Three key queries for community banks and credit unions to consider now in developing smart branch strategy for the post-pandemic future
In our last feature, we addressed how branch banking – optimizing what you have and identifying new places for expansion – represents opportunity in our post-COVID landscape. While digital adoption may get most of the attention right now for banking during the pandemic, it’s critical to note that more than half of consumers plan to return to the branch after the pandemic. Post-COVID, the branch will still represent a significant channel for both new account openings and deepening relationships with core customers.
In a recent Forbes article on How The Banking Experience Is Adapting To The Covid-19 New Normal, Brandon Boswell, vice president of branch operations for Navy Federal Credit Union, says despite the new technology and tools the credit union has rolled out during COVID, “We are keenly aware that there is a segment of the population that doesn’t like to use mobile apps and prefers to go into the branch and talk with a banker.” He goes on to describe the critical role of the branch, saying, “Even if you can [complete] most transactions without a branch, it’s important to be there… It’s difficult to replace face-to-face relationships with [only] technology.”
While options for consumers are necessarily flexing and expanding during the pandemic, thinking past COVID – and above the fray of every day – is critical for the future of banking.
Are You Taking Enough Action?
Deciding on the right degree of transformation is one of banking’s knottiest challenges. Having an efficient workforce and optimized branch environment is helping banks successfully navigate the now and next. And it’s not just a hunch that being lean pays off. A recent McKinsey study revealed that a bold transformation of the branch network delivered 4x higher gains in productivity than incremental adjustments, with 22% less customer attrition. Further, the study found “Similarly, after a short-term hit to sales, banks making bolder staff reductions (30% since 2015) were better positioned for future success.” Take stock of best practices and critical changes you can make to your network now that set you up for future success.
Are You Targeting the Right Locations?
Simply put: You can’t close your way to profitability. Shuttering underperforming locations or ones needing large investments – without tying these decisions to a smart strategy – is a mistake. In fact, a Novantas analysis of recent closures found that at least 20% were the “wrong” branches to close. Post-COVID, the need for convenience via proximity to home and work has driven needed access near one’s new-normal life. Some of these branches may be entirely new locations in expansion markets, and some may be optimizing prior locations to meet a new need. Performance and future market potential are key closure considerations, as are remediation strategies like personalized outreach and remote ITM deployment.
“Even with branch lobbies closed during the pandemic, many banks have been able to deepen relationships with existing customers. This was due to more outbound calling programs that checked in with customers and helped identify other products and services that would be valuable to them.”
Novantas, September 10, 2020
Are You Playing Offense of Just Defense?
Leveraging your branch channel for growth in current and future markets is critical for community banks and credit unions. EY reported last month that only 16% of people intend to change the way they bank long-term because of COVID – particularly telling data because it’s from six-months into our new-normal life and therefore likely to indicate long-term consumer behavior. While COVID is a catalyst for change, the vast majority of consumers will continue to seek out a branch to open accounts and get financial advice. With 75% of lost closure revenue coming from lost sales, enhancing the impact and experience of your retail channel can be a powerful way to help minimize losses, gain more market share and deepen wallet share.
The short-term pain of reducing and rightsizing facilities while looking at new opportunities for expansion will pave the way for future success. This is a time for critical decision making. From optimizing staff and service models to new market expansion, to determining how, when, and where to deploy change, it all begins with the right branch network transformation analysis and strategy. To develop strategies for brands and branches in the face of COVID, contact Adrenaline’s experts at info@adrenalinex.com or (678) 412-6903. For more information on bank branch reopening in the post-COVID landscape, download the Roadmap to Reopening. If you need support for staffing, see the Frontline Staff Engagement Training series.