Bank branches that meet customer needs
Banks have spent huge sums refurbishing their branches, often without a clear海枯石烂造句
payback. They should devote more effort to managing customer visits.
Nick Bidmead, Georges Massoud, and Piotr Romanowski
a u g u s t 2007
Banks in Europe and elwhere agree that branch networks will long remain the cornerstone of their retail distribution strategy. Yet many em dinchanted by the payback on their efforts to breathe new life into brick-and-mortar outlets. Few can demonstrate that the
investments are yielding tangible economic benefits.
The problem aris when banks adopt an intuitive design approach that emphasizes
aesthetics and expensive format changes, overlooking the customer’s needs.
Instead, banks should put utility before appearances, favor lower-budget tactical adjustments, and u branch formats to manage customer visits actively.
f i n a n c i a l s e r v i c e
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Article
at a
glance
Banks around the world have been investing huge sums of money in efforts to renew their branches. In Europe alone, more than 12,000 outlets—8 percent of the total stock—underwent some form of im
provement in 2005, and our calculations suggest that Europe’s retail-banking institutions may be spending €10 billion or more annually on refurbishment initiatives. The picture is similar in the United States, where veral networks are also undergoing renewal, expansion, or both.
Projects begun in the past few years have varied enormously in scope, from low-key tactical tweaks to total refits of dilapidated outlets. But as a whole, the impact ems surprisingly limited. A recent survey of executives at 40 banks by the worldwide retail format design agency John Ryan, for instance, found that changes had been rolled out, on average, to only 10 percent of the branches in a network, despite more ambitious initial plans in some cas. Almost half of the executives in the sample said that they would have done things differently if they had had an alternative.
A typical ca concerns a large European banking organization that started to refurbish its network of 1,000-plus branches, with a total budget of €250 million. The bank halted the effort after two years. No more than 100 outlets had been completed, and costs per branch were running two times over budget.
In our wider rearch we could not find consistent and conclusive evidence that many of the ambitious investments had incread the rate of revenue growth. On the contrary, with renewal costs per branch ranging from €30,000 to as much as
€500,000, considerable amounts of money are probably going to waste.
We believe that the main reason for the problem is the banks’ overreliance on an intuitive, design-led approach focusing on branch “hardware” (costly items such as furniture and new partitioning) and on aesthetics. In contrast, the more successful efforts pay clo attention to what customers want, put utility before looks, and u format changes to manage customer visits actively—all while adhering to strict timing and budget discipline.
Branching out
Despite expectations during the dot-com boom that clicks would quickly replace bricks, banks in Europe and the United States are adding hundreds of new branches a year. Even greater sums of money have been devoted to improving and reshaping existing outlets.
The current investment has been driven mainly by the perception that banks must react to the changing role of branches in a multichannel retail-banking environment (notably becau of the impact of telephone and Internet-bad rvices). Most banks have already centralized their back-office functions, freeing up extra space and resources for customer-facing activities. Now they want to emphasize the sales
and advisory roles of branches in addition to the established transaction rvices.
Focusing on branches makes n becau even though the number of nonbranch transactions has grown substantially, this activity has complemented rather than replaced what happens inside banks. Overall, transactions such as bill payments and transfers are not dwindling at the branch level; recent rearch shows that while the proportion of day-to-day banking transactions conducted in branches has fallen—in some countries, from around 70 percent in 2000 to a projected 30 percent by 2010 1—the absolute number of transactions per branch has not changed at all.
To be sure, the picture differs somewhat from country to country. In a few, such as Finland and the Netherlands, customer visits have declined substantially; others, including France, Italy, and the United Kingdom, have actually experienced increas. But most European countries have en little change. For the region as a whole, the total number of visits to branches is down by only about 1 percent, and
2 as a result of visits per branch actually jumped by 5 percent from 2001 to 2005
the closures precipitated by recent consolidation in national markets and the
dot-com era. Much the same thing has been happening in the United States. In short, most customers in most countries still want to undertake many banking activities in branches, whether becau of a lack of alternatives, lingering concerns about online curity, a general preference for face-to-face contact, or the complexity of
value-added interactions.3
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With online-banking penetration in the United States at more than 90 percent among 20-year-olds—as oppod to 45 to 50 percent among all customers—fundamental change in branch usage will no doubt happen one day, probably 20 to 30 years from now. For the foreeable future, transaction-related visits will continue to reprent the majority of branch traffic (as high as 90 percent in some cas) and will therefore remain a bank’s best opportunity to cross-ll rvices, build customer loyalty, and deepen relationships.
Managing customer visits
Banks eking to improve the performance of a branch network have veral means at their disposal. Many banks already understand and systematically u methods such as network optimization (deciding how many branches to have and where to locate them).4 They also know how
to rai their game by using “lean” techniques to redesign process and customer relationship management (CRM) and other tools
to make the sales forces more effective.
However, banks have done little to shape customer visits. The challenge includes meeting or exceeding customers’ rvice expectations to increa trust and loyalty, uncovering latent purchasing demand, and converting tho leads to actual sales
later.
