No “Big Bangs” in Branch Transformation

Glen Fosella wrote a good piece for Bank Systems & Technology this week, where he suggests: “While many banks are rethinking their long-term strategy for expensive branch networks, there are steps banks can take now to reduce costs and inefficiencies in the branch while providing a better customer experience.” We couldn’t agree more. Like it or not, banking (along with every other retail segment) must adapt to address seismic changes in consumer preferences and usage of digital channels. The trends are real, inexorable and accelerating. The trends are also global, with Nordic countries well ahead of North America in terms of internet usage, digital banking usage and right-sizing of the branch channel. For example, ABN AMRO saw more customer mobile banking logins than internet banking logins in early 2012. The Mobile banking channel now represents over 60% of all customer non-branch interactions. It currently operates 400 bank branches in the Netherlands. It once operated over 800. The branch channel needs to be more effective and efficient. But, what exactly is the “branch of the future”? Celent sees a marvellous variety of operating models and physical designs being deployed, but no one gets there in one “big bang”. To Glen’s point, while banks develop their long-term omnichannel delivery plans, there are great benefits to making incremental changes to the network NOW. In fact, Celent finds that approach largely common among banks with highly evolved branch infrastructures. The figure below shows the journey taken by a large number of banks globally. Gradually, most bank branches will look and operate very differently than most do now. But, getting there is difficult, expensive and risky. In our opinion, wise banks get there through a series of measured steps, while testing and learning as they go. But, do get going!