Category Archives: Retail Banking

5 Branch Reinventions that Can Turn Bricks and Mortar into Gold

Iconoclasts are forecasting the end of the retail bank branch. Simple and Moven have gone so far as to delete the word “bank” from their names, and make the rounds at industry events heralding the brave new branch-free landscape.
But US consumers and small businesses are channel omnivores. Give them mobile, online, ATM, phone and branch—all will be used by some, and some will be used by all. The cost of channel choice is great, and retail margins are on a diet, so reinvention is an economic necessity. Channel R&D is accelerating as banks large and small find the unique branch blueprint.
Look at these strategic innovators:

  1. Forget the movies, head to the branch. Small but mighty Umpqua Bank, with 200 “neighborhood stores” in the Pacific Northwest, is starting a “slow banking” revolution. Giant plasma touchscreens are used as “Discover Walls” to showcase neighborhood events, local merchants and podcasts. Wii bowling nights and Food Truck Tuesdays are big draws. Umpqua’s strategies add up to fast growth in key demographics: young, upscale families and small businesses.
  2. No longer solo, the branch is now the fulcrum of an omnichannel world. TD Bank lives their tagline—“America’s Most Convenient Bank”—legacy of the 2008 Commerce acquisition. TD’s 7-day, evening hours branch access has long been a differentiator. Now, omnichannel integration is sophisticated. Local branch manager videos and banner ads are served up in real-time by recognizing customer IP addresses. No surprise TD’s 2013 ad campaign abandons Regis and Kelly for “Bank human, again” featuring their branches as the headline act.
  3. Tellers are out, specialists are in. Chase, with 5600 branches, has got the yin and yang of their branch future figured out. Service costs are being squeezed through self-service kiosks: ATMs on steroids that can handle 90% of all teller transactions. At the same time, Chase is ramping sales horsepower with a six-fold increase in Private Bank branch presence , delivering 5x growth in the number of Private Bank clients since 2010. Other Sales Specialists in branch have grown 20%. And Chase’s net branch count is increasing, with new builds that are smaller and specialist-rich.
  4. Going virtual and mobile: PNC is working towards a vision of less physical density and more multi-channel options, reducing their branch count from today’s 2850 selectively. Going well beyond the now-familiar mobile deposit and digital/social contact center options, PNC is rapidly expanding mobile stores, street teams, community brand ambassadors and segment-specific “thin branches” that match the needs of their micromarket.  Watch for the famous “PNC Conversation” to get even smarter and better.
  5. Cut the ad budget and buy or build branches: Since 2008, M&T has doubled in size to 725+ branches, but its footprint radius has grown a mere 27 miles. Branch density is a strategy M&T uses effectively to build brand awareness and bank profitability, and acknowledges it enables a lower advertising budget. M&T’s invested in activating branches through clever and comprehensive management of their Baltimore Ravens and Buffalo Bills partnerships, ranging from in-branch promotions with players and shared community service programs to management of the franchise like a mega-branch, complete with sales goals. Banking Built for Baltimore demonstrates M&T’s smart leverage of branch penetration and sponsorship potential.

The answer to branch strategy isn’t as simple as develop or dismantle, reinforce or reduce. Like most strategy and marketing wins, it’s about defining a course that magnifies strengths, mitigates disadvantage and sets a course that fits your franchise, and your future.

Financial Literacy: Nicety or Necessity for Retail Banks?

In honor of Financial Literacy month (that’s April in case you’ve forgotten to note it on your calendar), we’re featuring 6 banks who have led in developing financial education resources…in very different ways:

