By : Martin Shires
November 07, 2014 10:08 AM
Branch closures continue to be the theme of the industry, even though reports show there has been a resurgence in customers' use of branches of late. Rationalization is the word of the moment as financial institutions streamline their operations and go for more automated solutions.
It makes sense in many ways. A self-service ATM is cheaper to run than a branch. Online banking means there is far less call for customers to go in branches. Closing branches can mean cutting costs while delivering more of the kind of services people really want.
But it’s not telling the full story. The chances of selling more products and generating more profit from customers is limited if they only use their iPhones to engage. For example, McKinsey highlighted this year the difference between how well customer enquiries convert into purchases across different channels. Digital enquiries convert into sales at a rate of only 15%, whereas enquiries managed by a human experience convert at a phenomenal 85%. Branches are the chief way for banks to interact on a personal level and sell more. Indeed amid all the language of branch transformation and the banking experience, it’s easy to forget that a bank is a business whose job it is to make money for its shareholders.
It does this partly through delivering a great experience, by offering more services online and via mobile channels, by being a security expert and by delivering a broad range of tailored services to customers. These are all important to customers.
But banks need to effectively market and sell these services somehow and the branch is still the way to do this. Indeed there is no such thing as an unprofitable branch. They may be mismanaged, or the staff may not be doing enough to upsell to existing customers, but the branch itself is not the problem. The next step is to use technology to deliver the branch interaction experience, across all of the channels now used by customers.
The way banking is going it’s easy to see everything through the prism of technology. But that’s only one side of the equation. A bank is like any other business that needs to sell more. Technology is the enabler; the real value is in the people who work for the company. Without them it will be hard to truly serve the needs of customers while also selling more products.
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