In the year-end episode, the Believe in Banking podcast covers the key trends and themes that have shaped the banking industry in 2024 and are expected to continue in 2025. Conversations between Gina Bleedorn, Juliet D’Ambrosio, and Sean Keathley address the generational shift in banking, finding Gen Z more focused on advisory experiences and driving banks and credit unions to invest heavily in their branch networks to stay relevant. Bringing the brand into the branch remains essential for financial institutions to build loyalty and advocacy with customers, and a bigger focus on branding or rebranding is shown to be a core tenet for success in financial services. Finally, no December episode would be complete without addressing the rise of generative AI that is set to transform the banking industry by automating routine tasks and freeing up bankers to focus on higher-value human relationships.
Text Transcription
Intro: This is Believe in Banking, a podcast series for decision makers, influencers and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower.
Juliet D’Ambrosio (00:18): Welcome to the Believe in Banking podcast. I am Juliet D’Ambrosio, Chief Experience Officer at Adrenaline. This is our last podcast of the year, so we’re taking a look back at some of those central themes that have defined banking throughout 2024, and we’re also looking ahead to those that will pave the path forward for 2025.
Backing up early, early in the year, we talked about the generational demands and shifts of banking, especially with Gen Z and how those expectations for that age cohort are really shifting towards more advisory experiences. We’ve seen this theme show up again and again and again as banks and credit unions are meeting the mandate for new experiences in new environments. What we think that means is that the branch will continue to remain a hub of banking activity and also influence even as we see those transactions move out. At the same time, we also see that there is massive movement of the industry towards the branch channel and that banks and credit unions have to commit to investing in branches in order to stay relevant.
We’ve seen everyone from Chase to BOA to PNC to Frost Bank, double down on branch investment this year. Some are even going deeper into their existing markets. They’re finding new opportunities. They’re creating community branches that reach out to the underserved and underbanked. This is the type of commitment to the branch that has really made a shift. It was quiet, it became an emerging trend, and now has turned into a powerful thesis for banking and successful relationships. It is how financial institutions are going to continue to grow into the next year.
And beyond that, of course you’ve heard us evangelize over this past year and before that bringing the brand into the branch environment is critical to success for all of these newly updated environments. Branch marketing in branch marketing is a key part of that success. Even more, a larger focus on branding or rebranding for financial institutions has been a big concentration for some of the most successful financial brands this year. And that’s whether there is a need for a better brand coming from competitive pressure to be more resonant with younger generations, different generations, or because M&A activity demands that kind of differentiation.
The bottom line – it really is a bottom line in this case – is that paying attention to your brand pays off for financial organizations. That’s what Adrenaline’s report on the ROI of Rebranding clearly demonstrates our rebranded banks and credit unions report that they grow more and they grow faster than the industry at large. We’re also expecting to see an even greater need for rebranding as M&A continues to tick up and gain steam in the new year with deals driving even greater value.
Finally, from a tech perspective, we couldn’t let 2024 wrap without mentioning the big AI elephant in the room. And AI is truly breaking new ground for banks and credit unions. It’s powering customer service function. It provides personalization and allows banks to sift through and use large amounts of data. The intro of generative AI really has turbocharged these advances and has allowed data to become actionable at a speed and scale only dreamed of a few years ago. We think we really know that AI is something that will transform banking – it already has – and society at large the way the smartphone did two decades ago and the way the internet did three decades before that.
So here it is, our end-of-the-year episode of the Believe in Banking podcast, setting the stage for what’s to come in 2025. Enjoy.
Gina Bleedorn (4:46): The real takeaway for you about what the different age groups are doing is that these younger generations that are coming into the bank branch because they want to, because they are seeking information and have a new expectation of banking. And that represents both a risk and an opportunity, because if they come in and the experience feels old, feels outdated, feels not personalized, not relevant, the service they’re receiving is not adding value, they will walk out and go elsewhere. So, the time very much is now to capitalize on this momentum of what the younger generations are seeking. You’ve got a gift that they want to come to you, you’ve got to make an experience that gives back to them, so they keep coming to you.
Sean Keathley (5:42): Well, Gina, you’ve nailed it, and you can’t even just generalize on these bands of ages. As you well know, neighborhoods look very different across this country. So one general problem, there is a network in banks of order takers, and that is what that older generation thinks of at their bank. But these newer generations are expecting a much different experience, to your point, and that experience can look very different by type of consumer. I’ll give you an example.
