From “Untapped Potential in Your Network,” a Curinos webinar presented April 23, 2024, featuring Andrew Hovet, managing director, and Steve Schaefer, principal.
Higher-for-longer rates. Reduced fees. Competition from national banks and fintechs. Amid these headwinds, it’s more important than ever for traditional financial institutions to protect and grow their core customer base, which provides a reliable source of deposits. But how?
Despite its shrinkage over the years, the branch network still contains tremendous potential, even if not always apparent and sometimes underappreciated.
The webinar presented a method for identifying untapped market opportunity and redefining network performance in ways that make sense in today’s hyper-competitive environment.
Here’s what institutions seeking to tap that potential should be thinking about:
1. The products that anchor core customers have declined in branch since pre-pandemic.
The drop in both new-to-bank and cross-sold checking sales per branch is particularly acute. Any gain in cross-sold deposit products has come almost entirely from CDs, which generally don’t lead to a deepening of the customer relationship. And in the same period, branch count shrank by about 10%, amplifying the downward dynamic.
2. When measuring sales, opportunity-normalized performance is much better than absolute performance.
In this actual case from an anonymized bank, the ranking of branches by sales performance on the left is misleading because it doesn’t account for market opportunity, in general or for specific products. In pure sales terms (left side), Branch #1012, for example, looks to be struggling while Branch #1003 appears to be soaring. But Curinos data on the behavior of 20,000+ branches nationwide shows that, when considering performance based on opportunity, Branch #1012 is outperforming #1003 even with much lower unit sales (right side). When plotting potential, the biggest potential upside is in the lower-right quadrant – high market opportunity, subpar performance to date. In evaluating and improving branch performance, opportunity-normalized context is essential.
3. Branch, market and network factors feed “MOI” for each product for each branch.
From Curinos’ inventory of more than 200 metrics, we can establish a market opportunity index (MOI) for each product in each branch. This enables a branch to play to its product strengths given the potential of each. FIs also need to consider the customer composition of each branch. The larger and wealthier the customer base, for example, the greater the opportunity for cross-selling. Finally, network position – encompassing factors like brand dominance – can inform the potential for new-to-bank customer acquisition.
4. Goal-setting needs to leverage history and opportunity-based peer benchmarks.
Curinos’ normalized performance curve (left side) can help FIs sets realistic goals for each branch. In this case, it represents all 2,000 branches in MOI Cohort #9 (right side), which is 10% of the total Curinos branch data set. Given its relatively high opportunity for checking, Branch A, currently in only the 30th percentile, has room to grow. Branch C, on the other hand, is outperforming. But rather than discouraging its high performers by asking more from it, an FI may want to dial back the goal slightly. What goal to set for middle-of-the-pack Branch B may depend on an institution’s appetite for new checking accounts.
5. Our goaling analytics help achieve buy-in from the field and sales.
Our goaling analytics, which can yield a 10-15% lift in sales performance, is an iterative, collaborative “white box” process that applies market opportunity and peer comparisons to goal setting. This can be powerful in gaining buy-in from sales and branch teams. It also provides better calibration within the organization by considering how derived goals fit into the sales-management ecosystem, bank-level growth targets and overall corporate goals.
