Banking: Rethinking branches

“Today, banks want to pull people into their branches, not push them [in],” says Paul Battista, Canadian financial services advisory leader at Ernst & Young LLP in Toronto. Clients once had no choice but to visit a branch to have transactions executed, he adds, but, increasingly, they now go to a branch only when they are seeking personalized service, issue resolution or high-level support and advice.

That change in how people do their banking allows banks to refocus their branches as the ideal channel through which to deliver high-touch advice and service – and as a key complement to banks’ online, mobile, call centre and ATM channels. The in-branch experience can provide the opportunity for banks to win a greater share of clients’ wallets, including wealth and investment advice.

Case in point: in recent years, Royal Bank of Canada (RBC) has been building out and modernizing its Canadian branch network, introducing a new, open-concept retail store format that features advice centres, embedded touch-screen technology and a friendlier layout that encourages clients to interact with technology and engage with employees in a seamless way.

“There’s no question,” says Wayne Bossert, executive vice president of sales with RBC and president and CEO of Royal Mutual Funds Inc. in Toronto, “that we’re seeing higher levels of customer loyalty, customer satisfaction and more opportunities to set face-to-face appointments [in which] we can actually sit down with a customer and really understand what their financial needs are. We think that’s a good indicator that we’re in a place to add value for them.”

According to a survey by the Canadian Bankers Association, 55% of Canadians now use the online channel as their primary means of banking, up from just 8% in 2000. Mobile banking, a relatively new channel, is increasing in popularity, with 31% of Canadians saying they used mobile banking in the past year. However, consumers still prefer to visit a branch when they seek support for complex product purchases or financial advice.

“Even with the advent of the new and improved banking channels, branches are still busy,” says Paul Dilda, head of branch and ATM channels for North America with Bank of Montreal in Toronto. What has really changed is the number of transactions overall, Dilda says, with dramatic increases in the number of both online and mobile transactions. However, volumes through the branch network remain steady.

The changing role of the bank branch also has given rise to a change in thinking about staffing; the traditional divide between service (delivered by tellers) and sales and advice (delivered by higher-skilled staff) is eroding. Today, branches increasingly employ specialists referred to in the broader industry as “universal bankers” – employees who can provide clients with either sales and product support or transaction services as required. As technology advances, allowing a greater number of basic transactions to be completed on a self-serve basis, the banking industry is moving away from using transaction-only employees in favour of multi-skilled staff.

“The buzz-phrase,” says Battista, “is ‘We need sellers, not tellers’.”

Banks are training their staff to build relationships and trust with clients through service and advice, referring customers to higher-skilled, in-house staff such as financial planners or small- business experts when complex service or advice is required.

“What a bank really wants is highly qualified, capable, credible salespeople,” Dilda says, “who are going to have deep product knowledge and the ability to guide customers into making the best financial decisions.”

However, it’s important that the focus remain on meeting clients’ basic banking needs, the ones that probably motivated a client to visit the branch in the first place, Battista says. Without that, further discussions regarding advice or more complex services can’t be initiated, and additional business can’t be won.

“You can have the best and most knowledgeable advisors,” adds Battista. “You can have the best – and best articulated – product sets. But if the basics of banking are not efficiently and correctly and seamlessly delivered, the foundation of trust is never established. A customer will think, ‘If you can’t do the simple things, I’m sure as heck not going to trust you to do the complex things’.”

Technological advances, seamlessly embedded into how the branch functions, will support how bank employees interact with clients. This strategy may start with helping clients to understand how to use a bank’s online and mobile channels, perhaps by demonstrating an application on a touch-screen display or a tablet in the branch or by helping clients to download an app onto their own device.

Technology that enables more self-serve banking – such as “remote deposit capture,” through which clients are able to take a photo of a cheque and send it electronically to their bank – removes the need for an in-branch visit. Changes such as this will accelerate the move away from the teller counter.

And there is in-branch technology, such as video conferencing, through which a client may be able to consult with, say, a tax expert in real time, facilitated by a branch employee in a meeting room or private office.

© 2014 Investment Executive. All rights reserved.