The trend: Now that banks and credit unions are getting by with fewer branches, it’s increasingly important for them to rethink their existing networks.
Creating a conversational setting: A branch experience in which customers can walk in and have a casual conversation with an employee gives banks the opportunity to understand the customer’s financial goals and act as a trusted financial advisor—not just a provider.
Consumers crave listeners: Bankers must hear out customers first. Rather than pushing them down pre-built experience paths, staff should start with more personal conversations to identify their customers’ true intent and deliver on that instead with more relevant products and services.
Think of what a branch manager always did: Listen first, remember who a customer is, continue the conversation over time, and provide relevant advice.
Reworking the traditional branch: Long-term bank branch evolution plans must be rooted in a financially sound business model. Banks will need to weigh the business potential of the reoriented services at their branches against the capital investment required to remodel and rework the physical space.
Banks should adopt a three-step process to determine the optimal branch network, per Capgemini.
Redesigning the physical space: The goal, then, is for banks to transform the branch network from a “transaction-type” model to one that’s smaller, less costly, and more closely oriented toward high-value sales and advice.
McKinsey estimates that under the traditional model, 70% of floor space is devoted to tellers and 30% is dedicated to self-service. In the smart or digital branch model, this is flipped.
Behavioral science insights: An Ipsos report recommends that banks let principles of behavioral science guide them in influencing and directing consumer behaviors.
Determine what consumers want and design the space accordingly: Two factors influence how consumers use physical spaces: 1) What are they seeking to accomplish? 2) What does the space enable them to do?
Reward desired behavior (operant conditioning): Provide incentives to consumers for using the branch as it’s targeted to be used.
Refocus visitors (framing): When a customer walks into a branch, they’ll use the spaces and staff they see. Reorient the branch to ensure the high-value services that need a human touch are front and center.
Banks are more like other verticals than not: Financial institutions are highly retail in nature. That means consumers hold them to much the same standards to which they hold their favorite stores—they want a memorable experience in the physical space.
Workplace: The same principles of hybrid working apply to bank branches. Their redesign will turn them into regional hub offices and collaborative meeting spaces.
Retail: Banks can learn from the direct-to-consumer (DTC) brands that were originally solely digital, like Warby Parker, Allbirds, and Bonobos, but are now blending physical store operations with online operations. Their goal is to enhance customer service and to create unique in-person experiences and communal spaces for customers.
Hospitality: Banks can learn from the way this industry uses a highly segmented, hyper-targeted strategy to create distinct branch designs and layouts—all while maintaining a single brand.
Healthcare: Healthcare providers take what’s in effect an omnichannel approach, balancing in-person and virtual care with continued in-person care for emergencies, combined with increasing virtual care for preventive healthcare and even virtual urgent care.
Our take: Surviving branches need a refresh, not only to help banks and credit unions zero in on their revamped customer relationship strategies, but also so that they avoid risking unnecessary operational and maintenance costs. The response of retail stores and other verticals to the “brick and mortar renaissance” and consumers’ desire to return to in-person experiences can help inspire redesigns.
This is the third article in a series looking at where bank and credit union branches fit into an ever-more-digitized banking experience. Previously, we explored why branches aren’t yet obsolete, and how consumers view them.
Next in our series: What branch formats are currently in play, and what technology and people skills best complement them