4/7/2017 7Stepsto'BranchoftheFuture'TransformationSuccess

The Financial Brand

7 Steps to Branch of the Future

Transformation Success
October 14, 2014 | Subscribe to The Financial Brandfor Free

Despitedecreasingbranchbasedtransactions,thebranchcontinuestobe
importanttothestrategicbusinessgrowthobjectivesoffinancialinstitutions.
Unfortunately,traditionalbricksandmortarfacilitiesarebothtooexpensiveto
buildandtoocostlytomaintain.So,whatarethekeystosuccessfulbranchof
thefuturetransformationinbanking?

By Jim Marous, Partner at The Financial Brand and Publisher of the Digital Banking Report

Asconsumerbankingpreferencescontinuetochange,itisimportantforfinancialinstitutionsto
transformtheirbranchnetworks.Someofthistransformationwillcertainlyinvolvebranchclosings.
Intheremainingcases,branchnetworkswillneedtorespondtothedesiresoftheincreasingly
digitalconsumerwhilebecomingbothmorecostefficientandsaleseffective.Centraltothisbranch
evolutionisnewselfservicetechnologythatcanreplacetellersandimproveplatformpersonnel
salesresults.

Theurgencyforinstitutionstotransformbranchesisintense,saidAndy
Orent,PresidentandCEO,HyosungAmericas.Robustdigitalchannel
adoptionandrapidlychangingconsumerbehaviorhavemadethebranchas
weknowittodayirrelevant.Itisclearthatinstitutionsneedtotransform
branchestomakethemmorecosteffective,whileservingcrucialcustomer
needs.

InastudybyHyosung,alistofbestpracticeswereprovidedtohelpinstitutionswithbranch
transformationinitiatives.Thebestpracticesaremeanttohelpinstitutionsthatrecognizethe
benefitsanddemandforbranchevolution,butmaynotunderstandhowtobesttakeactiononthe
missionofbranchtransformation.

1. Create a Positive Self-Service Experience

ResearchonbankcustomerbehaviorbyLextantlookedatthereasonswhycustomersdecidedto
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4/7/2017 7Stepsto'BranchoftheFuture'TransformationSuccess
ResearchonbankcustomerbehaviorbyLextantlookedatthereasonswhycustomersdecidedto
gotoatellerratherthananATMandrevealsalotaboutwhatcustomerswantfromselfservice
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options.

Tobesuccessful,itwasdeterminedthatinbranchselfserviceoptionsmustbe:

Fast:Selfservicesoptionsthatareimmediatelyavailableandreadytoperformtransactionsor
provideneededservices.
Easy:Technologythatinvolvesminimalmentalandphysicaleffortonthepartofconsumers,
avoidingtheneedtolearnthemachine,whichcouldimpactacceptance.
Secure:Physicalimprovementssuchasprovidingamplepersonalspace,withwell
consideredbufferzones,providestheprivacydesiredbyconsumers.

Ascouldbeexpected,consumersmustseeanadvantagetoselfserviceoptionstoleavetheir
teller.AtChase,thisishopedtobeachievedbyselfservicekiosksprovidingATMlikeservices
withcheckcashing,customdenominationwithdrawals,creditcardbillpay,prepaidcardsand
moneyorders.Inaddition,bankswithtabletsareavailabletoprovideassistancelikeopening
accounts.

Chase Bank office with self service kiosks

(ReadMore:14BranchoftheFutureDesigns)

2. Develop a Holistic Approach: Integrate People, Process, and

Technology
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 2. Develop a Holistic Approach:
4/7/2017
Integrate People, Process, and
7Stepsto'BranchoftheFuture'TransformationSuccess

Technology
The Financial Brand
Movementtoaninbranch,selfservicesolutiondoesnotmeantheeliminationofhumaninteraction,
buttheintegrationofhumaninterfaceaspartofthedigitaldeliveryofservice.AMcKinsey&

Companystudy foundthatasopposedtomovingcompletelyawayfrombranchtransactions,

customersusingmobileandonlinebankingmorethanonceaweekarealsoover60percentmore
likelytobeactiveretailbranchusers.

So,whilecustomershaveembracedmultichannelaccess,theyalsoexpecthighervaluefaceto
faceinteractionsattheirbankbranchandcallcenter.

3: Understand Volume Challenges: Moving Transactions Away From

Tellers
AccordingtotheFederalReserveBankofSanFrancisco,banksandcreditunionsstillhandlecash
and12percentofcashwithdrawalsstilloccurwithinthebranchesandthroughtellerlines.Inother
words,branchesstillareprocessingalargenumberofbasictransactionsthatcanbebetter
handledinanautomatedmanner.

