The “New Normal” is not here yet. This is how banks must transition while everything is still in transition…
~ by expert bank strategist, Tim Scholten
When the Pandemic hit in February, you and your team needed to immediately zero in on what mattered right then….at that moment. You answered the question of how are we going to service our customer’s needs during a “shelter at home” quarantine. You took actions that would protect both your customers and employees to assure operational continuity. You adapted and your customers adapted.
Now moving into one of the lowest margin environments we have seen in banking history, you need to use the same skills of zeroing in on what matters. Does this mean keeping things as close to normal as possible going forward because that WAS your plan i.e. people in the same roles, operating in the same way?
Does it mean that employee roles should see little change?
Or, does zeroing in on what matters mean bankers need to make significant changes right now in order to emerge from an extended low margin environment in better and stronger?
In a blog article by Chris Nichols published by Center State Correspondent Division titled: 5 Things You Are Going To Have To Do With Your Branches In 2021 and Beyond, Chris points out the fact that the average cost per customer of a branch now exceeds $600 per year.
He goes on to state that if opening an account or applying for a loan requires your customer to be in person, then your processes are too complicated and need to be streamlined.
He even states that without a massive change of mindset about how branches will be utilized going forward, you might as well sell your bank right now while there is still value.
The pandemic and its effects won’t go away as quickly as we all have hoped. The ripple effects on the economy and how people have shifted to the transitions in the way they are living their lives, including their banking, savings and borrowing habits have changed and will continue to change as the “new normal” has not yet arrived. Please read that again… the “new normal” has yet to arrive.
Banks and consumers have enjoyed a bustling economy for the past few years, and 4% net interest margins… but none of us can continue to operate the same as this shift has brought an economic environment with margins under 3%.
In reality, as the “powers that be” continue to wrestle out how things will pan out, our economy and society are still in transition as everyone is holding their breath, waiting to see what the mid and long-term ripple effects will be for their personal and professional lives. While many are just trying to get by day-to-day.
The 5 things Chris listed as areas needing immediate attention for change are: increasing safety precautions, rebalancing branch and digital delivery, changing up the product mix to improve profitability, changing service delivery (more digital – less paper), shifting from an old branch growth paradigm to a digitally driven paradigm.
While I agree with many of Chris’s points, I don’t think banks should immediately start dumping branches. I think it sends the wrong signal to your customers, to your shareholders, and to your employees.
So what matters most right now then?
Just like when COVID-19 hit, it’s time to reimagine what your employees do with their time right now. Most banks are using some sort of social distancing and/or work remote strategy as a safety net in case things get worse, yet many are doing the same old things. That doesn’t make much sense. Here is what matters most right now. Your customers needed to shift how they banked during the “Shelter at Home” period. That meant your staff needed to go 100% into education and re-education mode. You assisted customers in making the shift to utilizing self-service options even though many had resisted for years. Many employees also resisted this change prior to COVID. You accommodated those that couldn’t make the shift.
Now is the time to make that shift permanent. To realign your branches with staff that is prepared to educate and assist the customer with self-service and remote service options. To educate them on how to use these services. Branches will become sales and education centers for banking services in your market versus transaction locations. You saw evidence of this massive shift beginning in February and it has and will continue. We call this the Universal Banker Shift. It’s not an easy migration. Some of your existing staff won’t want to make the shift, but it is becoming more and more necessary. Your customer base is begging for it.
“Best-In-Class” organizations that have begun making this shift have focused on investing in the onboarding and development of their team members. They have experienced 2.5 times the profit and 1.9 times the profit margin from a Boston Consulting Group onboarding study. This means redesigning what your branch teams are doing and how you are developing them to become your primary source for educating customers and building relationships remotely will help to increase revenue . These are skills not generally practiced in branches today. They have been present in Customer Service or Call Centers however for more than a decade. So what matters most right now is to start repurposing what your branch team members do to build customer relationships and educate your customers with your self-service capabilities. That is a great investment in a fast moving trend that will continue and likely increase over the next couple of years. And, the data proves that it is a profitable strategy.
If you need help getting your plan started, we can help with roles, responsibilities, development and onboarding strategies that have worked in dozens of implementations.
Schedule your free strategy session with one of our experts to learn more about how we can help you zero on what matters most right now!
Pre-Covid, many community and regional banks had already transitioned (or attempted) to the Universal Banker (UB) delivery model in their branches. The realization (or not) of declared objectives and/or value from these change initiatives has been questionable. …
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