We have one client that has a network, highly Hispanic base of new young families. And when they come in to do account openings, they’re bringing the entire family, and it takes about three times as long. They’re bringing in all their paper bills and they want help getting them physically loaded on their phone. And the client is saying, when you give them a space to comfortably seat people and you’ve got dedicated smart bankers that are patient and help them go digital with all their bills, you’ve gained a customer for life by that support. But if you staff branches in a traditional way and you get overrun by consumers with those kinds of needs, you get into a problem very quickly.
Gina Bleedorn (7:00): And what you just described is forcing many to not just think about the design and what the colors of the branch look like. It’s really rethinking retail delivery holistically. And that has become, from our perspective, one of the major surges in interest that we are seeing and helping clients with. They’re re-imagining really how all of their network should be deployed and that type of smart thinking around taking cost out so you can reinvest it in where it matters. That’s got to be part of the picture here of thinking about how to make the right experience for the right customer in the right place.
Sean Keathley (7:50): I think that’s what’s going to challenge the traditional approach of just hiring an architect in an interview and [them] saying, what do you want? How many tellers, how many branches, or how many offices do you need in today in 2024? You really have to start with a strategy. Period.
Juliet D’Ambrosio (8:06): There’s been a ton of buzz around this recent announcement and what we’re talking about. What it really seems like is there were so many announcements that all came at the beginning of the year. There was Chase, BOA, PNC, Huntington, TD Bank, all of whom made announcements of very significant investments in branch networks and branch openings, new branch openings as well as renovation.
And it was sort of a line in the sand or a flag on the moon or whatever the right metaphor is that the branch is back, baby. There’s a resurgence that’s happening, and I think the industry, at least we at Adrenaline, were sort of wondering, is this a blip? Is it real? But now with this additional news from PNC, this is not an aberration. It’s truly a trend, and I’m interested in how we’re going to continue to see this exact trend of the retail resurgence play out over the coming years as the trend moves from the biggies down to super regionals, regionals, and the community banking and credit union sector. And there’s a reason for this that the biggest and brightest are making this investment in the branch, and it is because this is from a very recent McKinsey report that 72%, nearly three quarters of new sales happen in the branch channel. So, we’re seeing this investment because the banks and credit unions know it pays off.
Gina Bleedorn (9:44): And interestingly, we’re seeing it in all segments of the market from mass market to wealth to even now, underserved. Chase made a big announcement just a couple of weeks ago about a new branch investment opening 75 new community centers in underserved markets, and this is in addition to their JP Morgan branches targeting wealth. So, now it’s happening across all segments of the market. It’s also happening across all sizes of institutions. Even though the headlines are just the bested and brightest, as you mentioned, Juliet, the big guys we’ve got even just at Adrenaline, over 150 banks and credit unions we work with directly. And we’re seeing it across the board from institutions with a couple of branches to institutions with hundreds or thousands of branches.
And that is because of what you just said about all of the data is showing not just the national data, but the data at the individual institution levels that the sales are happening not just in the branch, but because of the branch and younger people are trending up with their use of the branch. All of that is ultimately because financial advice and problem resolution is hard to commoditize and it’s hard to do digitally. On top of that, when it comes to finances, that is at the root of people’s wellbeing and existence. So, it is foundational, and people want people.
Gina Bleedorn (11:13): I think, and I’m sounding a very gentle alarm bell of risk right now, that this in-person trend, especially of young people, represents absolutely major opportunity. It also represents risk. If they come in and they are not getting advice, consultation, engagement, even experience, and given a way to deepen their loyalty, they will go elsewhere. Something else we know about Gen Z and we’ve talked about and recently published a white paper on Gen Z and The Future of Finance, you can find it on our website. They are not loyal. They will leave if there is something better. They are not afraid to look elsewhere. And so if TikTok or a Fintech or the bank or the credit union down the street can give them a better experience, especially in and around advice and consultation, they will leave you for that. So that is a major thing to be wary of.
And I mentioned earlier, but we’ll further elaborate on this major trend now of not just new shiny branches in new places that’s still happening, but also renovation of existing – Chase was one of the first. Now, Chase was more about expansion into new, now they have announced they’re going to renovate 1,700 branches in addition to opening 500 new ones in the next three years. But also on their heels, Bank of America renovating entire network and expanding to new markets. TD Bank renovating hundreds of stores and opening 150 by 2027. PNC investing $1 billion on a hundred new branches and renovating every branch in their network by 2028.
