BRANCHLESS BANKING IS NOT A SUBSTITUTE OF BRANCH BANKING!
SYED ALAMDAR ALI,
Hailey College of Banking & Finance Lahore
Sep 15 - 21, 2008
Over the last few years, the financial service market has seen a proliferation of new players and new channels by changes of the external environments. Banks have found themselves facing more aggressive competition, uncertainty and unlimited opportunities therefore; they must examine their strengths and opportunities and take a competitive position in the competitive marketplace. Furthermore, banks have to reconsider and reevaluate fundamental assumptions about how they reach their markets to build efficient branch marketing strategies. That's what market segmentation analysis do for awareness of their customers and marketplace. During this phase of trying to change consumer behavior, banks now accept that customers are unlikely to break the habit of visiting a branch to do at least some of their banking.
With the introduction of ATMs, call centers, and, most recently, the Internet, banks hoped to drive customers toward channels that cost less to run than a branch. "Customers never fell for it," says Jerry Silva, a Tower Group USA senior analyst who focuses on delivery channels. "If you look at transaction volumes across all the delivery channels, on a year-on-year basis, they have never once come down. Customers simply use more channels, but they don't let go of old ones". In the modern age customers need to visit branches for a positive experience and not for a frustrating chore. The Banks can make this happen only with improved service level, product style and range, and ambiance.
In the aftermath of internet banking, the bank branches are not being viewed as endangered species but as the cornerstone of customer relationship development and management. Branch networks that can increase customer traffic customer, match right product to the right customer, and can deliver personal services that complements other channels can reap large benefits! The Boston Consulting Group has identified three approaches that can help banks achieve these goals.
Recreating Branches as small Entrepreneurial Businesses: Many bank branches are bureaucratic in their operations, and run on industrial principles. They are centrally directed and inflexible on their product and service. Staff are directed and trained to perform their duties without initiative or sensitivity to any given circumstances. In short the focus is on controlling costs and following rules instead of generating revenues through solving customer problems. To meet customer expectations and take advantage of relationships and selling opportunities the need to be more open minded. One way to achieve this is to create a more entrepreneurial organization at branch level. However, this requires great care in implementation in order to avoid increasing risks or loosing control. One of the ways to achieve this is to make the employees feel as owners of the enterprise by letting them own the shares of the bank, and letting them have authority liberty over administrative, credit, and pricing decisions. Also letting the employees have significant bonuses based upon their performance during the year.
Creating a More Rewarding Customer Experiencing: Many customers are not sure about their banking and financial needs and respective solutions. They therefore desire more interactive and personal banking relationship that offers explanations of their problems clear explanations and relatively painless solutions. Providing this depends in part on adopting of a retail mindset which runs counter to the image of staid reserve that banks have traditionally sought to project. It is increasingly clear that the banks can learn from the experience of the retailers, particularly regarding service mentality, ways to build loyal and trusting relationships, brand consistency, and store ambiance. For instance, many banks in United States have started to have play places for children of their customers. Also the staff attending the customer on the counter has the liberty to make little decisions like allowing credit up to certain level depending upon the customer relationship.
Simplifying the Product Range and Selling Proactively: In many banks the product ranges for different types of cards, mortgages, and deposit accounts are set by the specialist product managers. At best the products are well equipped for sale purposes but there is typically limited product coordination. To create a better branch banking experiencing the product design and range needs to be thought out from the point of view of both the customer and account manager. Banks must ask themselves the following questions: Are our products properly segmented and priced? Do we have the right range for each segment? Are our products too complex for our customers or sales capabilities? The key is to match products to customer needs and to know whom to target and when. Banks can do this more proactively. In our multichannel era, customer initiative could be captured not only locally but also centrally as the customer uses the Banks' website or makes contact to the call center! The goal is to make a more active sales culture that does not wait for the customer to appear at the door, and that leverages each visit to the branch. Essential to this task is the improved customer MIS and the development of tools that allow frontline staff to spot trigger points in customers' lives that drive financial services needs. Successful banks know a lot about their customers and interact with them frequently. Such knowledge and skill can be converted into profitable relationships.