I don’t know about you, but my time is one of my most valuable assets these days. I work long hours, I travel a lot, when I’m home I am struggling to find quality time (and quantity) with my kids, and I am increasingly trying to eek out a few minutes each day for myself. So anything that adds an additional demand on my time, better be worth it. So when a bank asks me to come down to the branch, or even presumes that I want to visit the branch – the question really is Why would I visit a branch?
Read this personal finance ‘forum’ comment from a customer in respect to the branch. This sort of thing is increasingly common these days, and is representative of many customers these days:
I’m a full time worker and rarely have the time to get out of the office during the day to eat, let alone do my banking.
Last week I finally got my act together and booked an appointment to see my local in branch advisor for an account review – more in their interest than mine I would have thought. Anyway, when I arrived the queues back from the counter seemed endless, not enough staff behind the desk; nothing seemed to be moving AT ALL – and, tear my hair out time – the advisor turned out to be off sick that day!!!
Why did no one bother to call me to let me know? No one seemed able to give me an answer. The experience has left me wondering why I bother having a local branch at all. It also made me realise that I’m actually pretty happy doing all my banking online or on the phone.
So can someone tell me, WHAT is the need for a ‘local’ bank branch these days exactly?
They seem a complete waste of space if you ask me…
sezzie33 – MoneySavingExpert.com Forums
Deloitte’s Centre for Banking Solutions attempted to answer why customers were less interested in the branch experience in this way…
For decades, most people visited the branch for credit approval, to conduct transactions, learn about products and services, and for customer service. However, most credit approval processes moved out of branch networks over a decade ago. Today, many of the core transactions that were once conducted in branches are shifting to electronic forms or are being captured elsewhere.
Adapting to a changing environment Evolving Models of Retail Banking Distribution, 2009
So with seemingly a real psychological challenge to why I would invest the time to visit my branch, and with a shift of core transaction types outside of the branch – what is the value of the branch today?
The value exchange concept
At the heart of marketing and customer theory is a concept of an exchange of value that occurs between two parties, this is compared with the intrinsic value that lies at the heart of a product, service, relationship, etc. In fact, believe it or not Karl Marx was one of the first to recognize this concept in his 1859 Contribution to the critique of Political Economy. It is the exchangeability of ‘value’ that contributes to economic interactions in society. But value has they annoying habit of changing over time.
Take two examples of modern businesses whose value exchange has shifted.
Pay Phones versus Mobile Phones
I was in New York City for the BANK 2.0 launch a couple of weeks ago and I when I was walking the streets I saw something that I can’t recall seeing for, well years actually – a New Yorker using a public phone. Yes…a public phone. They still exist in small numbers in various locations – but the numbers are dwindling.
Pay Phones are going the way of the Dodo due to mobile phones
The reason that Pay Phones are simply not popular anymore is that it is just far too convenient to carry around your mobile phone. Let’s face it. If you meet someone today that doesn’t own a mobile in the western world, it is somewhat anachronistic.
So if you are a telephone company, how would you defend the ‘value’ of using a Pay Phone in today’s modern society? It’s tough… there certainly is no value proposition that is unique. In times past you’d say it was about convenience, but with mobile phones you could hardly defend the convenience of Pay Phones. Thus, Pay Phones are already virtually extinct.
Blockbuster versus NetFlix
If you are a Blockbuster Franchisee right now, you must have a pretty pessimistic view of the world. Blockbuster sprang into existence in the mid-80s to compete with the small mum and pop video stores which were around back then. Today Blockbuster operates about 6,500 video stores, serving more than 87 million customers in the United States, and 25 other countries. The thing is, that today with digital distribution through vehicles like iTunes, Hulu, Amazon, Playstation, Wii, etc and with NetFlix’s approach to both digital distribution and DVD-in-the-post, Blockbuster is in severe trouble. Blockbuster has already closed 1,300 stores last year, and has announced another 545 stores will close this year. However, this is just the start – in the near term physical stores for Blockbuster just don’t make sense.
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So here is a long-winded supporting comment BK – nice post by the way.
Quite often people say that banking and the service it provides has lost its way.
I say its just the most visible and exposed industry to commoditization.
What is something that’s commoditised – it’s a product or service that has been systemized in its production and delivery to create consistency, and can be copied easily across different contexts and platforms.
The banking industry, on a retail level, has been reduced to commoditization, to the point where foreign and non banks can offer similar or sometimes better offers than incumbents.
You can get money from almost anywhere these days, and manage it without using a traditional bank brand at all.
The problem with a branch interaction is that there are 2 possible problems:
1. The systems of the bank are too fast for the people on the ground to deliver in an efficient manner (less likely)
2. The systems of the bank are too slow and complex for the people on the ground to deliver in an efficient manner (more likely)
This creates a log jam in delivery – time wasted by systems waiting for people to catch up; or by people waiting for access to systems and for those systems to process; or by people wading through complex tasks and processes whilst the customer drums his fingers on the desk or in queue, checking his watch as his lunch hour fades away.
Unfortunately to avoid commoditization and replication, it comes down to too small a point in the customer journey.
The notion of the uniqueness of a bank or service provider comes down to the human element – a huge responsibility to place on an entry or low level employee, with the pressure of angry customers waiting in line.
This I see is one of the ways banks act irresponsibly to their people and customers – there is too much pressure on one single access point, usually the frontline guys – who are largely inexperienced and underpaid.
Read complaints about branches online, and you’ll read about incompetent people not imcompetent middle management, projects or powerpoint packs. This is simply not fair.
Self service channels can solve this problem. A good user experience in a self service channel – online, mobile, atm – whilst possibly replicable, can be as distinctive a brand experience as the conversation you have with an agent or teller.
Alleviate the pressure from branches, do them a favour by reducing their relevance – or more importantly, your reliance on them.
Then everyone – you, your staff and your customers – can breath a sigh of relief.
Rob,
Spot on! If you are going to insist on maintaining some branch network, make sure there is real value there. Maintaining irrelevant transaction capability, and staffing with employees at the low-end of the payscale is the easiest way to get disintermediated.
What banks need to do is think about the total customer engagement and look to optimize the banks value by channel. A total channel view. When banks step back from that which they are emotionally invested in, and start investing back into the customer, the solution quickly becomes apparent.
Thanks for the contribution.
Brett