And TD and PNC are both clients of ours. We know they are doing this. They are doubling down, as are many regionals and communities behind them, on reconciling the experiences in the real estate they already have. Now, that also comes with right-sizing, closing, relocating, but there is a major shift that is occurring and if you are not already thinking, not just ‘How do I open a new branch experience?’ but ‘How do I shift the delivery of my physical experience?’ If you’re not already thinking about that, you are behind the eight ball.
Juliet D’Ambrosio (14:07): Yeah, I think we’ve been sort of tracing the evolution of the branch purpose, which can be delivered either through new North Star design, but also as you mentioned through renovation and refreshing in a way that does a couple things. One is thinking about our branches in a way that puts conversation at the forefront of even the visual experience of the space and how do we design the levers to tell a prospect or a customer or a Gen Zer who’s coming into the branches once a week that this is a place for conversation? We know generally transactions are going to continue to decrease or transactions at the branch about 5% per year across a bank’s retail network. And knowing that idea for renovation, for refreshing, as well as thinking about the experiences in a North Star way are so important in order to meet that need.
The other thing that comes to mind, Gina, as you’re talking about this and I’m thinking about how we are engaging with a lot of our clients right now, looking at your branches as a very powerful channel for your marketing through your retail communication strategy, which means that your branches, your branch network, need to be as strategic, as thoughtful and as powerful a marketing channel. They need to be activated in that way, but in a way that is appropriate to a physical environment.
So, as branches become renovated, refreshed, visually even built anew through new experiences, how do we use the branch to then communicate well and orchestrate that customer or member engagement that so that we are speaking to them? We are talking about our institution’s purpose, how we meet their needs, doing the kind of even product marketing in a way that is relevant and in a way that is consistent across branch networks. And as we know, branch networks are highly variable in their form, which is why a strategy is so important to add to that consistency.
Gina Bleedorn (16:42): I am so glad you brought up that point. Talking about retail communications and marketing in the branches is something that I talked about for the first time ever in seven years at Future Branches because the industry needs to hear it. We’ve certainly been talking about it for a while, but it hasn’t been a headline. I think it is a headline now because as you need to make the absolute most of these branch experiences. You need to leverage them. You’ve got really precious opportunities when people come in. You’ve got risk when people come in if they’re not given the right opportunity.
So having the right approach to marketing in them, and it’s largely digitally through digital signage. It is also through staff enablement, which marketing can also support programs that we’ve deployed. The banks and credit unions tell us their staff learns as much about their products and services sometimes as their customers do. That is a key piece of the puzzle. And it’s not that expensive or that difficult, but it’s something so many are not doing right. So, having the right strategic approach to an execution of branch marketing in the physical space, largely digital, but also digital signage, interior and exterior, but also things like activating windows, especially in urban markets or high visibility suburban markets. These are critical pieces to the puzzle of leveraging your branches for growth.
Gina Bleedorn (18:19): I like to talk about it, because it’s actually not complicated. It’s just often overlooked or not focused [on]. And so I think it’s such low hanging fruit to be able to do it and do it right. And it’s a combination of the right message, in the right place in the space, and then delivered with the right cadence and consistency. Typically that is in the form of digital marketing playlists. Now, what is really hard about branch marketing more so than most other channels, akin to perhaps very top of funnel awareness marketing, it’s hard to track because it is one-to-many. It is not at all one-to-one.
You have to think very differently about the outside of your branch versus the inside of the branch. Just as you said, Juliet, the outside is the beacon and the billboard, the outside is for acquisition and understanding that the branch is your #1 driver of consideration, maximizing the billboard effect with marketing in addition to your brand signage. Everything else about the branch and how it looks, that is the objective on the inside. They are already your customers. So, there you are not selling checking accounts for the most part anymore. You are trying to deepen share of wallets with other products and services. That means you have to think about those two things very differently for starters.
Juliet D’Ambrosio (19:55): And it gets into when we start talking about the outside versus the inside into zonal strategy. I love the zone framework because it really represents best practice for how you intentionally design and orchestrate the customer experience. So, yes, it’s marketing, but it’s really about that experience and it is the combination. I’ve always thought of psychology of your customers or the people walking into the branch, their journey. What are they looking for? What are their needs at each phase of their journey within your branch? And it’s the combination of that overlaid with the branch needs, the staff needs. What did they need to be able to do the best job possible throughout by helping to shepherd that experience along and the financial organization’s needs.
