Sandy Spring Bank, Olney, Md. Assets: $4.1 billion
Denise Stokes, senior vice president, director of retail and
Time working on focused optimization program:
49 at beginning of program, 44 today
Channel committee oversees all research and decisions around
optimization. The retail/marketing head, head of commercial,
CFO, chief technology officer, head of real estate and the bank
chairman are active members of the committee.
Validate your banks’ strategy:
Channel implies more than just the branch. The bank started
broad based, asking what is omni-channel about for it and what
is the role of the branch in that context?
The bank knew that data was going to be critical to decision-making. It partnered with Pitney Bowes for data. It looked
at both demographic and market data—for today as well as
anticipated population, household and household income
growth on five-year horizon to define demand. Competition
is also analyzed looking for branch density for the bank and
its competitors—how many branches do top-five banks in any
county (in the market) and how many do you have? In some
cases the bank found markets that were already overbanked or
markets in which its presence was so small it cannot realistically
compete. The bank looked at the ratio between deposit availability and number of branches (county or smaller tract level).
There was a distance analysis that helped to understand
how far away from a customer you can be before becoming
irrelevant. We looked at this from both an account opening
and a transactional perspective.
Analyze and conclude:
Five closings have occurred in the past three years, reducing
network size from 49 to 44. Most of these were easy decisions—
unprofitable, low-volume branches with a receiving branch
within short distance. The bank has relocated a branch and is
using the data to test new sites looking at 20 potential new sites
from new build or acquisition.
The bank’s traditional branch model has been a stand-alone
with four tellers and two drive-ups. Given the dramatic consumer
behavior changes, the bank has opened one new concept branch.
It is more self-service oriented with no traditional teller line,
universal bankers, image-enabled ATMs and WiFi. The concept
as a whole is being tested as well as looking for opportunities to
bring specific elements into the rest of the network.
The bank is testing things all along the way. The bank knows
that it’s a journey—adding and transitioning over time. The
bank concluded that half of its branches were fine and that half
should have some change. As a part of the ongoing analysis,
the bank has a rolling analysis of leases to identify optimal
timeframes for making some of these changes. This process is
a long-term thing.
Words of advice:
Follow the data. It’s the prudent, fiscally responsible thing to do.
It’s hard to do it yourself without a partner to help with market
data/competitive data. That’s why the bank works with Pitney
Bowes. The data helped set the level internally—for instance retail
and commercial may have different “opinions” about a particular
site. Returning to the data helps make decisions guided by facts.
It has been critical to get strategic alignment across partners.
And moving forward the bank knows that it needs to keep testing and keep up with the trends.
Follow the Data
“Much more of the emphasis today is on sales and recruiting.
3. Gather as much market and competitive data
As you begin the optimization process you need to decide what
the implications are to your branch density and format?”
“Start from the perspective of how do I fulfill my target and
current customers. It’s not about “What can I tweak,” it’s about
“Where do I want to be in the future,” says David Kierstein,
president of Peak Performance Consulting. “What are my target
segments? What are my target geographies? You need to establish
that framework before you start collecting and analyzing data.”
Hal Hopson of Pitney Bowes suggests that you start with micro-market level data. “Know who lives in each geography—
understand their demographics, channel preferences, psychographics
and channel usage. What is your current share of wallet in the
market? Survey branches in person, and collect attributes around
these branches. Understand the competition and branch density
in each area. Is it already overbanked? Look into the future.