By : Aamir Janjua
January 04, 2018 08:00 AM
Changing customer behaviours and expectations, increase in competition and cost pressures are pushing banks to re-define their distribution strategy. While there is an enhanced focus on building digital capabilities to connect with customers and streamline their service delivery model, core conversations still revolve around the holistic view of the distribution network, which includes physical and digital capabilities.
While digital channels are getting more and more mature, the physical branch network still plays an important role in connecting with customers by providing much needed sales and service capabilities, as well as enhancing brand loyalty and reducing churn. However, the profile of the branch is changing, and as a result banks often need to rethink what is the best approach to ensure they can continue to connect with consumers in a positive, engaging way, but without losing cost-effectiveness.
Quite a large number of NCR’s financial services customers are redefining their branch network, from prioritization and segmentation of their branch network to re-configuring of their capability and capacity and design layout to ensure that it resonates with their consumers and also aligns with their Omni-Channel strategy. At the same time, they are looking for alternative ways to connect with people in the physical world.
One tried and tested solution is to embrace greater use of self-service options in-branch. In a typical high street location, these can free up resources to focus on more advisory services such as helping with savings or mortgages - leaving self-service machines to handle many of the more common, transactional activities.
Elsewhere, the use of self-service can also help banks greatly downsize certain locations into so-called 'microbranches'. These can be just a few hundred square feet in area - significantly reducing overheads - while still providing all the services required thanks to the latest technology.
The 'pop-up' option - bringing banking where it's most needed
A related concept, and one that's gaining a lot of traction at the moment, is the idea of a 'pop-up' branch. Like a microbranch, this takes advantage of self-service capabilities, usually alongside a small number of advisors, to bring banking services to locations that would otherwise be inaccessible.
But these emphasize portability - they can be modified from a shipping container or designed as a trailer that can be towed to where it is needed. All you need is a parking lot, a generator and a way to connect to the bank's network and you've got a fully-functional branch.
There are several scenarios where such solutions can prove invaluable. One obvious area is in promoting financial inclusion in rural areas, where people may otherwise have to travel for many miles - or even days in some parts of the world - in order to gain access to financial services. A travelling, mobile branch solves this problem by bringing services exactly where they're needed.
But this is just one of the ways in which pop-up branches can prove valuable - and the key to success will be in identifying where opportunities lie and acting quickly to make the most of them.
Where can banks benefit from pop-up services?
One group of customers that most banks are trying to connect with is Millennials. Financial providers can target this segment by utilizing this pop-up capability, for example by targeting college students. These individuals, who will often be heading out on their own and encountering issues such as saving and budgeting for the first time can greatly benefit from in-person advice and guidance. Therefore, taking the bank to them and setting up on-campus can be an ideal way to reach out and entice customers.
That's what PNC Bank in the US has been doing, after it set up a pop-up branch on the campus of West Virginia University last year. The Financial Brand reports that it remained there for five months and aimed to become part of the community by handing out free rally towels on game days, and cups of coffee during exam periods.
PNC Bank's Jim Balouris explained: "Branch convenience remains the number one consideration when consumers choose their primary bank. A tiny branch is a fun, creative way to bring a host of services that help customers discover ways to enhance their financial wellbeing."
Elsewhere, pop-up branches can also be used to minimize disruption when traditional branches are out of action, such as due to renovations or in the event of a natural disaster, where they can be invaluable temporary hubs to help people cope with the aftermath of floods, fires or storms.
For example, we have seen in recent months that in response to Hurricane Harvey & Irma, quite a few banks have deployed this capability to promptly resume their financial services in the disaster affected area. Wells Fargo is one of those banks that have embrace this strategy, sending trucks equipped with ATMs to areas most affected. As rebuilding activities take months, having a pop up branch capability becomes critical for business continuity and customer support perspective.
We have also helped our customers in Australia and New Zealand to build pop-up branch capability, where banks have been using this for customer acquisition and retention at locations such as sporting events.
With careful forward planning and the right designs, these spots can be put together in a matter of hours to ensure banks are able to continue offering services and reach people wherever they are.
Pop-up branches are becoming more and more instrumental for financial inclusion, streamlining business operations and reaching out to the customer at the place of their choice. However, the most important part is to see your distribution network holistically to build the right network and to deliver the right service to the right customer at the location of their choice. It is also important to develop the right set of KPIs and performance measurement cadence to deliver a win-win situation for the bank and its customers.
To find out about more about the core elements of the Distribution strategy – please visit NCR's Retail Bank_Omni-Channel Strategy whitepaper.