What do we need to accomplish at every zone? The Attract zone, which is the exterior; it is the entrance. The Engage zone where someone begins to look around, orient and see where they are and make the choices about where they go. Sometimes they are waiting and hosted. The Transact zone – whatever that transaction looks like, whether it’s typical teller line or not. And then the Consult zone, which are where those deeper, one-on-one more private conversations are held. And so the branch marketing, looking through the zonal strategy, what we’re trying to do is focus right place to the right message, to the right type of delivery. What’s the right channel that we need to use or the right delivery mechanism at any one of those points. And I think that by having a very intentional approach to your zoning strategy, it really is a framework that can be used, replicated, and allow for scale and cohesive experiences, whatever your branch network looks like.
Gina Bleedorn (22:10): Something that many banking C-Suites and boards are always asking us: What is the ROI of rebranding? That’s the big question and there’s not an easy answer because it’s really told over time and the longer time goes on, the more you see the value. But to help answer this question about both short- and long-term gains, we have published a research report called the ROI of Rebranding – really the first of its kind that we have just released. Juliet, talk a little bit about this report.
Juliet D’Ambrosio (22:46): Happy to, and I think Gina, you touched on it – the reason that drove us to develop this report is because of the question, the question we get asked so often and [before now] we’ve sort of danced around the answer. In this report, we have some great analytics, we have data of financial institutions that we’ve rebranded over time. But if we know anything about banking boards, we know they are data driven. We know they’re like, “Show me the numbers. Brand sounds like it could be a little mushy. I want to see the cold hard results that I can expect from this investment, which led us to undertake this research report.”
So, we looked at longitudinal study over about 15 years of financial institutions that have rebranded for all different reasons. They were coming at it from lots of different approaches. Some through M&A, some through credit unions that had a recent seg or a charter change that needed to rebrand accordingly. Some that had just lost relevance and needed to reinvigorate their growth. Looking at how they have performed relative to the industry and relative to their peers. And when I say perform, I mean how they have grown. We looked at indicators like CAGR. We looked at indicators like employee engagement. We looked at indicators like new customer and new member growth.
And spoiler alert, rebranding does drive growth that is outside of the industry norm and that is true across the board. So, we looked at it both that longitudinal study from a quantitative basis, but also qualitatively. We work with banks, credit unions, financial institutions. We work very closely, very intimately with them through this process. Part of what we shine a light on is what are the triggering questions that any institution needs to ask themselves. Going into the process of rebrand and what we hope this report will do will really help to build advocacy for change.
We have clients come to us all the time saying, I know I need brand change. I don’t know what that looks like and I also don’t know how to build the fortitude within my own organization to help make that happen. Data in hand, cold hard facts in hand. They’re now armed with a story, a data-driven story about the ROI that one can expect from brand change. So, I cannot wait to really share some of the findings both in your breakout session and a bit in mine, but also really, I can’t wait to hear the response of people that we meet, potential clients, the industry at large, and the impact this kind of report can have.
Gina Bleedorn (25:49): Cutting to some of those hard cold facts you were talking about, Juliet, one of the most interesting things to me was the study of bank rebrands over time. And we have the advantage at Adrenaline of having done a lot of them over a long time. We’re up to about 65 rebrands over the past two decades of both banks and credit unions in the country about an equal amount of both. So, it’s a nice study, a good slice from a data perspective of what rebrands are and what they can do. And one of the most interesting trends was about the compound annual growth rate increase post rebrand, and that was especially strong in banks. Our study of rebranded banks saw a 13.6% increase in CAGR compared to the US average of 7.4%. And then rebranded credit unions bumped up to 8.3% compared to 7.8%.
But with credit unions, something to keep in mind is that the most often use case of credit union rebranding is breaking free from a limited name. So often many of the credit unions we are working with are about half of the industry average when we begin working with them and then following the rebrand, it takes the breaks off, as some have said, of their potential growth. Even bringing them up to average is an incredible increase for many of these.
And you talked about relevance. I think that that is the commonality across every single rebrand we’ve done – bank, credit union, M&A, and rename or rebrand. It is about becoming more relevant and if you also have to reconcile multiple brands as a result of M&A, if you also are considering M&A in the future, or if you’re a credit union and you’re breaking free of legacy barriers or you’re a bank and you’re breaking free of what we see most common is common name barriers where you have a name like “citizens” or “heritage” or “community” that you can’t own in those different situations. That’s where we can see these type of results.
