Why Do We Have Branches?

Over the years I would frequently ask people in the financial services industry if they personally utilized branches and if so, what drove them in. Typically the answer was “rarely” or “only when I have to” (my favorite). When I probed further to determine why they actually set foot in a branch the responses varied but all contained a common and most important theme. Inevitably they wanted to meet face to face with an employee of their bank or credit union regarding a matter of importance to them. These matters of importance generally fell into one of only two categories:

  1. They had a need to borrow money or were interested in restructuring their current debt, or
  2. They had a specific issue or problem regarding their accounts that they believed could best be addressed in person. These items can range from “simple” account maintenance (ownership or address changes) to clarifying unauthorized charges, but they remain very important in the eyes of the accountholder to walk out with some confidence the issue has been resolved.

The astute reader will observe that this is a very limited list. Curiously missing are tasks like conducting transactions, opening a new checking account or seeking sound financial advice. While all three occur with differing levels of regularity, the actual desire to initiate any of the three seems lacking. Let’s explore a little deeper.

  • The only way I’m going to go into a branch to conduct a transaction is if I can’t do it via some other more convenient channel (mobile, online, at an ATM, over the phone or even the drive thru). The branch is resorted to only when I can’t find an alternative. Does this sound like a ringing endorsement for the investment we make in staff and their helpful, courteous nature?
  • Second, to irritate someone to the extent that they need to switch institutions for their checking accounts is becoming increasingly difficult. Over the years we FI’s have done an excellent job of getting our hooks into customers (with direct deposit, ACH, online & mobile access, debit cards, bill pay, etc.) that in order to go through the process of re-establishing these essentials you have to remain livid for a significant period of time. The other very valid option is that the FI they are departing has forced the move based on the consumers behavior.
  • Also related to account opening – our in branch process was so convoluted from everything that had evolved over time (primarily for compliance) that the experience was on par with getting a good teeth cleaning from the sadistic hygienist. We actually decided to utilize our on-line account opening process in the branches as the process was streamlined and created a much more palatable experience.
  • Finally, my experience is that people just don’t walk in the door to their trusted institution seeking advice unless 1) they have a borrowing need or 2) they have a specific problem or issue. It just doesn’t happen – we can jumpstart the discussion and often do, but I think the tendency for most people is to seek guidance from relatives, friends or neighbors prior to engaging their own FI.

So what does this all mean? It’s good news – really! The problem resides with us. We have our priorities all screwed up. We put way too much focus on all the wrong things. How much time and effort goes into branch staffing models focused on meeting the consumer’s transaction needs? Just because they’re more routine and easier to quantify doesn’t mean it is the right thing to do. We end up sending the wrong message to those who choose to do business with us – do we really want them to know how much we value being able to deposit that check and hand them cash back?

Seriously, I think most of the general public has it right. They understand what the proper use of a branch should be and typically try to avoid them if possible. The limited percentage of people who consistently utilize branches for routine transactions have distorted most institution’s perspective to the point where the ability to capitalize on opportunities that create value for both parties has been negatively impacted. We have also deluded ourselves into thinking that traffic in the branches generates revenue. If we don’t capitalize on those important matters listed above which occur all too infrequently we’ve devalued ourselves (again) to those whose patronage keeps us employed.

Think I’ve got it all wrong? Let me ask you just one question.

How long do you typically expect someone to wait in a branch before speaking with someone about a loan or account issue as opposed to how long they’re expected to wait to do a routine transaction?

I believe the primary purpose of a branch is to create trust for the member (0r customer) that when they have a specific need or want that there will be some person at the branch they can speak directly with who will assist in meeting that need. It’s that simple, meeting basic emotional needs.

Where are your priorities? Are they consistent with the Purpose?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s