When the 'branch of the future' is debated, it's usually about how the latest industry trends can be wrapped into a perfect solution that everyone should build. But the reality for most banks and credit unions is that they operate with an assortment of branch facilities assembled over many years. How do they make that work more effectively?
Discussions about how to make the physical banking channel appeal to Millennial consumers usually revolve around the “Branch of the Future.” And more often than not the focus is solely on new construction. Some banks and credit unions are building new branches, of course, but for many institutions that’s not the not the position they’re in today.
There have been more than 90 mergers and acquisitions announced or finalized through just three quarters of 2019 alone. Ten of those (an unprecedented amount) are credit unions purchasing banks, resulting in combinations of very different brands and functional spaces. Those institutions have a unique challenge, but many others find themselves considering how to cost-effectively update and evolve their branch network. It is a complex issue, but one that is critical to the strength of their message and success of their institutions, particularly with younger generations.
A network-wide rebrand or refresh is no small task and will require a significant capital investment. ROI must be accounted for, and measurable, when determining the level of work to be done — refresh or overhaul — and how that work is phased over time to match available resources while maximizing impact. Essentially, why make an investment unless you know it will work?
Assessing Branch Reinvestment ROI
Perhaps the greatest ROI from reinvesting in your existing branch network is achieved by continuing to build strong brand equity. Simply put, brand equity is how relevant your brand appears from the consumer’s perspective. Over time, external forces can depreciate brand equity — changes in industry trends, consumer behavior, technology or market conditions — all can play a factor in whether your brand remains relevant with consumers.
|Fort Community Credit Union updated its branch network to better reflect its brand and enhance member experience across diverse architectural styles.|
To succeed and grow, banks and credit unions have to continually update and maintain their brand. A key part of that is to evolve their branch network, often comprising a mix of old, new and acquired facilities. Updating your branches doesn’t always mean a completely new direction, however. Sometimes the strongest ROI is through a “course correction” or “refresh.”
It’s important to take a methodical and phased approach to developing a strategy for evolving your branch network — one governed by discovery, design and deployment. We’ll look at each of these in turn.
Discovery: Key Questions to Ask
The discovery phase of any branch transformation project is absolutely critical. In order to understand how to best prioritize your investment, it’s important to start by evaluating both your branch network as a whole, as well as each individual branch and ask some key questions:
- How is each market performing? Is the market saturated with financial institutions? What other businesses are entering or leaving the area?
- How is each branch performing? Are most people visiting the branch for transactions or is it more for consultative reasons? What is the current activity today and what are growth projections for sales or new accounts?
- How does the physical space align to market and consumer needs? Is it too big or small? Is there sufficient meeting space? Is there flexibility to evolve to meet future needs? What technologies could be implemented to increase operational efficiency and improve overall customer service?
- What is the branch experience like? What is the condition of the facility, the branding and marketing efforts? Are there opportunities to enhance the consumer experience in ways that align with both the financial institution’s overall brand and the specific community of the branch?
Capturing this discovery data for each individual branch, and for the network overall, can help to create a “report card” that identifies what branches have a significant opportunity for improvement and deserve significant reinvestment, and what branches have limited upside and should receive only a light, cosmetic refresh — or nothing at all. These “grades” can help provide a roadmap for an overall branch network investment plan, targeting the high-priority locations. They also help ensure that the plan is realistic and fits within a desired timeframe and budget.
Design: Avoiding the Cookie-Cutter Effect
With a plan in hand, it’s time to craft a solution that responds to the discovery findings. The key here is the prototype branch — not a computerized visualization, but a functioning facility. By choosing an existing branch that qualifies for a full transformation, banks and credit unions can create a real-life prototype to develop the ideal branch to meet the evolving needs of consumers.
This initial investment also allows for hands-on training and evaluation to ensure that you are on the right path with the design modifications. From there, you can then apply major elements of that new design to the remaining branches in your network, scaled to meet the desired investment for each branch.
There’s a very important factor to address in the design process: How to avoid the “cookie cutter” effect. While there is considerable value and efficiency — for the institution and for consumers — to providing a consistent brand experience across multiple platforms, markets and branches, each community is also different with its own unique needs. Successful branch design carefully balances these competing interests, making each facility true to the brand and familiar for consumers, while customizing the space, messages and services to resonate with each community. Enabling that flexibility to put an individual community’s “spin” on your brand can enhance brand loyalty — from consumers and employees alike.
This flexibility can often be achieved through technology integration. With the addition of artificial intelligence and machine learning, branches can become more personalized to enhance overall consumer experience. Using AI, banks and credit unions have the flexibility to adjust their digital messaging to meet the unique needs not only of each branch’s community, but of each individual who walks through the door. This customized digital approach is a key part of the solution for evolving multi-branch networks.
Deployment: All at Once or Staged?
Now it’s time for the rubber to meet the road. You’ve done your homework, and you’ve got your prototype branch. You know which investments in specific branches will get you the greatest ROI. Now it’s time to consider the timing and the method.
As with all elements of the process, deployment is unique to each financial institution. For example, it’s important to weigh the benefits and downsides of choosing to close a branch for remodeling versus completing a “live remodel,” where the branch remains open through the process. Also there are benefits and downsides to a refresh going live across the entire footprint at the same time to maximize uniformity, brand cohesiveness and make a splash. However, that’s not realistic for every institution. For most institutions, in our experience, it is more likely that a multi-phased, multi-year rollout is the best path forward.
See the featured article here in The Financial Brand