Facility Solutions: Applying Tech Trends to Branch Strategy

The 2017 Retail Banking Trends and Predictions report, sponsored by Kony, is based on a Digital Banking Report survey of more than 500 financial institutions across the globe. Though the survey focuses on remote channels, its findings have implications for facilities management as well. Let’s look at the most common things survey respondents said they would be working on in 2017. You can apply these ideas to evolving your credit union’s branch strategy and take branch performance to the next level.

Design/enhance the digital experience (71 percent)

The digital experience your credit union delivers should be driven by brand characteristics and goals that extend through all facets of the organization. Brand development is circular and evolves as changes in one delivery channel affect expectations and perceptions of other channels. Your goal should be to manage service delivery in both online and person-to-person channels so the member experience is seamless however they choose to interact with their credit union. 

Enhance data analytics capabilities to identify customer needs (50 percent)

Good data in, good results out. Does your member data reflect actual branch use, or is it still reporting branches of origination? If the latter, you will be making bogus assumptions about branch performance. Assign only active members to each branch.

Here’s another example of using data analytics to improve member service: Are you segmenting market data to understand the propensity to use specific products and services and then aligning your delivery systems to target market characteristics? Segmentation using psycho-demographics can be used to score markets for investment in a variety of delivery types and to substantially enhance the impact of direct marketing.

Find ways to reduce operating costs (41 percent)

What should your branch network look like in seven years in terms of space use and staffing? What will you do with oversized legacy branches, too many branches, branches in the wrong locations, and branches that don’t support your branded delivery model? Credit unions waste millions of dollars per year on oversized facilities and staffing models that do not match specific market potentials. Assess your current branch and real estate strategy with a goal of improving your delivery array.

Many credit unions do not have a long-term occupancy strategy to analyze all their options and impact on the bottom line. I recently completed two strategic headquarters occupancy plans for which the difference in occupancy cost over 20 years ranged from $5 million to $34 million and from $24 million to $62 million. Every credit union should have their HQ and branch real estate strategies in place and keep the analysis alive through branch and market evolution. The cost is relatively cheap, and the reward is high.

Increase investment in innovation (26 percent)

There are fewer “bleeding edge” and “hype cycle” issues around branch technology today as the emphasis shifts to system integration. For example, a credit union may be assessing whether to retrofit a Diebold ATM with video-assist to encourage members to “do it themselves” or to install an NCR ATM with integrated video teller that can work on-screen with members to provide hands-on guidance. Both serve a purpose, so cost, timing, and the ability to connect to shared-branch networks may be deciding factors. 

The HQ workplace is also an important theater for innovation. Do you have a plan for attracting young workers while retaining older staff, for providing a variety of ways to work to improve productivity and collaboration, for offering work-at-home options where possible, encouraging physical and mental well-being of employees, and for projecting your brand image and experience? These forms of innovation have the potential to return significant benefits in terms of both culture and productivity.

Dual challenges

Other issues highlighted in the retail banking trends report that apply to both technology and brick-and-mortar channels include:

• Meeting regulatory and compliance specifications. (22 percent) Are your facilities up to American with Disabilities Act standards, including the provision of lactation rooms? These rooms are easy to provide in a headquarters but can be difficult to add to branches. In a previous column, I shared strategies to accommodate this regulation through employee policies rather than costly retrofitting.
• Updating/replacing components of a legacy infrastructure. (22 percent) In addition to the core transaction system, credit unions must regularly update or replace operational components such as roofs, elevators and HVAC systems, which can run into hundreds of thousands of dollars. And they may face significant costs in integrating new systems with existing hardware, such as retrofitting ATMs with video tellers and connecting cash recyclers to transaction systems. To head off these headaches, IT must be part of every branch evolution conversation.
• Recruiting and retaining talent to meet changing needs. (20 percent) Innovations in branch design and technology may serve as a recruitment tool for younger employees, but new ways of working may be challenging for long-term staff. We have learned that prototypes are more likely to succeed if they are led by talented, committed managers willing to act as champions of change.
• Changing core business processes. (18 percent) Member service improvements don’t all carry big price tags. For example, Nordstrom drew kudos for training its staff to walk around the counter to present customers with their purchases and shake their hands. Be on the lookout for changes that increase member engagement—with or without technology.
• Improve components of security and authentication. (14 percent) As branch lobby designs become more open, member privacy has become a concern. Can other people overhear conversations between staff and members? Are screens outfitted with visibility-limiting devices? Are offices partially obscured for seated conversations? Are ATM and video teller monitors obscured? It is wise to conduct an annual audit to ensure branch security and privacy.

The beginning of a new year is a time to look forward, think big and begin to translate plans into action. Let’s take some inspiration from the banking trends survey and set our course for evolution and success in service delivery across channels.

Paul Seibert is an independent consultant under Paul Seibert Consulting, Seattle.