Mercator Blog

Reconfigured Branches Require Redefined Banking Roles
Date: June 15, 2016
Research Team
With much attention being given to branch reconfiguration and teller and customer service rightsizing efforts, it’s not hard to envision a very different branch experience in the near future. For many banking customers, interest is waning in the branch being the primary point of contact for deposits, withdrawals, and balance updates.

Quite simply, many of today’s banking customers are forgoing traditional full-service interaction with tellers in favor of using newer self- and assisted-service options. Because of these dynamics, and a host of others that we have written about in various Mercator Advisory Group Banking Channels reports, the number of branches has dropped—and in some cases plummeted—over the past decade.

The number of FDIC-insured branches in the U.S. has declined by about 6% since the peak just before the Great Recession in 2008 to December 2015, but there is a disparity by type of institution. And while commercial bank branches declined just 2.5% during the period from 2008 to 2015, the number of savings institutions branches had a 35% reduction in that same timeframe.

These changing branch dynamics present challenges for financial institutions of all sizes, but they also present opportunities. At the heart of the matter are the seemingly contradictory goals of reducing costs while offering an excellent customer experience. Institutions are constantly seeking the next big thing on the journey toward improved customer interaction and efficient processes.

For an increasing number of banks and credit unions, the movement toward omnichannel banking is their long-term goal, with an emphasis on real-time information and channel integration. For some, an interim plan is to adopt a “lean branching” strategy based on a quest for continuous process improvements, while reducing waste and inefficiencies. Lean branching is a core component and critical success factor in many FIs’ branch reconfiguration efforts.

The role of branches continues to evolve, with their primary purpose fast becoming more of an advice channel than a transaction channel. This role is not necessarily new, but has evolved over the past several years to include interaction with roving customer service representatives equipped with tablets, or in some cases, video virtual interaction with a call or contact center via video.

With branches being used increasingly for consultative tasks the fundamental role of branches and branch personnel needs to be evaluated. An important part of that is the training adjustments required for tellers and customer service representatives to better understand banking customer goals and needs. This includes the sharing of information about appropriate products and services, while supporting increased interaction and engagement with today’s banking customers.