Inorderforthesetransactionstomoveawayfromthetellerline,peoplemustfeelconfident.The
Hyosungstudystates,Thismeanshelpingconsumersunderstandthatnewdevicesactually
provideabetterexperienceoverallwhenusedtoselfserveandcompletetransactions.

Thisgoesbeyondjustbasicwithdrawalanddeposittransactionstoincludesplitdepositsacross
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multipleaccountsandselectingthecurrencydenominationswhenwithdrawingcash.Withinperson
demonstrationsonselfservicedevicesthatprovideeasytouseinstructions,consumerconfidence
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canbebuiltthatwillmovevolumeawayfromtheteller.

CommonwealthBankinAustraliaisrollingoutanumberoftellerlessbanksthatincludemachines
thatdoavarietyofbasictransactionsatanytimeofthedayornight.

Commonwealth Bank, Australia Self Service Stations

4: Develop an ROI Model: Understand The Data Needed For The

Transformation Strategy
Tomoveforwardwithabranchtransformationproject,Hyosungrecommendsthatbanksandcredit
unionsassignvaluestoallcostcomponentsofbranchoperations,includingrealestatecosts,
humanresources,equipment,etc.Branchtransactioncosts,aswellasthecostsofonlineand
mobilealternativesmustalsobeunderstoodtomakebetterbranchtransformationdecisions.

Ontherevenueside,thepotentialforincreasedbranchsalesshouldbeconsideredaspersonnel
areredeployedfromtransactionbasedrolestocustomerserviceandsellingroles.With60%to
70%ofsalesstilloccurringinthebranch,thisincreasedpotentialforrevenueisthedrivertokeep
certainbranchesopen.

InanexclusiveinterviewbyTheFinancialBrandwithAndyOrent,hestated,Asuccessfulbranch
transformationprogramwillaccomplishthegoalsofcostreduction,butshouldalsoenhance
customersserviceandsupport,whileprovidingmorepeopletodrivesales.Asbasictransactions
aremovedtoselfservice,orassistedselfservicereducingtheheadcountrequirementforthat
functionthesavingscanbeshiftedtoincreasedsalespersonnel.
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functionthesavingscanbeshiftedtoincreasedsalespersonnel.

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AtNationalAustraliaBank,theirSmartStoredesignblendsiPads,touchscreensandselfservice
technologyallowingforbothselfserviceandhighserviceinteractions.Whiletherearenotraditional
tellers,customersinsteadchoosefromarangeofselfserviceintelligentmachinesorcanmeet

withsalespersonnelwhoworkwithiPadsandlargetouchscreendevices.Thenewstoresare25%
smallerthantraditionalbranches,andareopenlongerhoursthantraditionalbranches.

NAB Smart Store design in Australia

(ReadMore:NABUnveilsFirstSmartStoreBranchDesign)

5: Align Transformation With Institution And Branch Business Goals

Itfollowslogicthatbranchtransformationgoalsshouldbeinlinewiththebusinessgoalsofthe
institutionandthedatathatsupportsthosegoals.Astheroleofthebranchismodified,itis
importantforfinancialinstitutionstotakeintoaccounthowtheirproductsaresoldandserviced
currently,localconsumerdemographicsandcompetitivedynamics.

Currentbranchstaffrolesmustalsobetakenintoaccount,sinceindividualswilleitherneedtobe
retrained,redeployedand/ornewpersonnelhired.Thistransitioncanbesensitive,however,when
employeesbelievetheirjobisatstakeasmanyorganizationshavefoundwhennewtechnology.

Ultimately,thereisnotaonesizefitsallanswertobranchtransformation.AccordingtoHyosung,
theintegrationofpeople,processandtechnologywillallowforvaryingsizedbranchformats,which
willimproveROIwhilemaintainingorimprovingcurrentcustomerservicelevels.

Themarketplacehasseenseveraldifferentstrategiesbydifferentfinancialinstitutions,including
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Themarketplacehasseenseveraldifferentstrategiesbydifferentfinancialinstitutions,including
Chase,WellsFargoandBankofAmerica.Whilemanyofthesestrategiesarepartofabranch

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reductionprocess,severalbanksareintroducingcompletelynewbranchconcepts,likePNCs
portablepopupbranches.

