Branching Out: Rebuilding Value in the Branch Channel
Datamonitor, June 2010, Pages: 75
Until recently, banks seemed to be neglecting their branches in favor of remote channels. However, they are now appreciating that branches are a highly effective channel for acquiring customers and selling products. Banks have therefore put in a lot of effort into improving the quality of the customer experience on offer in their branches. This report investigates the impact of these changes.
Scope
- Understand how and why banks are reassessing their branch strategies.
- Presents results from the Financial Services Consumer Insight Survey to highlight consumer preferences regarding the branch channel.
- Analyses the latest trends in branch design and configuration, the use of technology and the role and function of staff.
- Assess the outlook for branch networks.
Highlights of this title
Branches are moving away from a primarily transactional role towards a sales and advisory function. Many consumers prefer to use branches when buying or seeking advice on financial products, particularly more complex products, such as mortgages.
New technology, such as touchscreens, video conferencing and digital signage are all helping to make the branch experience a more enjoyable and worthwhile one for customers. Open-plan architecture, retail-inspired design and clearer layouts have made branches more welcoming and easier to navigate.
Although mergers and regulatory action in the wake of the banking crisis could lead to some branch closures, banks will continue to invest in their branch networks, as they are central to restoring trust and confidence in the industry. Consumers increasingly want to access their bank through a variety of channels, including branches.
Key reasons to purchase this title
- Learn about the latest trends in bank branch design and strategy.
- Read case studies of providers who are introducing innovative developments into their branch networks.
- Understand what the branch of the future might look like, and what roles it might fulfill.
Overview
Catalyst
Summary
Methodology
Executive Summary
Branches remain a vital communication and distribution channel for banks
Branches are increasingly geared towards the sale of complex and advised products
Branch design is changing radically
A retail-inspired approach to branch design is allowing banks to increase product sales
Technology is helping to enrich the customer experience
Digital signage can help to boost product sales and reduce boredom while waiting
Jyske Bank has put digital signage at the heart of its service proposition
Many banks view branch staff as being more vital than ever to their service propositions
A number of banks have placed a considerable investment in staff training
TD Bank is moving towards offering specialist sales and advice in its branches
Banks are taking an increasingly analytical approach to optimizing their branch networks
Branch layouts are moving away from a standardized look to one that varies by location
Branches remain the most effective channel for building relationships
Customers want to access their banks through a variety of channels
The branch channel will continue to evolve
Banks must rethink the purpose of their branches
Banks need to improve the quality of the in-branch experience
Evaluating the customer experience
What does customer experience mean?
The evolution of customer experience
The importance of generating a satisfying customer experience
Providers are starting to focus on customer experience management
A lack of integration can cost providers dearly
Most banks now have in place extensive programs to monitor customer satisfaction
Customer loyalty is the key to profitability
Customer advocacy is an extremely powerful medium for winning new customers
Loyalty and advocacy are closely correlated with profitability and growth
Financial providers need to improve the quality of the customer experience they provide
There is much room for improvement in the standards of service that banks provide
Banks should focus on differentiating their customer experience
Emotional attributes are vital to creating a unique experience
How a bank handles moments of truth has a disproportionate impact upon the customer experience
Creating an attractive customer experience can enable banks to charge a premium for their offering
Rethinking the closure of branches
Rumors of the death of the branch have been greatly exaggerated
Bank branches seemed to be on their way out in the 1990s
Banks have been forced to think again about migrating away from the branch
Branches remain a vital communication and distribution channel for banks
Branches are increasingly geared towards the sale of complex and advised products
Regulatory demands are making it increasingly difficult to sell complex products via remote channels
Banks are encouraging customers to migrate to remote channels for routine transactions
Many consumers remain resistant to the charms of online banking
A proportion of online bankers still prefer face-to-face contact with their bank
Branches are a valuable channel for attracting retail deposits in the wake of the banking crisis
The new face of branch banking
Branch design is changing radically
A retail-inspired approach to branch design is allowing banks to increase product sales
Branch design is helping to reinforce brand image
Branches are being tailored to meet the needs of different customer segments
New trends in layout are helping to facilitate the customer journey through the branch
Zoning is helping to improve the operational efficiency of branches
Several banks are pushing ahead with the transformation of the traditional branch
Umpqua Bank in Oregon has turned its branches into community hubs
Barclays Bank has tailored its branches in response to its customers' needs
Lloyds TSB's redesign emphasizes the commitment of each branch to its local community
Helm Bank in Colombia is pioneering a multi-sensory approach to brand identity
Jyske Bank in Denmark has worked hard to create a welcoming atmosphere
Deutsche Bank's Q110 'Bank of the Future' offers a complete retailing experience
There can be risks in adopting a retail-led approach to branch design
Washington Mutual reverted to a more conventional layout following its takeover by JPMorgan Chase
Abbey abandoned its partnership with Costa Coffee after just a few years
There is some difference in opinion about the wisdom of abandoning traditional branch design
The Datamonitor view on branch design
Technology is helping to enrich the customer experience
Touchscreens facilitate a more intuitive interaction between bank and customer
Barclays Bank is pioneering the use of touchscreen technology in its flagship London Piccadilly branch
Umpqua Bank uses touchscreen technology to build customer engagement
Touchscreen technology can be used outside a branch to engage the interest of pedestrians
