Is the branch still important?
As a part of PwC’s “Retail Banking 2020” study, top executives
were asked that question. “Fifty-nine percent of respondents
expect the importance of branch banking to diminish significantly as customers migrate to digital channels, and 48 percent
expect branch banking to change significantly by 2020.” Yet,
only 16 percent of respondents viewed themselves as “very
prepared” for this shift.
Respondents globally view the largest banks as benefitting
most from these changes, and smaller regional and community
banks being the most threatened, PwC adds.
Jean-Werner de T’Serclaes, a partner at The Boston Consulting Group, says the future of bank branches wasn’t just about
closing them. “Banks are looking to optimize their branch
networks rather than eliminate them,” he says. “Relatively few
bank customers want to do everything online, and most still
want branches for face-to-face conversations about complex
products such as mortgages.”
Optimize your branch network
So if optimization is more than simply closing branches, what
is it? What should you consider as you approach a network
optimization project? What are the outcomes you are working
Here are five general steps identified by leading experts in
m;Have the right people guiding the process and building
m;Validate your banks’ strategy—business/segment/geograph-
ic—optimization needs to occur in this broader context.
m;Gather as much market and competitive data as possible.
m;Analyze the data to arrive at several conclusions for each
market/branch: close, consolidate, invest, reconfigure.
m;Repeat—consumer behavior is going to continue to evolve—
optimization needs to be approached as an iterative process.
Let’s view each of these steps in greater detail:
1. Have the right people guiding the process and
Darren Dewey, senior vice president, director of retail distribution at Associated Bank, Green Bay, Wis., offers this advice, “We
have touched 200 of our 230 branches in the past five years—an
executive committee was formed at the beginning of the process
with our CFO, chief retail officer, commercial real estate manager
and community market leader. We needed to make the right
capital expenditure decisions with changing consumer behaviors and technologies. This balance of perspectives helped to
ensure the right decisions and buy-in at the most senior levels.”
Denise Stokes, senior vice president, director of retail and
marketing for Sandy Springs Bank, Olney, Md., describes a
similar approach. “We established a channel committee about
three years ago. Channel implies more than just the branch. We
started broad-based, asking what is omni-channel about for us
and what is the role of the branch in that context? The committee oversees all research and decisions around optimization.
The retail/marketing head, head of commercial, CFO, chief
technology officer, head of real estate and even our chairman
were active members of the committee.”
2. Validate your banks’ strategy—business, segment
and geographic role of the branch.
“You have to look at the historical role of a branch and how
roles have changed—if traditional roles include advertising,
recruiting new clients, cross-selling and transaction management—ask yourself how that mix has changed,” says T’Serclaes.
Banks are looking to optimize their branch networks rather
than eliminate them.
Spatial data visualization allows businesses to better analyze drive
times around a given point, like a branch location, and understand the
population within each of those drive times.
Sophisticated computer simulations can help visualize locations
of different banks and nearby competing banks in relation to local
population and demographics.