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To dump or not to dump the branch

I never knew how much debate could be created by making the mere statement of placing IP-enabled networks at the core
of the bank and re-engineering to exploit this as the basis of future
banking.  This is instead of placing branch networks at the core.

Some
people believe this is purely academic as we have branches today and
can’t get rid of them, so the question is how to use the branches we
have today.

My contention is different. 

As I have stated
many times before, branches are critical sales centres and, in the
future, they will not be transaction centres.  Historically, they have
been transaction centres.  This is what everyone is struggling with
today: how to turn tellers into sellers and branches into sales
operations.

Personally, I don’t think you can turn tellers into
sellers.  It’s a bit like turning credit risk officers into customer
service reps … it may work with a few, but most would rather be
credit risk officers and tellers.

So you firstly need to rehire.

If
you are going to do that, then you also need to ask in the
transformation process, that if you are going to turn your old
transactional branches into sales operations, do you need so many of
them?  If you get rid of the transaction focus and move it to machines
on the high street or in a branch lobby, how many branches do you then
need?

Equally, if you are moving branches away from transactions,
which are now managed through remote telephone and internet connections
and other self-service machines, all of which are IP-enabled systems
including the branch ATMs, then how do you rethink the network?

This was the point of  Wednesday’s blog on bank strategies being fundamentally flawed, and those who think
branches are the start point will throw good money after bad.  Those
who think IP-networks are the start point, and then build the
end-points (which include branches) on top, will be much nearer the
right strategy for the future.

I’m sure folks will carry on
arguing this point — after all, I run workshops on this stuff and make
a good living out of it (as do many others) — but I know for a fact
that those who think IP-networks are just layered on top of old
infrastructures, networks, distribution strategies and organisations
are wrong.  Afer all, having been around re-engineering bank processes
for over two decades, this is why we have ended up with silo
structures, painful processes and inappropriate skills.

So, in
summary, my point is that the strategy needs to start around an
IP-enabled bank.  If you were designing that bank, then here’s the
question I would ask around the branch focus:

  • How many branches would you layer on top? 
  • How many of those would be self-service automated branches and how many would be sales centres? 
  • How many staff, and what sort of staff, would you hire for those sales centres? 
  • What would be the customer demographics for each sales centre, and how would those staff skills fit with those customers? 
  • What happens to the existing staff and who do you need to reskill or offer severance? 
  • What
    are the technological aspects of the IP-enabled branch in this context,
    and how much technology do you put into the branch? 
  • What is that technology doing and how does it profile against the staff skills and customer demographics?
  • Is
    the techology future-proofed and how engaging is this going to be,
    versus putting that service into other channels such as online or
    through contact centres?
  • How does the underpinning of the new IP-enabled branch fit with the IP-enabled alternative contact points?
  • Are they fully consistent with a single electronic IP-enabled service?

These
are all questions retail banks are asking, and some are answering …
and it ain’t easy.  But it has to start with the network being the IP
(that’s Internet Protocol) network of the 21st century and not the high
street bricks network of the 20th and before.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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