BFSI VISION Branch Transformation

1. Hyosung Releases Branch Transformation Best Practices Guide for Financial Institutions

Source- Business Wire
Hyosung, the fastest growing supplier of ATMs in North America and the market leader in Branch Transformation solutions, recently released its newest research paper titled, "Reality Check Getting Past the Hype of Branch Transformation: The Top 7 Concepts for Getting Transformation Done Successfully" as a part of its ongoing efforts to provide actionable advice to financial professions who want to help their organizations develop and execute branch transformations.

In the last few years, a lot has been said about the need for financial institutions to rethink their branch strategies. Institutions of all sizes, including banks and credit unions, recognize the need to revolutionize the consumer banking experience.

"The urgency for institutions to transform their branches is intense," said Andy Orent, President and CEO, Hyosung Americas. "Robust digital channel adoption and rapidly changing consumer behavior have made the branch as we know it today irrelevant. It is clear that institutions need to transform branches to make them more cost-effective, while serving crucial customer needs."

Even as mobile and digital adoption continues to increase, branches remain an important touch point for consumers and closing them is not always the best option. Hyosung has recognized that there is a challenge for banks and credit unions that are faced with the shift in client demand and how retail customers want to interact with their banks. As a result, institutions must figure out how to transform quickly and effectively in order to reduce the expense of the branch model, while keeping up with rapidly evolving consumer demands.

"What we have seen is that while many institutions have embraced transformation, some are quickly falling behind and simply do not know where to start when exploring a branch transformation project," continued Orent. "The industry recognizes the benefits and demand, but as with many new developments, understanding how to best address a project and take action can be the most difficult step for institutions to take. We've pooled our internal expertise to develop this research paper to help firms understand this industry evolution and make more intelligent decisions when it comes to branch transformation."

Following the work Hyosung has completed with a variety of financial institutions, the firm has developed a list of best practices to help guide the industry through similar projects. Topics covered in this white paper include:

How to create and effectively manage a positive self-service experience

Best practices for developing a holistic approach through the integration of people, processes and technology

Understanding and analyzing the volume challenges resulting from the automation of transactions

Interpreting and understanding the data needed for transformation strategy

How to align transformation with institution and branch business goals

2. Powering the Branch Transformation

Source- Credit Union magazine
Technology definitely plays a role in modern credit union branch design—but people and processes carry equal, if not greater, importance, says Chris Gill, senior director for Diebold Advisory Services. Diebold is a CUNA Strategic Services alliance provider.

"The goal is to create environments where members can engage with staff and develop deeper relationships and discussions around financial needs," Gill says.

Many credit unions are doing away with the traditional teller line, opting to install automated technology and create spaces where staff can engage in higher-level conversations with members, according to Gill.

Some branches have kiosks with ATMs, and the staff don' touch cash. "Employees greet members within 10 seconds to see why they're there, walk them to a self-service device, and show them how to use it," Gill says. "In the future, kiosks will automate check dispensing and cashing, as well as coin dispensing."

Automation doesn't equate to self-service, notes Terry Page, financial center manager at $1.8 billion asset University Federal Credit Union, Austin, Texas. He points to consumers' comfort with Southwest Airlines' ticket kiosks, where associates guide you through the process. This contrast with the confusion and frustration often generated by understaffed supermarket self-checkout lines.

"Southwest has successfully increased its level of service by employing associates who help create a positive customer experience through a sense of urgency, education, and building the member-customer relationship while decreasing the barriers between the customer and h is or her flight," Page says.

With a traditional teller line, an employee spends only 10% of his or her time working with members versus 85% in modernized branches, Gill observes.

Novel elements also can lure consumers. IntegrUS Credit Union in Dubuque, Iowa, with $19 million in assets, unveiled a full-service branch with a wireless café/coffee shop.

It's all about providing a great consumer experience, Gill says: "That leads to greater satisfaction, loyalty, and differentiation from other financial institutions."

3. The Next Generation of Bank Branch Employees

Source- Bank Tech
Banks need to change their model for branch staffing if they're going to cut branch costs while providing great service.

Banks are struggling to figure out how they can cut costs in their branch networks without damaging their customer experience or relationships. If they're going to cut branch costs, they must look at the biggest cost in most branch networks.

Branch networks make 47% of banks' operating costs and 54% of that branch expenditure goes to staffing, according to research by Diebold and Forrester. Those employees are a key driver of the branch customer experience, and that experience still matters a great deal to customers, Raja Bose, vice president of branch transformation and advisory services at Diebold, said during a presentation in New York City last week.

