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Branch Banking: Best Practice in The Worst of Times
VRL Publishing Ltd, March 2009, Pages: 280
It is by now a well-accepted fact that traditional channels, like branches, are here to stay in the retail banking domain. However, having to deal with traditional channels does not have to mean having to stick with traditional approaches to try to increase sales efficiencies through them. At the same time, turning the branch model on its head may also not bring the desired results. Many banks have tried, and failed, to turn the branch into something it should not be in the first place. A balanced approach is needed – taking into account customer preferences, using the best aspects of the channels banks have already built and integrating all elements that drive efficiencies in a synergistic way.
For most banks, branches are still the key retail delivery channel. It would therefore make sense to start with the traditional branch set-up and explore how to make it work more efficiently. To do this, all parts of the ‘efficiency puzzle’ need to be integrated. Sales training needs to be followed by revised objectives, reflecting the expected improvements due to training. Proactive sales processes need to be given extra time – to be identified by capacity measurement and made available by capacity reallocation. Freeing up extra time for sales staff to do proactive selling needs to be integrated into well-planned sales processes, guided by superior sales management practices, to really work. Tracking and reward systems need to focus sales energies. The list goes on.
New approaches to traditional face-to-face selling have already been tested and proven by many banks. Branch agents and sales agents can improve efficiencies dramatically – but only when planned, implemented and managed properly. They can build on existing traditional channels so there is no need to tear out parts of the infrastructure that are working well. The key issue though is to not only integrate these new channels at the strategic level but do the execution correctly. Failure to do so can cost dearly, as those who took a good idea (for example, branch agents) and executed it poorly (for example, as a branch franchise set-up) have learned.
Finally, there are a number of ways that sales efficiencies can be increased, which are traditionally considered to belong to other functional areas and not to Sales. Some of these are relatively new, like using local trade area segmentation to plan activities and set objectives at the branch level in a finely tuned way. Some of them have been around for some time and are strongly controlled by other areas, like evaluating potential bank acquisition targets. And many of them are essential ‘glue’ elements that tie things together for Sales but rarely get mentioned as part of sales efficiency discussions: organisational design; pricing strategies; alliances; and more.
It is important that all of the above areas be addressed together, in a holistic way, if one wants to improve sales efficiencies with a lasting effect. It is equally important that each item be reviewed with a practical implementation approach in mind.
This study therefore addresses the above three areas: improving branch sales with an integrated approach; building on branches with additional face-to-face channels for a significant efficiency boost; and, covering nontraditional areas and glue elements to round out the picture.
This report is intended to be a practitioner’s guide. To accomplish this, it is rich in checklists, case studies, benchmarks and ‘how to’ templates. Most of the examples have been drawn from the author’s own experience, covering 25 years and 50 countries across four continents. At the same time, a number of areas have been given very little or no exposure at all. This is because they have been well-addressed by other books and studies in the past.
The focus is on presenting new but tested ideas and on how to integrate different practical approaches for best results. So, for example, there is limited discussion of model branch or call centre designs. But there are reviews on how they should fit into an overall efficiency-focused approach – their roles, the best ways to integrate them, their evolution. Reviewing the table of contents should give the reader a good understanding of how the report is structured and what to expect.
The key ideas of the report could be summed up thus:
Integrating all elements that have impact on branch sales is necessary to drive efficiency improvements. When handled well, an integrated approach can double sales efficiencies through the branches and in some cases can result in even higher (up to five-fold) improvement. The elements to consider go from the physical (location, premises) to strategic (alignments needed), enablers (capacity planning, training), processes (reactive, proactive) and overall management (goal setting, activity planning, tracking, rewarding, motivating).
Banks should not try to replace branches by other channels on a wholesale basis. Rather, the branch set-up should be built upon by introducing other, more efficient traditional approaches first. Branch agents and sales agents are two tested approaches that could work. The branch agent approach ‘near sources’ the running of branches to local entrepreneurs while keeping strong control. It saves both headcount and capital.
The sales agent approach adds a strong, but short-term focused acquisition capability to the network. It can add extra capacity in a very cost-efficient and flexible way as needed.
There are a number of areas where Sales needs to be involved to bring its efficiency focus to the discussion. M&A initiatives, service quality programmes and CRM requirements definitions are but a few of these. To be able to contribute, Sales needs to understand how to approach these areas in a disciplined way.
Equally, there are areas that are essential for providing the ‘glue’ to sales activities. Again, Sales needs to have a good understanding of how to contribute to and influence any debate concerning these areas (for example pricing strategies, business reviews, alliances).
Use of the Report
It is the author’s hope that the high-level reviews of the study, coupled with the detailed executional examples and tools, will give the reader a good understanding of all the above points
The aim of the study is to enable the practitioner to understand what is needed, to be able to present it convincingly for senior management approval and be able to start high-quality, fast implementation using the templates provided. At the same time, senior executives should be able to get a fully integrated view of the many different approaches that can be used to boost sales results, together with useful benchmarks to set their expectations at the right level.
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