  1. Regions Bank sponsored Financial Fitness Fridays in January 2013, with live seminars at their branch locations. Their My GreenGuide online learning portal is one of the best—engaging visuals, accessible advice and a good array of life stage-based calculators for everything from retirement to managing hardships. Engagement translates to differentiation.
  2. Wells Fargo, in their usual “do it well or not at all” style, supports
    Hands On Banking, both broad and deep in the segments served and formats offered.  From teens to entrepreneurs, teachers to the workplace, this program covers the ground–and delivered financial smarts to nearly 154,000 US consumers in 2012 alone
  3. Capital One has assembled a virtual smorgasbord of learning tools, best practices, programs, seminars, games and partnerships serving just about any segment you can name—from kids to retirees, college students to newlyweds, teachers to small business owners. Buried in the maze of options they offer are some gems—including teachable moments for teens, an easy lease-vs-buy calculator for businesses and tips on preventing ID theft. But you’d have to have spare time and determination to mine the full value out of the literacy labyrinth.
  4. Literacy’s gone mobile at Fifth Third—and this has nothing to do with a smartphone. The Financial Empowerment Mobiles are 40-foot city buses tricked out as financial learning centers, and activated with locally staffed flash mobs and other PR-worthy activities. Less intriguing, but high-impact are 53’s age-based programs from the 5th grade focused Young Bankers Club to sponsorship of ABA’s Teach Children to Save and Dave Ramsey’s Foundations in Personal Finance high school curriculum. High community value matches well to this bank’s regional and local go-to-market strategy.
  5. A 2011 survey found that 89% of US parents think they are important in teaching children about basic money management, but less than 4 in 10 actually do it. BMO Harris is out to close the gap with its engaging and comprehensive Helpful Steps for Parents. Activity books for kids, age-based practical advice, blogs and videos targeting common teachable moments make this one of the best kid-centered efforts out there. The Zone offers activities, games and learning in kid-friendly form—and does well until it misses with the teen audience.
  6. PNC leverages their $350mm commitment to Grow Up Great, their multi-year, comprehensive initiative focused on helping kids under 5 prepare for success in school, made even better through partnership with Sesame Workshop. The program’s financial education reach includes distribution of more than a million multimedia kits, teacher training, parent guides, PNC staff volunteers and grants for local efforts across PNC’s footprint. Like PNC’s hypercool Virtual Wallet targeting the millenials, the S is for Savings product is the market leader—a $25 minimum balance is packaged with a kid-friendly interactive demo, tips and the online equivalent of a piggy bank. And these are only part of PNC’s broad-based financial education curricula.  Like most PNC efforts, their literacy approach is systematic, segmented and substantial.

Financial education offerings are as varied as their sponsors. And their value is clearly broader than ticking a box on a regulatory checklist. Financial literacy done right builds engagement and loyalty.  What’s more, smarter consumers are better customers.

Are Banks Capturing Branches’ Full Marketing, Sales and Service Potential?

A number of recent surveys have shown that electronic channels – notably online and mobile banking – have taken over from branches as the primary customer service channels. This has led to some extreme speculation on the future of the branch channel. The industry consensus is that there will be a role for the branch channel in a future omnichannel banking environment, but there is a good deal of debate on what that role will be.

And banks’ role in everyday banking transaction processing diminishes, banks are starting to tap into the sales, marketing and customer support potential of the branch channel, in areas like:

  • Customer acquisition: A Bancography 2012 survey found that 95% of new accounts are opened in the branch. And a recent Novarica survey found that 58% of people under 30 would not consider opening an account at a branch that does not have a branch nearby.
  • Cross-sell: Some banks are already starting to overhaul both branch structures and staffing to reflect an expanded sales function. Bank of America recently discussed a redesign of its branches, which includes private rooms for meetings with financial specialists, as well as videoconferencing for remote access to experts. Banks should also be looking to upskill and support tellers to generate referrals for in-branch or remote specialists.
  • Branding: The branch is the most physical manifestation of a bank’s brand. As such, branches should reflect and extend overall bank advertising efforts in signage, collateral, etc.  In addition, advertising should promote branch strengths.
  • Customer support: While electronic channels have advantages over branches in areas like convenience and 24-hour access, consumers continue to express a preference for branches for addressing financial needs that are more complex and/or personal in nature. A 2012 Cisco survey found that 84% of consumers are interested in a “specialty branch,” which would provide advice and personal, customized assistance.  The most popular types of advice would be financial education, notary public services and tax preparation.
  • Community relations: Branches are a tangible expression of a bank’s commitment to a specific market. Some banks are already redesigning branches to take on more of a community role.  Umpqua Bank is a standout performer in this regard, with its cutting-edge branches including a “Discover Wall” that showcases neighborhood events, Local Spotlights on selected small businesses in the local area, as well as branch-specific Facebook pages.
  • Research & Development: A number of large banks (such as Citibank, Bank of America and Umpqua) have opened “flagship” stores that showcase the bank’s latest sales and service technologies. In addition to creating local buzz for the bank as positioning it as a cutting-edge financial provider, these branches enable the testing of new products, services and technologies prior to wider deployment.

For banks to get the best return on their branch investment, they need to understand the changes in how consumers and businesses interact with their banks, develop a more holistic view of branch capabilities, and work to integrate branch-based activities with other bank marketing, sales and service initiatives.