Branch experience is still the biggest factor in customer satisfaction scores for banks -- even more than fees or rates, Bose said, citing research from J.D. Power & Associates. Simply cutting branch staff to reduce costs will likely hurt that experience. To cut costs while maintaining a great experience, banks need to change the profile and training of their frontline branch employees.

"The No. 1 success factor [in branch transformation] is employee training and education," Bose said. "Do you have the right profile of employee? What are you incenting them on?"

The old model of separate roles for tellers and bankers in the branch will no longer work. Extraco Bank, a community bank in central Texas, has completely reformed its branch staffing model over the last few years. James Geeslin, vice chairman of Extraco, said that, if banks are going to reduce their branch staff, each remaining employee must be able to do more tasks in the branch, whether that's conducting a transaction, offering financial advice to customers, or showing them how to use an ATM or mobile banking app.

Extraco had too much manpower in its 20 locations using the traditional staff model of tellers and relationship bankers, Geeslin said. "Sometimes when one was busy, the other didn't have anything to do." The answer was to reduce staff while training employees to fill multiple roles in the branch environment. "We changed our job design and hiring model. We might have an employee who is a good teller but can't recommend products or services. They're more of an order taker. As we had natural attrition, we started to look for a new kind of employee."

That new kind of employee was comfortable going up to the front of the branch to help a customer with a transaction, or going to a cubicle in the back of a branch to conduct a complex operational task.

"If you walk into one of our branches, you can't tell who the branch manager is. Our managers are working managers. They're all over the branch helping take care of customers." Some of Extraco's 20-plus branches now have as few as two staff members.

This new type of employee profile and training model, which Extraco based on the SWARM methodology used in other industries, has led directly to a 20% increase in customer satisfaction scores for the bank.

NBT Bank is working with Diebold Advisory Services to remodel four of its branches. David Raven, president of retail banking at NBT, said the new type of branch employee must have different inherent skills from the traditional bank teller. As part of the remodeling initiative, the bank is looking to hire staff with a different skill set.

"We need staff who have a stage presence," Raven said. "They need to be confident in engaging the customer in a conversation about their financial lives." New branch hires are being trained in every part of the bank's organization, so they can share more knowledge with customers asking for advice or product recommendations.

Extraco also looked for people who could be more conversant with customers, and it developed a 12-18-week training program for new staff to enhance their ability to connect with customers conversationally, Geeslin said. The program emphasizes situational training with partners to help build those conversational skills.

As banks move away from the old teller model, they also need to get more transactions automated. Bose said there's no point in investing in all of this new employee training if those employees wind up conducting transactions all day like traditional tellers. For both Extraco and NBT Bank, that has meant moving ATMs to the front of the branch and training staff to show customers how to use them.

"We had a test and learn with one bank that had 26% of its deposits at ATMs," Bose said. "They moved the ATMs in one of their branches and trained the staff there to teach customers to use them, and the ATM deposits increased to 54%, while teller deposits dropped by 19%. And that branch outperformed its peer branches in sales, because the staff could spend more time engaging with customers."

4. Branch Transformation: The Data Behind the Trend

Source- Codigo
With traditional transactions continuing to move toward mobile and online banking, financial institutions are considering how the branch fits into their distribution strategy. While the dust seems to have settled around financial institution closures caused by the banking crisis of 2008, many are still trying to figure out what's next for the banking center.

In 2013, branch counts in the U.S. actually netted positive growth, but a recent study conducted this year shows branch count to be declining. Amidst the fluctuating data and varied analysis, Codigo decided to ask the industry directly what it had planned for banking centers this year and into 2015.

Many in the financial space have published opinions on the direction of branching, but few have accompanied them with statistics. In an attempt to remove some of the confusion around the popular topic of Branch Transformation, Codigo surveyed over 150 Banks and Credit Unions across the country to ask what they have planned for their retail locations.

None of the respondents were from institutions with over 250 total locations. This is unique because most of the press around branch closures and transformation tends to be centered on institutions of that size and above, while ignoring trends within the vast majority of Banks and Credit Unions in the United States and abroad.

The survey inquired about building, remodeling, and closing locations, as well as branch design, staff, and technology – all to discover exactly what "branch transformation" includes.

Respondents were U.S. financial institutions evenly distributed throughout the country, with credit unions outnumbering banks by a little more than 2 to 1. Institution size varied from smaller community banks to major, multi-state networks with the majority representing those with 1 to 25 branch locations.