Financial institutions largely agree they need to revamp their branch infrastructures, but hardly any have a clear idea of what the end product should look like, according to a new study by Celent, a Boston-based research and advisory firm.
As a result, many financial institutions seem to have fallen into an abyss of inaction, doing little to mitigate some of their biggest problems – falling branch traffic, mounting costs to modernize their branches and outdated operations. Just 11% of the respondents in the study said they have a clear vision of how they'll transform their branches. Nearly half (44%) said they weren't even working on developing a vision.
The problem isn't that financial institutions think their branches are fine the way they are. Four out of five respondents in the study, which was based on research from Celent's Branch Transformation Research Panel and conducted in May and June 2015, said they know transforming their branches is imperative. Panelists gave their own branch channel infrastructures an overall grade of C+, and less than a third said any aspect of their branch networks were very good or excellent, Celent found.
Competing priorities and lack of funding are big impediments, according to the study. Cost or complexity, legacy systems and culture are also significant hurdles. Opinions on what it takes to transform branch infrastructure vary, too. Only 57% of the study's respondents believe branch transformation means making radical changes to their branch operating models, 27% said only modest changes were necessary and 14% said only refinements were necessary.
"The lack of a strong consensus suggests that most respondents are not very far along in their journey," Celent Senior Analyst and report author Bob Meara said.
Financial institutions are increasingly focused on up-to-the-minute digital operations, but few have invested in branch effectiveness for sales and service, the study also found.
"The result is too many banks with relatively modern digital channel delivery infrastructures alongside dated, ineffective, and inefficient branch infrastructures," Meara said.
In particular, five technologies – branch customer experience surveys, desktop and process analytics, digital appointment booking, video analytics and workforce management – can help keep branches viable if they take a more modern approach.
"Collectively, they are the 'missing link' in branch transformation efforts," Meara noted.
However, many financial institutions either aren't using the technologies in their branches or aren't using them effectively. Branch customer experience surveys, which have long been a tool for improving face-to-face interactions, are often done via phone or email, making them less timely, for example. Plus, they often aren't systematically tracked or integrated into performance scorecards. Most financial institutions track and analyze members' digital use and call center interactions, but few use desktop and process analytics software that can provide similar, detailed views of activities performed by individual branch employees on their tablets and workstations, the study added.
Digital appointment booking, use of workforce management software to minimize overstaffing and use of video analytics to understand customer traffic patterns are also underutilized, especially in financial institutions with less than $1 billion in assets, according to the study.
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