increasingly independent of the branch channel. </li></ul><ul><li>Customer demographics are shifting, making Generation Y and ethnic groups vitally important. </li></ul><ul><li>Source: Evolving Models of Retail Banking Distribution, Deloitte, 2008 </li></ul>
  3. 3. The Branch Value: Customer Perspective <ul><li>Customers continue to cite convenience as the number one reason for choosing a bank: </li></ul><ul><ul><li>Retail Bank Selection % of respondents </li></ul></ul><ul><ul><li>Branch Close to Home 52% </li></ul></ul><ul><ul><li>Good Service 36 </li></ul></ul><ul><ul><li>Convenient ATMs 35 </li></ul></ul><ul><ul><li>Free Checking 34 </li></ul></ul><ul><ul><li>Previous Relationship 32 </li></ul></ul><ul><ul><li>Offers Direct Deposit 24 </li></ul></ul><ul><ul><li>Branch Close to Work 22 </li></ul></ul><ul><ul><li>Low Fees/Charges 19 </li></ul></ul><ul><ul><li>Low or no ATM Fees 18 </li></ul></ul><ul><ul><li>Convenient Hours 17 </li></ul></ul><ul><ul><li>Source: PSI Survey of US customers </li></ul></ul>
  4. 4. <ul><li>Does this mean having a lot of branches </li></ul><ul><li>Does this mean having a extensive ATM network </li></ul><ul><li>Does this mean having an extensive array of products </li></ul>Questions:
  5. 5. Answers <ul><li>The answer is a both a yes and no to the questions. Having an extensive ATM and branch network along with 10 page menu of products does not assure success alone </li></ul><ul><li>Banks should focus on: </li></ul><ul><ul><li>Distribution excellence </li></ul></ul><ul><ul><ul><li>This drives customer choice, loyalty, and ultimately, profitability </li></ul></ul></ul><ul><ul><li>Forward thinking </li></ul></ul><ul><ul><ul><li>The world is changing at a rapid pace and customer expectations the bank role is changing </li></ul></ul></ul><ul><ul><li>Less transactions and more on retailing </li></ul></ul><ul><ul><ul><li>Mastering retail concepts from such success as Starbucks, Target, and others will provide greater insight to marketing and selling bank services </li></ul></ul></ul>
  6. 6. New Banking Paradigm <ul><li>Customer </li></ul><ul><li>Anywhere Anytime Anyway customer convenience </li></ul><ul><ul><li>Online banking </li></ul></ul><ul><ul><ul><li>24/7 service </li></ul></ul></ul><ul><ul><li>8 to 8 branch service </li></ul></ul><ul><ul><li>365 days branch service </li></ul></ul><ul><li>Instant comparison of products and services </li></ul><ul><li>Reduced Turn Around Time </li></ul><ul><li>Enriched interactivity through customized services </li></ul>Bank
  7. 7. New Banking Paradigm <ul><li>Bank </li></ul><ul><li>Redefine </li></ul><ul><ul><li>Traditional concepts </li></ul></ul><ul><ul><li>Role of the branch </li></ul></ul><ul><ul><li>Business processes </li></ul></ul><ul><li>Wider and more focused market reach </li></ul><ul><li>Reduced distribution costs </li></ul><ul><ul><li>Cross Sell </li></ul></ul><ul><li>Leverage customer database </li></ul><ul><ul><li>Customer acquisition / retention </li></ul></ul><ul><ul><li>Credit screening and data mining </li></ul></ul>Customer
  8. 8. The Innovators <ul><li>ING Savings </li></ul><ul><ul><li>Retail banking </li></ul></ul><ul><ul><li>Very Limited branches </li></ul></ul><ul><ul><li>E-banking </li></ul></ul><ul><ul><li>Basic Product Menu </li></ul></ul><ul><li>Commerce Bancorp </li></ul><ul><ul><li>Commercial and Retail </li></ul></ul><ul><ul><li>Numerous branches </li></ul></ul><ul><ul><li>Traditional Banking </li></ul></ul><ul><ul><li>Multiple products sets </li></ul></ul><ul><li>HSBC ( US banking ) </li></ul><ul><ul><li>Commercial and Retail </li></ul></ul><ul><ul><li>Limited branches </li></ul></ul><ul><ul><li>“ Self-Directed” banking </li></ul></ul><ul><ul><li>Limited Products </li></ul></ul>
  9. 9. ING Savings <ul><li>ING branches: </li></ul><ul><ul><li>Differentiate the brand </li></ul></ul><ul><ul><li>Are not called branches, they are called “ Cafes” </li></ul></ul><ul><ul><li>Creates social currency…banking is cool, very cool. </li></ul></ul>
  10. 10. Commerce Bancorp <ul><li>Commerce branches: </li></ul><ul><ul><li>Build the brand </li></ul></ul><ul><ul><li>Are the mission statement...”Building the Brand one brick at a time” </li></ul></ul><ul><ul><li>Unconventional </li></ul></ul><ul><ul><ul><li>Opened seven days a week </li></ul></ul></ul><ul><ul><ul><li>Hours based on working class people </li></ul></ul></ul><ul><ul><ul><li>convenient banking </li></ul></ul></ul>
  11. 11. HSBC USA <ul><li>HSBC USA branches: </li></ul><ul><ul><li>Provide Niche services for Cosmocrats </li></ul></ul><ul><ul><li>Provide Straight-Thru banking for ‘Self-Directed’ customers </li></ul></ul>
  12. 12. The theme among all three cases <ul><li>Demand for non-traditional Service </li></ul><ul><li>Automation of Services (for customer needs, not for bank needs) </li></ul><ul><li>Emphasis on Customer rather than Product </li></ul>
  13. 13. Branch as a Multi-Channel Platform <ul><li>The branch represents: </li></ul><ul><li>A significant opportunity for changing the customer experience; </li></ul><ul><li>A significant opportunity for enhancing the brand; </li></ul><ul><li>A platform for offering superior non-deposit offices and e-banking services </li></ul>
  14. 14. From Transactions to Interactions From this………… to this………
  15. 15. And…Trust and Transparency Customers outside IndyMac Bank Stanford Bank