Gina Bleedorn (28:07): This is a topic that I think the industry really needs to hear about right now, and it’s banking and artificial intelligence. Juliet and her team have produced a research report on the topic, and I’d love for Juliet to help demystify, especially for banks, what generative AI and even regular AI before that and what it could mean for the future of banking.
Juliet D’Ambrosio (28:33): I love the idea, Gina, that you put it into very clear and approachable terms. This is a moment of opportunity for the banking industry, really for all industry, really for society as we figure out how to navigate artificial intelligence. So very quickly, just so we’re all sort of speaking the same language, AI is simply a computer program, any computer program that is able to take in data reason through it and ultimately make some adaptation. So that’s it. AI, and it’s been around for, gosh, for over 60 years. It first generated in 1956. Why we have been talking about AI and why in fact, in just one year when ChatGPT was introduced and the mentions of AI in earnings calls leaped up 180% is because you mentioned Gina the coming out year, and that was ChatGPT.
ChatGPT is simply generative AI. It is a tool that allows any user, you or I could go to chatgpt.com today and enter in prompts that would allow us to receive back responses, images, text, videos, plans, predictions that are created by AI. So, it becomes a tool of conversation and dialogue. Therefore, the word chat, and it is able to generate net new content that does not replace what the human mind can do, but can speed it up and make it more efficient. And therefore that’s why it’s so exciting that we are on the precipice of a real evolution, if not a revolution, in the way that all of us begin to tap into the power of generative AI.
Gina Bleedorn (30:39): Chris Hyzy, who is the chief investment officer at Bank of America’s private bank, had a quote that really struck me. “AI is going to transform the global economy as surely as electricity and the steam engine did in their own times.” That’s hard to even grasp mentally, but that is the gravitas which AI represents.
We have a number of people in our own company that have started using ChatGPT as often as, or even in lieu of Googling. For instance, the day after it launched, our managing director of retail strategy, Ben Hopper asked chat GPT about branch banking and was happy to have ChatGPT, not predict the death of the branch, but instead support the right sizing of the network model that we talk about. That’s something bigger, but even smaller things. We have submitted meeting minutes into ChatGPT and had an output with next steps and a summary of key takeaways in almost shocking accuracy.
So, the idea that it is not displacing human because there is still lots of interpretation and context that a machine likely will not have, but the idea that it could speed up what we do, so that what humans do is focused on what humans can only uniquely do. And that’s going to be a big decisioning point for financial institutions. What can a machine do and what can a human do and how can we port anything and everything that a machine can do to a machine, so that humans can shine in areas where they are most valuable.
Juliet D’Ambrosio (32:27): It’s so interesting, Gina, there was Michael Abbott, who’s the senior managing director and global banking lead at Accenture, who produced a wonderful report here, phrased exactly what you said so beautifully, which is don’t think of generative AI as replacing bankers. Think of it as making them more intelligent. It’s like having Kasparov whispering in your ear as you’re playing chess. And so when we think about the idea that there are some parts of a banker’s day that can be automated, and that doesn’t mean that we are replacing that banker. There are studies that say 20% of a banker’s day could be automated up to three quarters of a banker’s day could be automated, but that allows for that extra either 75 or 25% of that banker’s day to have the higher value conversations, connections, investment in relationships with their customers, with their members.
So, it truly is like having Kasparov whispering in their ear that they have an amplifier of their own human intelligence so that bankers can do what only bankers can do, which is look someone in the eye, make determinations, make decisions that are empowered by this intelligence but not replaced by it. And I think that’s why when we look at the impact that generative AI has on all industries, banking is at the lead. The New York Times published an article very recently that generative AI’s biggest impact will be on the banking sector, all because there is the highest potential there for automation that then frees up people to make those human connections.
Gina Bleedorn (34:33): Especially as leaders of banking organizations, we know that the idea of AI transforming the way business is done comes caution, and again, fear at what that means for the workforce is that they have. The reality is the workforce is likely going to change in a number of different areas. While some roles may be slowly deprecated over time or really some functions of some roles become deprecated, because AI or other technology can do them, there are new jobs being created, there are upskill opportunities. There is absolutely as much opportunity here as there could be risk of negative change, and that’s really important for financial institutions to embrace right now. And if you don’t want to embrace it, you’re going to find it anyway, because it is here. So, really the only choice is to embrace it and figure out how it can help move ahead, both in mitigating risk, but in capitalizing on opportunity that it could afford.
Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site believeinbanking.com.