The opportunity is largely untapped becau banks tend to approach it intuitively rather than analytically, as part of a wider branch renewal program. Moreover, banks often assume that large capital investments, long payback periods, and extensive format changes will be needed. On the contrary, we believe that customer visits should be approached with a retailing mind-t, focud on lower-budget tactical adjustments.
To understand better what managing customer visits looks like in practice, consider the initiatives recently undertaken by three different banks:
One leading regional player in the United States launched a
merchandising campaign on the facades of its branches to draw
customers into them for a “five-minute financial checkup” and an
opportunity to win a prize. Customers and noncustomers took a
“swipe and win” leaflet from a merchandising display or a member of
the staff and then swiped it at a terminal inside the branch. Only after
completing a brief interactive financial review on the terminal did they
learn whether they had won. The campaign was highly successful,
leading, on average, to a 10 percent increa in current-account
openings across all participating branches (and an almost 20 percent
increa at the highest-traffic locations).
One major European bank, which had grown by acquiring many
smaller community institutions, t out simultaneously to increa the
migration of customers to lf-rvice channels and to step up its
cross-lling to existing customers. In the branches, the bank deployed a
digital-marketing platform (using interactive screens) with content that
included not only standard product information but also migration
tips, community news, generic sports and weather information, and
online customer satisfaction surveys. Customers were encouraged to
韩国炒年糕interact with the staff for more information. The impact was significant:
more than 80 percent of branch visitors noticed the screens, almost 50
percent followed the messages, and around 3 percent asked for more
information. The initiative generated roughly 100 leads (requests for
information) a month, which the bank deemed an excellent return on its
investment.
A large UK bank that focud on increasing customer satisfaction and
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cross-sales to existing customers identified three key objectives:
improving the customer’s branch experience, reducing perceived wait
times, and stimulating more interactions between bankers and
customers. It introduced two key innovations: opinion-gathering
devices (such as product interest and customer satisfaction surveys) for
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customers waiting in lines and screens above tellers’ windows for
product and rvice promotions, as well as for educational,
entertainment, and localized messages. Although the marketing
messages were kept deliberately short (10 to 15 conds), the impact
was significant. Exit polling of customers showed an increa of 25
赤者percent in their satisfaction with rvice levels, despite a small increa in
actual queuing times.
A three-step process
How can other banks make similarly effective moves? They should start by defining their objectives for branch renewal (such as improving rvice levels, customer acquisition, and cross-lling, or a combination of all three) and by tting clearly quantified targets. Managing customer visits then becomes a three-step process. First, banks need to gain a better understanding of the needs of their customers and of the customer traffic moving through their branches. The next step is to gment the visits into their parate components, highlighting the functions required for each. Finally, banks must identify the specific interventions and levers that can bring about the desired changes.
Understand what customers want and do
Few banks have more than a rudimentary knowledge of what customers want from a branch and how they currently u it. In fact, in our experience few banks know how many customers visit branches, so bank executives should u data analysis and direct obrvation to track the flow of customers and their behavior—in detail. Banks should supplement their traditional sales- and transaction-oriented metrics
by increasing their u of activity-bad branch-level metrics, such as the number of visits, the purpo of tho visits (for instance, rvice or sales), the flow of customers within branches, and rates of conversion into leads or sales ssions.
Break down visits into their components
Putting looks before utility is a common pitfall in branch renewal programs. To avoid it, banks must first decide how to shape the flow of visits from customers (for instance, by having staff members approach them as they enter the branch) and then design the environment accordingly. To be effective, the changes will probably have to go far beyond the physical formats of branches.
A typical customer visit has five key components—outside the branch, entering, queuing and transacting, waiting for sales, and leaving—corresponding to distinct physical areas. Banks should h
ave different objectives for each component (exhibit), taking into account the different needs (and income-generating potential) of rvice-
and sales-related visits. At the entering stage, for instance, a key objective will be to gment customers into people on simple transactional errands (who should be
5 directed to a teller or a lf-rvice desk) and tho on “moment-of-truth” missions (such as resolving problems or eking advice), which shape customer perceptions of the bank.
E X H I B I T
The components of a visit
Clear signage can be very effective, particularly combined with the physical paration of the transaction area (teller counters and ATMs) from the
help-and-advice area (the rvice desk and the sales ction). Placing a meeter-greeter desk directly in the line of incoming customers can be a good idea under some circumstances but may be ill advid in others. In our experience this approach often works well in large branches with complex traffic patterns: different customer gments requiring specialized personnel to handle their various requests. But it can be needlessly expensive in smaller, transaction-oriented outlets and is positively束河古镇在哪里
lf-defeating if, as frequently happens, the desk is there but left unstaffed.
Identify and apply the right levers
The third step is to identify the best combination of levers for managing customer visits. A bank’s choice, implemented on a branch-by-branch basis, should reflect its strategy, network configuration, location, and culture. In general, the solution has构图形式
