If you want to find one of the biggest conundrums for the financial-services industry, look no further than the bank branch.
The pandemic has driven more customers to digital channels and there’s growing evidence that branch transactions and sales volumes aren’t ever coming back to pre-pandemic levels.
So why not just shut down more of them?
Efficiency ratios are too high and banks need the cost savings.
The trick is that branches still count. They are the brand billboards that drive unaided awareness – a key component of all-important future growth that isn’t easily replicated in digital channels.
So how can banks afford a local presence? The solution is to change the fundamental way the branch operates by reducing costs and making the workforce more productive – especially the sales and support staff.
PRODUCTIVITY ON THE DECLINE
It is of little surprise that banks have been slow to respond to changes in branch behavior by customers during the pandemic.
Much of the focus has understandably been on improving digital prowess as lockdowns and work-from-home policies pushed customers to online channels. Branch priorities, meanwhile, were aimed at keeping customers and employees safe.
The result is that productivity rates have declined at alarming rates. Curinos estimates that sales productivity dropped 15% between the end of 2019 and the end of 2021, with teller productivity down 10%. (See Figure 1.) Super regionals saw the biggest drop in sales productivity, while large regionals experienced the biggest decline in teller productivity.
The declines in productivity correspond to a drop in branch activity. For example, teller transactions per branch per month fell 25% from 2019 levels by the end of 2021. Super regionals led the way with a drop of 27%. (See Figure 2.)
Figure 1: Sales and teller productivity rates are down from 2019.
Super Regional Bank Benchmark
Note: All Branches = both in-store and traditional. Average per branch per month averages are straight averages of monthly data. Includes both small business and consumer accounts
Source: Curinos SalesScape
Figure 2: Monthly teller transactions continue to decline.
Industry transactions (per branch per month)
Note: All Branches = both in-store and traditional locations.
Source: Curinos SalesScape
Many banks have responded to the decline in teller transactions by cutting staff, but that isn’t the case in the rest of the branch. Curinos research has found that teller full-time equivalent (FTE) is down 14%, but levels among non-teller sales and administrative staff fell by only 1% between 2019 and 2021. While reductions have been constrained by minimum staffing requirements, the numbers clearly show that banks aren’t staffing the branch in accordance with the reduced customer demand.
The key, then, is to make the sales and service staff more productive while also overhauling the role of the teller.
HOW TO IMPROVE PRODUCTIVITY
Curinos sees four ways in which banks can improve productivity while retaining the sales engine and pivotal presence in the community. This new model can transform the branch into primarily a sales and service outlet from its transactional roots.
Reduce Hours of Operation: Many banks were forced to modify branch hours during the pandemic. As restrictions have eased, however, most banks have returned to their traditional hours of operation. More creative strategies are needed. Australia’s Commonwealth Bank last year announced that 10% of its branches would close their doors at lunchtime and shift staff to other duties. While this is an extreme example, banks should evaluate their policies and have different hours in certain locations. These strategies can be complemented by technology like virtual tellers that can extend the traditional capabilities of an ATM. Banks can also eliminate the dominant position of teller windows and focus the branch on sales and problem resolution. These solutions may initially create friction with some customers, but they will eventually adjust.
Retrain Staff: If the branch will continue to handle teller transactions, it is time to provide new opportunities and responsibilities for workers who have idle time on their hands. They can work the contact center or provide research to help the back office. They can be trained as notaries or can strengthen digital relationships by working the chat lines or helping customers with onboarding.
Engage Customers: Branches are still an important tool to drive customer growth, so cross-selling is essential. It is difficult to acquire new customers through the branch and attrition is at an all-time low, but there is still room to deepen relationships. Are your customers aware of all the bank’s products? How about developing new ones that don’t cannibalize existing balances? Proactive outreach will be key. Make outbound calls, schedule appointments, send emails and reinforce the digital enablement of customers with a personal touch.
Community Staffing: With the exception of some use of ‘float staff,’ banks have largely assigned the same team members to the same branches. When branches had large staffs, this made plenty of sense. But when the average branch consists of one manager and four team members, the spans of control no longer make sense and there is “trapped” capacity in each location. Creating larger teams aligned around multiple branch locations will increase flexibility in staffing.
SATISFIED AND MORE PRODUCTIVE
Finally, this is the time to think about how to help employees feel satisfied at work. We have all heard stories about The Great Resignation and bank employees are no different. The branch workforce has been on the front lines of the pandemic, forced to deal with changing corporate policies on masks and social distancing and the uncertainty of temporary branch closures due to COVID-19 exposure.
As a result, banks are challenged to maintain enough workers to keep branches staffed at minimum levels. The historical transaction-focused nature of the branch model has supported relatively low-wage, clerical and repetitive work — exactly the types of roles that are experiencing high levels of attrition during the Great Resignation. A recent study quoted in Forbes found one of the most significant factors that attracted people to a new job was “more meaningful work.” Do job postings for teller positions really fit the bill?
The next generation of branch workforce is especially attuned to providing a positive impact on the places where they live and work. That means more than just sponsoring the local Little League team. The ability to provide customers with advice about their financial health can help achieve that goal – leading to more job satisfaction, better productivity and more loyal employees.
