Banks across the country are grappling with the right approach to branch banking as the Covid-19 pandemic lingers.
Management concerns surrounding logistics and safety must give way to longer-term considerations aimed squarely at the bottom line. Executives need to contemplate the future of their branch operations and business model, incorporating the guidance that large-scale pandemics may persist in some shape or form in the future. Read on to explore key considerations relating to the long-term implication of pandemics on customer service delivery.
Will customers ever come back into our branches? How will that impact our bank?
Branch visits have irrevocably changed. A recent study asked consumers to rank their preference of seven different banking channels, before, during and post-pandemic. Six months after the start of the pandemic, branch banking has settled into sixth place. The study predicts “a rapid decrease in the importance of the physical branch as customers become more habituated to the use of digital, which is a behavior that will linger long term.”
Jimmy Ton, senior vice president and director of digital channels at Irvine, California-based First Foundation Bank, agrees. “For those who adopted digital services during this time, they’ll probably stick with them. It takes 60 days to form a habit and people have been reconditioned during the pandemic. There’s no reason to believe they will abandon these services,” said Ton.
Novantas highlights another concern. “The branch network’s competitive advantage for sales has been eliminated overnight, possibly forever. Although sales were already shifting away from branches, they will now need to be even more digital.”
Banks must prepare for a permanent, significant reduction of branch visits. They should discuss this impact on their business models and what changes, internally and customer-facing, will need to occur.
Highly personalized service is our hallmark. How can we possibly digitize that?
Many banks have long leveraged high-touch customer service as a differentiator when competing with national banks. This was often delivered through branch networks and sales teams — until now.
Bankers have witnessed pandemic-induced migration to digital channels. But this is no time to celebrate; J. D. Power shows overall satisfaction has declined as customers transition from branch to digital channels. That’s because banks have so far been unable to replicate the personalized nature of in-branch experiences digitally.
But it can be done.
Think of it this way: branch staff can glance at a screen filled with information about the customer sitting in front of them to personalize the conversation. That same data can be used to craft a personalized conversation, delivered via email or text message instead. Both methods communicate to the customer that you know who they are, and can offer ways to help them.
Digital engagement platforms offering deep personalization delivered via individualized websites, text messages, video and online chats exist today. They deliver a positive, digital experience with minimal effort, even for data-challenged banks.
“A significant chunk of interactions can move to digital. A great parallel is what we saw happen with telehealth, moving routine physical in-person appointments to virtual ones,” said John Philpott, a partner at FINTOP Capital. “It’s a great example of how professional conversations can be digital; banks can absolutely do the same.”
Banks should plan to shift all or a significant portion of sales and service delivery away from their branch networks and to digital engagement and sales platforms that are ideally powered by insightful data to hyper-personalize the experience.
Strategically speaking, what else should we consider?
With branch-based account opening limited and most banks flush with cash, the pressure for new deposits has lessened. Now is an opportune time to focus on the existing customer base to minimize attrition and boost profitability of those relationships.
Ted Brown, CEO of Digital Onboarding, founded the company based on the idea that opening a new account does not mean you’ve established a relationship.
“[The ] number of new checking accounts is the wrong metric to obsess over,” Brown said. “Are your customers fully utilizing the products and services they’ve signed up for? Are they turning to your bank to satisfy additional needs? Starting with Day One, successful onboarding — and continuous engagement thereafter — increases product usage, cross-sell success and ultimately drives profits.”
Zeroing in on customer engagement and retention, instead of new customer growth, may be a smart, strategic and profitable move in the current environment. Responsible bank leadership must contemplate what changes and investments they will need to make to stay relevant with customers post-COVID 19.