As a financial industry CEO, your job is to oversee all your branches, ensuring productivity is forthcoming and branches are taking the initiative. Do you offer solutions, or do you limit the possibilities? What action are you prepared to take when branches are losing money?
Branches that are terminal under-performers need to be either consolidated or even closed down altogether. Branch location specialists can diagnose your strategy via intensive branch comparison studies for the locales in question. They will give it to you straight. But ultimately, you’re the boss, and the decision is yours alone.
The good news is that there’s a huge difference between terminally sick branches, and branches that are just feeling a little under the weather.
A sick branch can be diagnosed via several symptoms that absolutely have to be addressed. Here are four examples:
• A grandiose bank of teller windows whose stations are at most 50% occupied.
• A single ATM that consistently generates longer lines than any of the individual teller windows.
• An abundance of “dead” space where the only activity involves airborne dust particles.
• The branch operates solely as a cash transaction office offering few, if any, other services.
I could go on, but instead here’s the diagnosis and cure for those four symptoms:
• Once upon a time, financial institutions were basically vaults with store fronts. This kind of branch is becoming extinct, and if your branches only function in this one way they’re in danger of becoming extinct too! The answer is teller pods, AKA dialogue towers, where your staff function as “universal bankers”, carrying out transactions but also available to dispense advice and information, with the means right there to support it.
• A branch fitting the description in point two is scandalous. Not adding a second, or even third ATM, is costing the branch money. If you really want to impress your customers (and attract new ones), invest in something truly innovative like an automated interactive teller machine, or ITM. This allows a remote human being to communicate with users by video on a variety of subjects, in real time. Branches who utilize this technology are known as “smart branches”.
• Gaping areas of space are always wrong. A rational branch should use all available space for business functioning, enhancing brand awareness and marketing services. Banks and credit unions today offer insurance, loans, investment advice, and more. All of these should be clearly advertised in specific zones within the retail space. Which brings me to symptom number four.
• Services are retail distribution channels. They’re sources of growth and customer data. Through expanding services, you can learn about your customers while providing information to them on even more services they want to learn about from you. It’s a feedback loop that keeps consumers loyal to your brand and keeps your brand ahead of the pack.
Or the herd, if you prefer.
Herders vs. Leaders
Bosses are generally leaders or herders.
A leader guides their branches from the front, giving clear signals as to which direction they should be heading.
A herder bullies their branches from the rear, nipping their heels with little concern for their well-being.
When CEOs stay ahead of the curve, they are open to innovation and change. When they lag behind the action, they risk being usurped by competitors who embrace industry upheavals. In short, the herder is far likelier to suffer from “Sick Branch Syndrome” than is the caring leader. And sick branches will cost you dear.
Each of your branches is subject to its own unique selection pressures, so each must be assessed separately. Holding all branches to one standard can alienate successful branch managers and place unnecessary stress on managers who aren’t moving you forward as a brand.
It may not be their fault; if you failed to properly research location options before siting branches, they could have been doomed before they were even built. By merely herding your branches without paying attention to disruptive new approaches, you’re missing chances to improve profitability.
Acting to Optimize and Rationalize
Optimization/rationalization of your retail space should begin with two things: 1. A consultation with a branch location specialist to determine if the branch even has the potential to succeed. 2. A thorough assessment of exactly how much space you really need from an industry design expert. Many businesses leak money via energy inefficiency and poorly-designed layouts. For this reason, only integrated projects should be considered.
At the same time, beware of under-utilizing other channels. The institution’s website, email blasts, social media, and industry events should all be considered as potential revenue generators. All can be used to disseminate news, offers, information and reminders of important upcoming dates.
“The Bank of Things”
In addition, many banks, credit unions, insurance companies and others now offer smartphone apps that “talk” to both the consumer and the merchant. These digital connections form what is known as “the Bank of Things” (derived from the term, “the Internet of Things”), and they are pivotal developments in the evolution of financial services.
When you fail to communicate with customers through these digital channels, you fail, period. Being at the head of this wave is critical for banks and credit unions today.
Remember: Time’s arrow moves in one direction only – Forward. As your older customer base retires and eventually succumbs to the rigors of this mortal coil, younger customers take their place. The cycle never ends, and as time moves on, they, too, are replaced by the next generation of professionals, each more tech-savvy than the last.
20 years ago we scarcely suspected the coming techno-revolution. 20 years from now, who knows what bionic nanotechnology will exist? Prepare now, by building the foundation and embracing change.
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