The branch: it can be the future

The branch: it can be the future

The bank branch continues to be reviled by its detractors. Is there a future for the bricks and mortar channel?

Bankers reporting a decline in customer branch visits should hardly be surprised. The majority of UK branch customers are still being faced with an unwelcoming transaction-shop environment, staff with poor interpersonal skills, and clumsy corrosive sales tactics. Even the rigours of contact centre IVR (Interactive Voice Response) must seem like a better alternative, and internet banking avoids all.

Success is there for the taking

And yet across the world a whole range of new branch concepts are under development by different types of financial institutions (including credit unions and post offices) proving that there is life in the branch yet. More than that, the branch can maintain its role as a leading delivery channel, offering an ideal environment in which to showcase the organisation’s brand values and serving as a launch pad for reaching out more effectively to local and niche communities.

Creating cool branches

Many new-style branches are demonstrating that critical success factors for retail bank branches include not only design and staff skills, but also the incorporation of digital technologies that allow customers to self-serve and advisers to interact with them in new and proactive ways to provide a richer customer experience.

Success does not always depend upon calling in high profile design consultancies either, although these too have generated a seemingly endless supply of novel retail branch concepts. The latest generation of Denmark’s Jyske Bank branches, for example, have been developed internally to offer a destination for both customers and the community. ‘Sensory marketing’ allows the comforting aroma of coffee to pervade the atmosphere of branches, where the whole community – not just bank customers – are welcome to use the cafe and leisure facilities (pictured).

Some banks have opted to tailor branches to specific customer segments to capture market share. Both DBS and OCBC in Singapore, for example, have identified the young persons’ market as a source of valuable business. In 2010 DBS launched an I Designed A Bank, which invited young people to design their ideal branch. The winning submission was modified only slightly to ensure its operational viability and launched under the name of DBS Remix in 2011, styling itself as ‘Singapore’s first bank by day, financial playground by night’.

A second branch opened in 2012 that offers its young customers an almost paperless experience featuring an e-queuing system that notifies customers of their turn via text message.

The bank is pursuing its ‘co-creation’ projects by working with student bodies to develop a financial literacy programme, and encouraging them to work on projects like designing financial planning tools, retirement planning calculators and even expense tracking apps for smart phones which can be then be showcased at the branch.

Sub-brands and skis

Social media and a range of new channels have also played a major part in the creation of the new OCBC branches. The development team carried out extensive lifestyle research, which even included living within young communities an experience which informed the development of a product proposition and new branch concept under the sub-brand, Frank.

The creation of a sub-brand has also played a role in the strategy of Bulgaria’s Bulbank (a subsidiary of UniCredit) which has developed a product, membership and branch proposition targeting the women’s sector under the sub-brand, Donna. A dedicated branch and zones in other outlets are operated by specially trained female relationship managers, with products that target the segment in novel ways – for example by offering preferential conditions to new mothers, and a promise to donate a percentage of the bank’s profit from Donna products to support social causes.

While it has been in vogue to claim that bankers should be more like retailers, some smarter institutions have already worked out that there is much to be learned from other market sectors, too.

North Shore Credit Union in Vancouver set out to take a major share of the mass affluent segment with a branch design that sets out to recreate the ambience of a ‘West Coast financial wellness spa’, where ‘guests’ each receive a personal welcome from the branch ‘concierges’ who know most of them by name, and outlets are locally themed using natural materials (pictured). At Whistler, for example, a Northwest skiing paradise, the branch offers storage for skis and snowboards, a fireplace and a display of snow-themed merchandise. The bank claims that it has seen record numbers of deposits, far outstripping expectations, since the launch of the new branch prototype.

Elsewhere on the west coast, Oregon-based Umpqua Bank, a leading innovator in the US market, has been enriching its development programmes for customer facing staff with input from a luxury hotel group Ritz Carlton since the 1990s.

New models

Industry understanding of the role and value of the smaller or ‘lite’ branch is also growing in markets that had previously ignored its effectiveness.

In the USA, small footprint branches with reduced staff numbers and greater use of self-service are an established formula for success – and one that has also been tried and tested by ING in Europe and Westpac in New Zealand. Personal and small business clients are able to conduct most of their day-to-day teller and account management transactions on a self-service basis, thereby releasing staff to focus on customer service and relationship development.

Elsewhere in the USA some financial institutions have been able to keep less frequented branches open by installing ATMS fitted with video that enables remotely located staff to provide specialist product advice that cannot be made available at every branch, or simply to offer face-to-face out of hours service. The new Bankwerx branch concept launched by Conestoga Bank in Philadelphia, also features traditional video banking at dedicated booths, where customers can conduct self-service transactions, but also request face-to-face access to a member of staff at the contact centre should they require assistance.

The next generation

The smart bankers, credit unions and post offices now understand that the success of the branch depends upon a more effective alignment with the expectations of their target segments together with a better projection of brand values in-branch. The DBS Remix concept demonstrates how all forms of customer activated terminals, mobiles, and electronic devices, will play an increasingly significant role in enhancing the branch customer experience in future.

Success is there for the taking and can be realised by sound and creative marketing, best practice in design and operation, and true focus on the customer experience – in other words, professionalism.

The smart institutions have already worked out that the objective should be about creating branches that their target customers actually want to come to. And those branches are now starting to get built.


David Cavell advises banks around the world on the development of profitable delivery channel strategies. He is the author of the Retail Banking Research report Branch Banking 11 – Case studies for the next generation

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