Using video links can help create a more personalized experience for customers
Umpqua Bank is experimenting with video links to help increase face-to-face contact
First Atlantic is also investing in video tellers to improve efficiency
ABN Amro is piloting unmanned branches where all communication is conducted remotely
There are potential downsides to the use of video technology
Increasing levels of automation are contributing to greater operational efficiency
BNP Paribas has replaced teller positions with multifunction ATMs in most of its branches
Garanti Bank in Turkey has made widespread use of self-service kiosks
Sparkassen in Germany has installed movable kiosks in some of its branches
Digital signage can help to boost product sales and reduce boredom while waiting
Digital signage is highly effective in engaging the attention of customers
Bank of America reduced perceived waiting times through the use of digital displays
Jyske Bank has put digital signage at the heart of its service proposition
Behind-the-scenes technology can also improve the customer experience
TD Bank in the US is speeding up transaction processing times through the use of technology
The Datamonitor view on the use of technology
Many banks view branch staff as being more vital than ever to their service propositions
Meeting-and-greeting helps to improve security
Changes in branch layout and technology have also necessitated a change in staff function
Banks could be doing more to promote product sales through their staff
The quality of branch staff has become a marketing tool for banks
Changing staff priorities means a change in recruitment criteria
A number of banks have placed a considerable investment in staff training
Umpqua Bank has placed great emphasis on the quality of service provided by its staff
TD Bank is moving towards offering specialist sales and advice in its branches
Barclays Bank has resurrected the branch manager
Branch opening hours are gradually becoming more customer-friendly
The Datamonitor view on the role of branch staff
Banks are taking an increasingly analytical approach to optimizing their branch networks
Branch network optimization provides a powerful analytical framework for assessing network performance
Banks prefer to open branches where there is the greatest number of potential customers
Branch location is an important determinant of choice of bank
Branch layouts are moving away from a standardized look to one that varies by location
The Datamonitor view on branch networks
The future of branch banking
The branch channel will continue to evolve
Branches remain the most effective channel for building relationships
Branches can help to target high-value segments
Customers want to access their banks through a variety of channels
Branches have a role to play in restoring trust and confidence in the banking industry
Fallout from the banking crisis may lead to further closures
Bank mergers could force more branch closures
The decades-long expansion in US bank branch numbers could come to an end
Banks with larger branch networks may outperform those with smaller networks
Banks must rethink the purpose of their branches
Banks need to improve the quality of the in-branch experience
APPENDIX
Supplementary data
Definitions
Digital signage
Self-service kiosks
Methodology
Further reading
Ask the analyst
Disclaimer
List of Tables
Table 1: Method of applying for mortgage
Table 2: Size of UK bank branch networks over time
Table 3: Sources of information used when researching mortgages
Table 4: Method of applying for mortgage, by type of mortgage
Table 5: Method of applying for mortgage, by age
Table 6: Method of applying for mortgage, by household income
Table 7: Method of applying for unsecured personal loan
Table 8: Proportion of non-online bankers who cite a preference for dealing with people in a branch as a reason for not banking online
Table 9: Proportion of online bankers who prefer to have face-to-face contact with their bank rather than use online services
Table 10: Impact of channel preference upon trust
Table 11: Number of branches of US commercial banks over time vs size of US population
List of Figures
Figure 1: The branch remains by far the most popular channel for mortgage applications
Figure 2: Jyske Bank makes effective use of video to encourage product sales
Figure 3: Summary of main developments that will affect branch networks in coming years
Figure 4: Value-added increases as providers move towards an experience-based economy
Figure 5: Consumer behavior varies from antagonism to advocacy according to consumer attitudes
Figure 6: Many providers now regard NPS as a key metric
Figure 7: Branch numbers in the UK have remained relatively stable for several years
Figure 8: A high proportion of mortgage holders sought face-to-face advice on their mortgage
Figure 9: The branch remains by far the most popular channel for mortgage applications
Figure 10: In-branch mortgage application is dominant across all age groups
Figure 11: A preference for dealing with people is a major reason for non-online consumers to avoid online banking
Figure 12: Nearly a third of consumers who bank online still prefer to deal with their bank face-to-face
Figure 13: Banks around the world are redesigning their branches to be more visually appealing
Figure 14: Customer experience of a branch visit revolves around five key stages
Figure 15: Banks are starting to take a more systematic approach to branch layout
Figure 16: Umpqua Bank sees its branches or 'stores' as vital to its brand image
Figure 17: Lloyds TSB has opted for a local feel in its branches to maximize customer engagement
Figure 18: Helm Bank has created a totally immersive branch experience
Figure 19: Jyske Bank of Denmark has turned its offerings into tangible, tactile objects
Figure 20: Q110 from Deutsche Bank gives customers the chance to buy consumer goods in-branch
Figure 21: Many customers found WaMu's new-look 'Occasio' branches confusing
Figure 22: Barclays is pioneering the use of an advanced touchscreen interface
Figure 23: Interactive window displays can help to attract passers-by
Figure 24: Umpqua Bank allows customers to communicate remotely with advisors via video link
Figure 25: First Atlantic keeps its tellers backstage
Figure 26: Garanti Bank has gained a reputation for using advanced self-service devices
Figure 27: Jyske Bank makes effective use of video to encourage product sales
Figure 28: Deutsche Bank's Q110 branch advertises which of its staff are currently on duty
Figure 29: Highly detailed geodemographic analysis is available to banks deciding on branch location
Figure 30: Summary of main developments that will affect branch networks in coming years
Figure 31: HSBC's Premier branches serve the needs of its HNW customers
Figure 32: Impact of channel usage on trust
Figure 33: The growth of branch numbers in the US has far outstripped the growth of the general population
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