Like rumors of Mark Twain’s death back when, the demise of bank and credit union branches may be an exaggeration. Nevertheless many financial institutions know that in order for branches to survive they need to join the fitness craze by adopting a leaner approach to physical locations. Shifting consumer activities through mobile and Web channels is driving the transformation to the long-established branch-banking model. Financial institutions on the forefront of the change realize that a branch’s future depends on how well they adapt to changing accountholder needs and improved branch network efficiency.
The “hub-and-spoke” network model permits financial institutions to maintain a brick and mortar existence at considerably reduced operating cost. By using a centrally-located branch offering full service capabilities, supported by sales-focused, cashless branches and fully functioning ATMs they retain exposure and complement digital platforms to facilitate accountholders to bank when, where and how they want.
A number of hub-and-spoke models currently distribute branch responsibilities within banks and credit union regions. In one model:
- The hub is a one-stop branch with all available products and services. Accountholders can educate themselves, test drive new technology, and receive personalized and consultative advice. Spokes in the network, which support the hub, specialize in either advice or service, but not usually both. Shopping malls or areas with high foot traffic – not standalone locations — present ideal locations for the spokes.
- Advice branches specialize in knowledge, guidance and account origination. Staffed by one of two people and supported typically by completely or partially automated. Often there is video access to remotely-based staff that can make specific expertise available to consumers on demand. This model is best achieved by using cash recycling machines.
- Service branches provide self-service activities. Accountholders usually do not engage with representatives working at the facility, instead they interact with the financial institution staff remotely. A service rep may walk the floor offering real-time information though a tablet.
There are also slight deviations of the spokes, such as:
- Concept branches that tests new designs and technology similar to what concept cars do for automobile manufacturers.
- Recreational branches, in places such as cafes and lounges, used to reinforce the brand.
- Differentiated branches that target specific customer segments such as wealth management.
- In-store or micro branches where financial institutions share overhead costs with retail outlets. These branches generally attract fewer deposits than standalone outlets, but the lower operating costs, along with greater consumer convenience offsets the negatives.
- Branchless banks where there is no physical presence at all. A digital-only provider takes advantage of low operating costs to serve highly connected consumers.
To make this shift, banks invest in devices that encourage better interactivity with accountholders to better fulfill needs, educate about available products, and recognize and recommend the best steps for each individual’s financial situation. In this archetype, the branch is just one part of an incorporated, multichannel relationship — similar to other non-banking retail experiences — that includes research, consultation, purchase and service.
Because mobile accountholders increasingly want a seamless, omnipresent, and engaged banking experience wherever they choose to connect these branches are designed with an integrated real-time experience in mind. This requires financial institutions to simplify and standardize technology across channels so sales and service representatives can use the same process, screens and online applications available to the consumers.