Matt was featured in this weeks Financial Brand column on branches: thefinancialbrand/36541/banking-experts-discuss-role-of-branches/ His entire quote (dude gets wordy) was as follows: The importance of branches relies heavily on a financial institutions strategy. Its no secret that a bricks-and-mortar presence is an expensive service delivery channel, but what often gets forgotten in the quest for operational efficiency is the impact branch locations have on business development. A 2012 Novantas report found that 87% of consumers surveyed claimed branch location is the top reason for selecting a financial institution. Prime Performance found that to be the case with 52% of the consumers they surveyed (74% also claimed to have opened their most recent account at a branch). With this cherry-picked data, its easy to make the case that branches not only arent dead, they actually still play a vital role in financial institution performance. North Carolina State Employees Credit Union (NCSECU) has grown its branch network from 148 to 248 in the past eleven years, while seeing assets rise from $9.1 billion to nearly $27 billion in the same time period. But if you dive even deeper youll find that NCSECUs strategy has had much more to do with service than it has financial returns. They serve state employees in every county. As a result, they made certain that branch locations were convenient for citizens in each of the states 100 counties. On the other hand some financial institutions have realized that cost efficient service delivery depends on effective use of electronic delivery channels. A recent FMSI paper found that the average cost of a branch transaction hit $1.08, a 125% increase over the past 20 years. Financial institutions seeking to improve business results despite an unforgiving interest rate and regulatory environment would be wise to find ways to shift offline service delivery to lower cost online channels. This strategy only works, however, if the financial institution has a member or customer base comfortable with such a shift. To complicate matters, studies show that the introduction of new delivery channels doesnt drive down the cost of service. Amazingly, the introduction of new delivery channels simply drives consumers to use more touch points. While the average cost of a transaction may go down, the average cost of service for each member may increase. In short there is plenty of justification for both pro- and anti-branch sentiment in todays business environment. Forcing ourselves to eliminate confirmation bias from muddying the waters, the wisest approach for a bank or credit union executive is to consider the financial institutions overall strategy. How do your customers/members want to be served? What service channels are you good at? Where those two things intersect is an amazing place to prioritize.
Posted on: Fri, 07 Feb 2014 18:17:24 +0000
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