Complete transformation: How to improve bank branch performance

It’s no secret that retail bank branches are struggling to perform. As customers turn to digital channels for transactions, there is a lower reliance on physical locations.However, there are still valid reasons to keep branch networks alive, both from the customer side and the organization side. And these benefits aren’t just linked to reported customer preference or branding.

Bank branches and resilience

At the beginning of 2023, you may remember the headline news about the fall of Silicon Valley Bank. As a reminder, the bank suddenly announced that it needed to raise $2.25 billion to ensure the health of its balance sheet. This led to a rush from the customer base who withdrew $42 billion in deposits, as reported at the time, shortly after the announcement. 

The incident had global repercussions, with the Japanese, South Korean, and Hong Kong stock markets falling by 2.67%, 3.91%, and 2.81% respectively just two days after the Silicon Valley collapse. In Europe, the banking index fell by 7%, leading to market losses of 120 billion euros.

It was a major challenge for financial institutions globally, defined by high levels of insecurity and fear. That said, one study shows that there was a direct correlation between resilience and the banks that had strong branch networks. 

According to the study: 

“Our findings highlight the importance of branch density and its implications for deposit stability. Digital banking enables banks with lower branch density to attract deposit flows and expand funding capacity. However, digital banking and low branch density also lessen the value of the bank-depositor relationship—shifting the depositor base to corporations and tech-savvy depositors with large, mostly uninsured deposits.”

There’s nothing wrong with having a digital-first strategy, provided that the digital banking solutions aren’t the only means of getting in touch with your bank. It’s important to offer all channels for customers, including customer service staff for customer visits at retail branch locations.

Keeping the network operational

Having a healthy bank branch network is an enormous asset in times of crisis or when customer trust is particularly low. 

Of course, it goes without saying that in normal times, this means little if the finances aren’t sustainable. To put it simply, banks and credit unions want to save their network and remain in their local communities, they need to improve bank branch experience and performance. 

Smart ATMs: Tweaking the current concept

The temptation for decision makers is to take the current bank set up and make tactical decisions to reduce costs in the individual branch.

One approach of this nature is to introduce Smart ATMs to physical branch locations. These machines offer greater functionalities to normal ATMs, allowing customers to open an account, deposit cash and checks, or transfer funds. 

This means that branches can reduce their opening hours, saving on numerous operational costs as a result.

A bandaid – not a solution

The problem is that Smart ATMs serve as a bandaid to the problem bank branches face. While they present valid use cases for operational efficiency, they don’t get to the heart of the issue.

When the Silicon Valley collapse happened, banks with branches didn’t do better because it was more convenient to carry out transactions, but because having a physical presence increased levels of trust. 

This is also the key function that bank branches serve when customers choose to use them in their everyday lives. The majority of the services that a smart ATM offers can be carried out online anyway, so it is unlikely to do much apart from help the network cling on to life while operating at a lower level. 

Offering greater access to advice

To put it simply, Smart ATMs alone will not save your bank branch network. If used in isolation, they are more likely to simply prolong the death throes. 

When customers make the effort to come to a branch, it is because they want something that they can’t do online – or feel more comfortable doing in person. That is getting access to real, authentic, human advice. 

This may be because they have a problem that they are particularly worried about. Alternatively, it could be because they are considering taking out a mortgage, loan, or other kind of sales opportunity. 

Whatever the reason, when this moment of high need strikes, if a customer goes to a bank and finds it is closed, no ATM will be smart enough to help them. 

Human support through technology

Considering that the solution is to offer more access to human support, it may appear untenable to keep your bank branch network afloat. 

However, that simply isn’t true. 

Technology should instead be used as a facilitator of authentic human interactions, allowing customers to get more access to better advice – without inflating costs. And achieving this is entirely possible. 

Digital receptions for branch banking

The key piece of technology for this is the digital reception, which allows a real member of the branch staff to greet you as you enter a bank branch, even if they aren’t physically present.

In other words they can authenticate the individual’s identity, control touchpads and printers, and even direct the customer to a private room for a meeting.

The benefits of a hybrid approach

While the financial side is key to ensure ongoing branch operation, a hybrid approach can reduce customer wait times and a better overall service. It allows for your normal manual transactions or routine transactions to take place, but it also provides the space to offer valuable insights.

While maintaining optimal staffing levels, hybrid approaches can actually increase access to dedicated resources, such as expert insights, while overcoming common challenges associated with branch banking.

How organizations are leveraging the technology

The digital reception does what the Smart ATM can’t by providing greater access to human support. That said, it still needs to fit the individual institution’s needs. 

Here are some ways that organizations are doing this. 

Postnetz video consultations

In a recent test, Postnetz – a subsidiary of Swiss Post – decided to install video consultation rooms in their branches to offer video advice alongside their traditional option. This is a minimalist hybrid approach that is being used to augment their current set up and expand the reach of their expert advice. 

Valiant Bank branch transformation

The Swiss-based Valiant Bank took a transformational approach to completely revitalize their branch network. Combining the digital reception with a modular approach to building branches, the bank was successfully able to reduce costs (both setup costs and ongoing operational costs). This approach allowed them to increase their opening hours and maintain customer satisfaction. 

Improving branch performance through transformation

The landscape has changed completely, and so much you. It’s no longer enough to save your current branch concept – banks, credit unions, and similar institutions must embrace complete transformation. 

For branch managers and branch employees, digital solutions can be the key to unlocking new customer experiences and helping individuals make informed decisions at the right moment for them.

While self-service options such as Smart ATMs are necessary, this alone isn’t enough for the banking industry to fight the trend of branch closures. To turn an underperforming branch into a top-performing branch, banks need to prioritize exceptional customer experiences across the customer journey to improve customer loyalty – and find new opportunities to generate value.