The banking industry is feeling the heat from digital disruption now more than ever before. Innovative technology, fierce competition and ever-rising client expectations accelerated the delivery of initiatives like online banking, e-wallets and mobile apps, leaving many to wonder what this massive shift to digital means for the physical branch network.
As the industry questions the viability and makeup of the physical branch in today’s digital age, two innovative leaders in banking, Cort O'Haver, CEO of Umpqua, and John W. Smith, CEO of DBSI and CFM were asked to share their visions of what the Branch of the Future should look like in the closing keynote of this year’s FinXTech Annual Summit.
Read on for the panel highlights, predictions on what’s ahead and insider insight on what Umpqua’s doing to move their business forward.
What do clients want from today's branches?
“Convenience, convenience, convenience!”
After surfacing that 70% of clients who make the switch from community banks to big banks do it because of the technology, ease and convenience of going digital, Cort explained how crucial it is for smaller banks to move quickly in these efforts to retain customers and deliver to their needs and expectations.
John shared additional considerations, adding that clients also want:
- Advice from branch staff on how banking products can help them through life’s journey
- Robust problem resolution, when needed
- Choice in who they bank with (instead of getting the next available teller)
Do changing consumer behaviors and the reactions to technology in the branch have to do with age? Are boomers demanding more technology, or is it just millennials?
Umpqua has found a common thread between the users of their technology across their entire branch network – and it has more to do with business acumen than age.
Though you’ve likely seen Umpqua’s captivating branches that illuminate city street corners, Cort shared that digital solutions have even become the norm for business owners in remote, rural areas with smaller branches. Just like farming communities eventually embraced the tech to more efficiently plow fields and harvest crops (even using drones!), clients ultimately started to adopt banking technology because they understood how it could bring convenience and ease into their lives – even if they weren’t asking for it.
In addition, John shares that consumers really aren’t asking for one specific solution. They won’t know what they want until we show them – but they do know they need relevant, convenient and better ways to bank (seeing a trend here?).
What are the latest technology innovations Umpqua and DBSI are developing to address changing expectations?
Meet Go To – an app from Umpua that delivers customers a personal banker, right from their pocket. The app, formerly named Best Financial Friend (BFF) was piloted in Portland, OR and bridges the gap between personalized service and the convenience of mobile in a concept Cort calls “human digital.”
Need advice about a loan? Want some help planning for your financial future? Want to transfer funds right away? Easy—just open the app (no branch visit required). From there, you can choose who you bank with and begin a live chat that looks just like a text message conversation where you can perform any transaction from the palm of your hand (except for getting cash).
The app will allow businesses to prefill out their deposits online or via mobile, so financial institutions are aware runners are on the way. After the deposit auto-populates into their core, the deposit is processed live and proper fees are assessed. Lastly, the business receives an automated receipt, which indicates that the runner should be back very soon (no more Starbucks runs on your time!).
Model branches: What's working?
If you ask the market which bank consistently gets it right, the answer is almost always Umpqua.
Umpqua’s larger retail spaces, notably in San Francisco and Portland, are places where the word branch just doesn’t do justice. Cort refers to them as “branding billboards,” designed to bring banking and the community they serve together in a fun, approachable and meaningful ways.
The possibilities to reengineer the experience are endless. Like Umpqua, you could...
- Replace teller lines with yoga mats to host group classes
- Throw the latest Disney movie on the screen for a kids’ movie night
- Enable some retail therapy by showcasing the products of a local business
Another area where Umpqua has seen success is their method of measuring the effectiveness of their branch network. In the last 90 days, Umpqua has made the decision to close 30 branches – and will be down to 200 by the end of the year. If you’re thinking this isn’t a good sign, it’s actually quite the opposite – deposits at Umpqua have grown!
As for DBSI, John explained that the science of transformation is incredibly complex. The art of finding the right design, technology and process to get to your desired state while navigating the barriers to effective sales and service isn’t an easy skill set to master.
In a real example of mitigating these barriers with a financial institution based in Utah, John highlighted what's working:
- Your branch should attract, pop and sell for you 24/7!
- The average consumer has 16 banking products... but only about 2.5 with their primary FI (meaning they’re getting 84% of their banking products from someone else!) When implemented strategically, digital signage can help clients discover all that you offer.
- You’ve invested heavily in mobile and digital tools….but it only has a 30% adoption rate. Leverage technology to help customers gain confidence using these solutions.
- Let customers choose who they bank with in your design (teller towers and flex spaces for staff) alongside a technology called Remote Transaction Assist that enables start to finish service with transaction processing anywhere in the branch!
- If you want cost-effective problem resolution, try Expert Nearby – a flex space for clients to work with specialists in a secure environment (cost of travel and inconvenience of aligning calendars not included).
What does the future look like for branches?
Less physical branch environments, more convenient ways to bank.
John predicts we’ll be seeing micro branches pop up in unexpected, yet high-traffic areas – malls, grocery stores, even the parking lot next to Dutch Brothers Coffee! The mini model screams convenience – more locations, smaller footprint, and available to customers 24 hours a day, 7 days a week.
Cort sees the high-tech, high-touch trend continuing. Expect the full roll-out of Umpqua’s human-digital banking strategy (including the Go-To app concept) to continue for the rest of 2018.
What lessons were learned in the process?
Regardless of how great an idea sounds, when it’s brought to life it may not always be what’s best for your business or customers.
“Don’t belabor the decision to let go of an initiative when you know it’s bad – whether that’s the vendor, the customer experience, anything – make the call early enough so you can recover faster,” - Cort O'Haver
Sometimes, it’s as simple as choosing the right partner and asking for the opportunity to leverage their strengths. Cort recommended that for anything your business doesn’t excel in, look for the right vendor to help you get to where you want to go – and make partners a part of your lives.
However, when the technology does work and you know it’s right – engineer how to bring the client along. Communicate the benefit to the customer (think ease and convenience) instead of positioning your solution as a device that’s replacing someone.
“It’s all about adding value,” says Cort. “You have to ensure that both staff and customers know that humans are a part of that.”
As far as DBSI, John explains that simply designing a new space and implementing technology does not guarantee success.
"Build it and they will come doesn’t work – and you truly need to "operationalize" the design, process, technology and people to align to the strategic intent of the project. - John W. Smith
Staff may not be clear on how to use your new technology and haven't built up the confidence to deliver this new experience to clients. If this is left to chance, the outcomes are typically not ideal. Branch staff need a playbook to ensure the effects of transformation are realized. It starts with understanding the operational/strategic intent behind new designs and technology, how to use the new technology, along with having talk tracks and choreography on how to interact with customers in the space.
In a final statement, Cort brought everything together with an important message:
“You need to let your people know that you, as a financial institution or partner, have their back. And it has to be you and me, me and John, everyone – it can’t just be AI.”
So, while digitization continues to grow, it's still clear that both Umpqua and DBSI still see a place for the physical branch in many years to come.