Far from being hounded into extinction, the branch has undergone a resurrection with an entrepreneurial shift towards making sales instead of merely carrying out transactions. Michael Imeson reports.
Reports of the death of the branch were an exaggeration, to borrow a famous quote from Mark Twain. A decade ago, most observers were predicting that branch banking would go the way of the dodo and black-and-white television.
In the event, most branches were not killed off. Even those that were have since been resurrected, although often in different locations that are more convenient for the customer.
Most importantly of all, both types – survivors and reborn – now appear in a new form. They have glitzy shop-fronts, fashion-store type interiors, high-tech terminals, semi-entrepreneurial management and staff with a mission to sell, sell, sell.
Greek rebirth
It is the re-orientation towards a highly sophisticated sales environment that is the key to their rebirth. Minos Moissis, general manager of the domestic branch network at National Bank of Greece, the country’s biggest bank, who says the branch will remain the most important distribution channel for many years, is taking several steps to make his bank’s branches more sales oriented.
“We’ve made the decision to upgrade the physical identity of our branches,” says Mr Moissis. “We are embarking on an investment programme to increase the flow of customers, reduce queues and make it easier to sell to customers using product specialists in the branch.”
This includes using new technology so that the most common transactions can be done faster, allowing staff to devote more time to sales and advice. It also includes locating specialised relationship managers in 60% of its branches to deal with certain market segments, such as the affluent and small to medium enterprise customers.
Staff profiles are changing, too. Following an early voluntary retirement programme adopted by National Bank of Greece, it has replaced those who left on a ratio of 3 to 1. “For every three who left, we took on one new person,” says Mr Moissis.
“We have taken on 1000 new people in the past two-and-a-half-years. They all have a university degree and very good English. They take banking exams and we employ the best ones. They are very quick to adapt to the new branch environment.”
Italian focus
Monte dei Paschi di Siena (MPS), Italy’s third biggest bank, is firmly focused on branches, says Piergianni Sani, the bank’s head of distribution network development. It has opened about 150 new branches in the past three years and is planning further significant increases in its branch network.
“Having more branches gets us closer to customers, although at the same time we are pursuing a multi-channel approach and integrating the physical and virtual channels,” says Mr Sani.
In common with other banks throughout Europe, MPS is making its branches less dependent on transactions, and more sales and advice oriented. It is steadily moving more transactions on to ATMs and focusing the front office on sales and service. “This can be difficult, because practices and attitudes in staff are deep-rooted,” says Mr Sani.
The design of branches – and how the people who work in them are hired, re-deployed, trained and rewarded – is crucial to the success of any branch sales strategy. Accordingly, the layout of MPS’s branches will be renewed to make them more dynamic and shape the “customer journey”, says Mr Sani.
He adds: “The customer will enter a welcome area, then move on to a multi-channel corner with ATMs and internet stations, and finally walk to a counter at the furthest point from the entrance where transactions can be conducted and a sales adviser be requested.”
Sales report
This trend towards sales and away from a dependence on transactions is confirmed by a recently published report by technology provider Hewlett-Packard (HP) and the European Financial Management and Marketing Association. ‘Banking on Sales: How Branches are Becoming More Sales and Advice Oriented’ is based on interviews with retail banking executives from 16 banks in Europe.
“Ten years ago, the future of the retail bank branch was in question,” says Andrew Matuszeski of HP. But branches have survived, and some networks have got bigger. Why? “It turns out people prefer to make important financial decisions face to face,” says Mr Matuszeski. Banks also need to connect with customers emotionally. But the role of the branch has shifted. “The branch is rapidly becoming a sales centre,” he says, “with routine transaction flows shifting to alternative channels”.
If there was ever going to be a twist in the long tale of branch banking, this is as good as any.