PNC PopUp portable branch test design

(ReadMore:PNCRollsOutFirstEverPortablePopUpBranch)

6: Learn From The Past

Severalfinancialinstitutionbranchdesignphaseshaveoccurredthroughtheyearsbasedonthe
perceivedneedsofthemarketplacecombinedwiththeobjectivesofspecificorganizations.From
thesuperstorebranchesofthe1980s,tothesupermarketbranchesofthe1990s,andnowthe
minibranchesoftoday,banksandcreditunionsneedtolearnfromthepastastheybuildforthe
future.

Thebestbranchdesignsforthefuturewillmostlikelybeacombinationofelementsusedinthe
past,adjustedforthedigitalfuture.Thekeywillbetoprovideacostefficientdesignthatdelivers
thebestcustomerexperienceinalignmentwiththebrandandobjectivesoftheorganization.

AgreatexampleofabankthatcombinesdigitaltechnologywithastrongsenseofbrandisUmpqua
Bank.UmpquasSanFranciscolocationfeelsmorelikeacontemporarystoreorupscalecafthan
abankbranch.Itfeaturesmobileconcierges,iPads,interactivetouchscreens,outdoorseatingand
afreeloanerbike.
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Umpqua Bank branch in San Francisco

(ReadMore:Innovation,iPadsTransformCustomerExperienceAtDBSFlagshipBranch)

7: Take a Strategic Approach

AccordingtotheHyosungstudy,manyinternalconstituenciesfromvariousdivisionswilllikelyhave
aseatatthebranchtransformationtable,includingRetailDistribution,ATMBusinessDeliveryand
KioskStrategy,ECommerceandMobileDeliveryandOperationsallofwhichhavedifferent
responsibilitiesandviewsonwhatmaywork.Havingsomanypartiesatthetablewithvested
interestscanslowtheprocessdown,butisnecessary.

Astheprocessproceeds,itisimportanttokeeptheoverarchingstrategyfrontandcenterandto
makesurethattheoverarchingobjectivesaremet.Itisalsoimportanttoviewthisasa
transformationprocessthatisongoingasopposedtoaoneanddoneproject.

Notallnewbranchdesignsneedtobebuiltincompactspaces.Forinstance,aconceptbranchfor
DBSinSingaporesprawlsover8,500squarefeet,boastingfeatureslikeiPads,digitalqueuing,
electronicformsandvirtualassistantswithartificialintelligence.ThefloorplanforDBSisdivided
intosixmainareas:theexteriorzone,thewelcomezone,thequickservicezone,thetellerzone,
theselfservicezoneandtheconsultativezone.

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A flagship branch for DBS in Singapore with over 8,500 square feet

(ReadMore:Innovation,iPadsTransformCustomerExperienceAtDBSFlagshipBranch)

Transformation Challenges and Next Steps

Branchtransformationisnotanoptioninanenvironmentwherecostsneedtobereducedandthe
customerexperienceneedstobeimproved.Buttherearechallengesthatwillbefacedduringthe
transformationprocess.AccordingtoAndyOrentfromHyosung,thebiggestchallengeisthe
processofmodernizingahistoricalbank.

Itisverydifficulttogetthestaffwhohaveworkedinolderinstitutionsproperlyonboardwiththe
changesrequiredtotransformadistributionnetworkwhichisnowbecomingincreasingself
service,saidOrentinourexclusiveinterview.Youhavetoaccountforthedifferentrulesbetween
selfserviceandmanualassistance,suchaslimitsoncashwithdrawalandthedifferencein
identificationnecessarytotakeoutthatmoney.

AccordingtoOrent,thethreemostimportantthingsthatfinancialinstitutionsshouldconsiderall
comefrombuildingstrategy.Abankhastobuildastrategyandplanaroundpeople,astrategyand
aplanaroundprocess,andaplanandastrategyaroundtechnology.Simplyinstallinganew,
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multifunctionaldevicewillnotbyitselfhavemuchimpact.Ifbranchemployeesarentbeingtaught
howtousethesenewerdevices,theycannotproperlyleveragethemanddemonstratetheirvalue
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totheconsumer.

Download The White Paper Now
Hyosungswhitepaper,entitledRealityCheck:GettingPasttheHypeAroundBranch
Transformation,isavailableforfreedownload.Thewhitepaperincludesinsights,recommendations
andreferencesfortheirresearch.

Download White Paper Now

JimMarous iscopublisherofTheFinancialBrandandpublisheroftheDigitalBanking
Report,asubscriptionbasedpublicationthatprovidesdeepinsightsintothedigitizationof
banking,withover150reportsinthedigitalarchive availabletosubscribers.Youcan
followJimonTwitter andLinkedIn,orvisithisprofessionalwebsite.

All content 2017 by The Financial Brandand may not be reproduced by any means without permission.

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