Declining Branch Traffic – Armageddon or Opportunity?

Mobile Banking Means Less Opportunity to Sell Face-to-Face

Any banker who hasn’t been in a coma is aware of the competitive disadvantage their bank or credit union can face if they don’t find a way to connect with the increasing number of customers or members who rely predominantly on electronic and mobile banking. Translation: they’re not coming into your branches and opportunities are being missed!

If you don’t have face-to-face opportunities to find out customer challenges, life events and their financial goals, how in the world can you build trust, offer solutions and generate more revenue? The immutable facts are:

The necessity to visit your bank or credit union branch for basic transactional activity is steadily declining. Since 1992, branch volume has been halved while average transactional cost has doubled (FMSI 2013 Bank and Credit Union Teller Line Study)
Most of you have invested tens of thousands of dollars (and hundreds of thousands for some) in training your staff to sell face-to-face but increasingly they don’t want to see your face. Call nights are marginally effective and–be honest–your customers and staff don’t like them anyway
The most current research finds that one out of ten customers or members say they will leave your bank or credit union in the next year even if they are satisfied with your service! (recall all the money you spent on training to provide good service–how ungrateful they are)

What’s a banker to do? Not to worry. You can blunt the effect of these frustrating trends and even thrive by choosing one of two revenue generating models.

Relationship Selling vs Transactional Focus

There are all kinds of banking business models but here are two simple and easily understandable ones to generate revenue. Every bank and credit union needs to choose one to focus on:

Highly transactional, focus on walk-in and call-in customers, minimal follow-up, less personal service, low cost
Relationship management, business generated as a direct result of consistent outreach, more substantive conversation to build trust, CRM software and member profiles create member and customer loyalty and relationships that lead to future business.

So how does this affect you? The transactional model is still workable for some banks and credit unions. However, we feel it has the odds stacked against it and the customer relationship management approach in number two offers more opportunity. You decide.

Transactional Business is Becoming a Losing Proposition

You may not be feeling much pain today but this choice is like the old Fram Oil Filter commercials where the auto repair shop owner says “You can pay me now (for the filter) or pay me later (for engine repairs)”. Rely on decreasing transactional business with its increasing costs is like not changing your oil filter – at some point, we believe you’re likely to pay dearly with a broken down revenue generating machine. However, use CRM software and build a banking relationship management culture where your people connect with customers or members – especially those who don’t visit branches – and your organization will grow organically (Accenture Study, Banking 2012: Revenue Growth and Innovation).

We still list the high transaction model as a choice because although it’s workable for some, we just can’t say for how long given the trends of decreasing branch traffic and unprofitable transaction business. Progressive banks and credit unions (and that’s how we describe our clients) are maximizing the customer relationship with existing members or customers. Consider, if you’re relying mostly on transactional business, your base could very well be declining because many of them are looking elsewhere for loans and other products. We agree with Roger Beverage, President and CEO of Oklahoma Bankers who said,

“If banks don’t take action to build strong relationships with
more of their customers, as time goes on, they may be earning
a ‘satisfactory’ ROA on diminishing assets and be on their way
out of business”.

What You Can Do to Gain Customer Loyalty and Revenue

The sad thing about Mr. Beverage’s statement is you might think your members or customers are still part of the fold because you have their online banking, their checking and a credit card. Having those services doesn’t mean you have their loyalty or they will contact you when they have a need. In the meantime, your members are going elsewhere for loans, financial advice and planning, etc. These people are “at risk” of being lost forever.

Here’s what you need to do to build the customer relationship and create organic revenue:

Get your staff trained in relationship management skills. They differ greatly from basic cross selling skills
Engage customers or members and make a personal connection
Build an intimate understanding of their financial goals, anxieties and dreams
Create profiles in your CRM software and update consistently
Use this information to plan outreach calls and tailor product suggestions around their needs and expectations

Some experts in the industry will tell you the way to gain the business of people who don’t come into your branches is to double down on mobile banking. That’s valuable but not the answer. Enhanced mobile banking is positive but it also means less personal service and less high touch. What’s your level of confidence people who rely solely on your digital/mobile model will call you when they have a need? On the other hand, what’s your level of confidence that highly engaged members with whom you have a personal connection will call you? Much higher I would say. (By the way, outreach is not outbound telemarketing.)

Benefits of a Relationship Management Culture

Thanks for reading our post. Contact us to learn about the benefits and results you can expect from a relationship management culture and how we help our clients build one.

Agree or disagree? Do let us know what you think by scrolling down and commenting below.

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