Be a financial-services resource center. Financial advisors could conduct seminars after hours on such topics as managing debt, savings strategy, or how to transition from paycheck-to-paycheck banking to accumulating wealth. For the “mass affluent” customer — the person who is already saving and investing — the branch can offer “light” relationship management. For example, a bank specialist who sold one financial product to a customer could periodically review that customer’s needs and recommend other appropriate products.
Deliver customer solutions at the point of contact. Tellers fulfill transactions; branch customer service representatives handle simple product sales and know when to refer customers to a branch-based specialist. Customers perceive the value of consulting a “banker,” and the bank gets more involved with customers when they are planning and optimizing their choices, not just when they’re shopping for products.
Be stocked with advice and product packages. To deliver consultation services economically, branches must offer a set of standardized products targeted for different life stages or for immediate needs. Banks can package existing products and information in a new way in order to focus on the 80 percent of the customers who need advice when planning for college tuitions, maximizing retirement savings, and so on.
Focus on local demographics. Operating a customer-focused branch economically also requires tailoring branch services to local market needs. This micromarket alignment is typically driven by age and income, and incorporates such factors as area population concentration, branch proximity to business centers, and customers’ ethnicity. Achieving this alignment drives decisions regarding branch staffing, skills, product configurations, and customer sales/retention targets.
Be the hub of a multichannel offering. Call centers and the Web are fine for routine transactions, but the branch needs to be the centerpiece of the customer’s interaction with the bank because it is the best place to get personalized information and attention and to conduct complex banking activities. It is also the best channel to encourage customers to entrust more of their assets to the bank as their needs change.
The Federation Model
Many large banks’ pursuit of scale has come at a huge loss of control over local capabilities and costs. These banks have achieved neither the cost savings of monoline banks nor the deeper “wallet” penetration and service quality of small local banks.
|Call centers and the Web are fine for routine transactions, but the branch needs to be the centerpiece of customer interactions.|
Applying the federation model is not merely a matter of making organizational adjustments. Nor is it the same as franchising. By giving each branch responsibility for managing its own P&L and retaining some centralized management, banks allow branch managers to run their own businesses and to leverage the brand and infrastructural power of the institution.
|The federation model can increase revenue between 35 percent and 65 percent per branch.|
Based on work with several clients, we estimate that banks using the federation model can expect to see revenue increases of between 35 percent and 65 percent per branch, depending upon market potential and current performance. This improvement stems mostly from increased product cross-selling due to the availability of financial service product packages and greater customer retention as customer satisfaction rises. There are higher costs for staff training, performance incentives, and technology investments, but much of these cost increases can be recovered through lower staff changeover and reduced layers of management.