Faced with changing customer preferences, especially from millennials and Generation-Xers who make up America’s largest demographic, banks and credit unions are keen to transform their branches from traditional to newer models that incorporate the delicate balance between high tech and high touch (see 100% Branchless Banking – Myth or Reality?). But successful branch transformations aren’t easily accomplished. Here’s why:
#1 Staff Doesn’t Know How to Use Technology
With fintechs chipping away at financial institutions’ business, and with consumers wanting a more efficient banking experience, banks and credit unions are feeling the heat. Many banks are rushing into branch transformation strategies without properly laying the foundations for change.
For instance, when a top bank first introduced envelope-free check deposits, many employees were not even aware that that feature existed, and fully 80% did not know how to make an envelope-free deposit.
Technology is a cornerstone of branch transformation, with sophisticated machines (such as Interactive Teller Machines or ITMs) offering all sorts of banking options. But the more the options, the greater the perplexity of those who attempt to use them. Yet, banks aren’t doing enough to train their staff on new branch technologies.
As a result, customers get frustrated with the “transformed” branch when they can’t figure out how to use the machines they are directed to, and even more so when branch staff can’t help them either; leading to a rather disgruntling branch experience, and little desire to use those machines again. Instead, they default to interacting with a teller or branch banker the old-fashioned way, and in worst case scenario don’t return to the transformed branch.
#2 Not Gaining Staff Buy-in
Remember the time when airlines first introduced self-service kiosks, but travelers still lined-up behind manned counters to get their boarding passes and safely drop-off their bags? Turns out, airline staff saw those machines as threatening to their jobs, and never encouraged people to use them. However, over time counter staff realized that the machines were a blessing that reduced the stress of processing hundreds of passengers before the flight took off, and freed them up to focus on critical service requests and customer service. Passengers, too, now realize that there are shorter check-in lines, and are happier for it.
The same holds true for branch transformations. Tellers and bank staff covertly greet a transformation with hostility because they believe technology will soon make their jobs redundant. They may be unwilling to welcome the change, and Trojan-like, impede the bank’s or credit union’s transformation strategy from within because management did not do enough to get staff on board.
Consequently, the millions spent on a branch transformation go to waste as new technology lies unused, and branch staff revert to old ways.
#3 Not Educating Customers on New Branch Technology
Related to #1 above, branch transformations also fail when bank management acts on the belief of "If you build it, they will come." Successful branch transformations require that branches educate customers on new technologies to give them the confidence to use them. What good is a really versatile ITM if customers don’t know how to use it, and head to the teller line instead??
A key component of branch transformation is cost reduction through technology. Investing tens of thousands in innovations but still having staff tied up with performing routine customer tasks, has the opposite effect by increasing costs and reducing branch profits, which goes counter to the cost-reduction premise.
#4 Omitting “Branch Cash” Integration
Banks were amongst the earliest adopters of computers, and built extensive legacy programs that still power most back offices today. Financial institutions have also been quick to adopt Internet and mobile applications, and newer technologies.
More often than not, integration goes deep, tying new programs into back office systems and databases, but forgets to digitally connect local data sources at the branch itself, for example devices like ITMs, Cash Recyclers or CDMs. New machines and technology at the bank or credit union do not “talk” to existing branch platforms, or staff do not have access to the data that these newer machines are gathering.
For instance, branch managers may not know how much cash demand a new ITM receives because it isn’t connected to any platform, such as logicpath’s C3 Financial, a cash management tool that is fully capable of gathering device data and displaying it to staff.
Cash is the life blood of a bank or credit union, and not connecting a branch’s various cash resources to a platform will hurt the branch’s customer satisfaction and profits.
#5 Not Co-opting the Customer
Finally, branch transformations are expensive and an utter waste of money if customers don’t like coming to them. The solution lies in answering three key questions before creating a branch transformation strategy, two of which focus on feedback from customers to figure out how best to serve them and develop a roadmap for branch transformation success.