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May 17, 2011 by Steve Williams Steve Williams

Conversations in the Branch and Transactions in the Cloud

400 million square feet! Can you believe it? 400 million square feet!

That’s a rough approximation of the “retail” space of the 118,000 bank and credit union branches nationwide. In recent years, the rise of remote delivery channels has served to accelerate the “alive or dead” debate about branches among industry pundits. For the most part, bankers don’t believe the future of branches can be boiled into simply a Dead or Alive answer. Rather, most bankers envision a certain sweet spot with branches and e-channels that is often described as follows:

  • We want our customers to use e-channels for routine transactions but come into the branch more for financial advice.”
  • “We want our branch staff less focused on transactions and more on sales.”
  • “We want people to begin their relationship in the branch and then use our remote channels to manage their accounts.”

During 2011, I have heard this theme upgraded and repackaged a bit more into a powerful idea:


In a nutshell, bankers are still striving to position the branch as a place where customers will seek advice concerning their financial position and select products and services that are customized to their unique situation. Many believe the complexities and nuances of one’s financial life make it difficult to conduct banking in a purely remote fashion. Sure, somebody can check a balance, transfer money or even fill out a loan application, but most believe that the “online only” customer will not become the norm in our lifetimes.

In addition, bankers are seeking to steer their investment in branch staff away from transaction processing and more toward revenue-producing activities. However, in our firm’s recent benchmarking of mid-size banks (The Cornerstone Report), we found the typical branch still conducts 100 times as many teller transactions per month as new accounts opened. There is still a long way to go as bankers seek efficiency improvements by expanding the usage of self-service channels. For this reason, banks are working hard to integrate channel usage into their customer profitability calculations so they can better understand how much income online customers drive versus the traditional “lobby lizards” who chat up the tellers and eat all the doughnuts. Our industry is abuzz right now with efforts to make this channel transition and redefine the branch’s role.

Because the vast majority of financial institutions seem to be aping toward this “Conversations in the branch … transactions in the cloud” model, I sat back and tried to conduct my own personal “reality check” on this vision. Sure, it sounds great in strategic plans and BAI conferences, but how will it really play out? In scrutinizing this model, I identified five key realities that are important for bankers to understand:

Reality #1: In-person “conversations” don’t require a branch. While vibrant, personalized conversations may be critical to drive future bank revenue, they don’t have to occur on our terms at the branch on the corner of Elm and Mockingbird near the Arby’s. Our customer may think, “Get your lazy butt over to my place and earn your money.” Outbound sales may become as common as branch sales in the future. It’s also important to take a close look at real, day-to-day human behavior. Conversations don’t always start with an in-person encounter. Instead, they can start with a Web inquiry, a phone call or an email. Many consumers will want to feel out the potential payoff of sacrificing their precious time for an in-person conversation with these initial communication methods. [See my partner Terence Roche’s excellent piece, “Sales Culture in the Cloud.”] Importantly, consumers often start a financial purchase by establishing a contact with someone they view as trusted and competent. Rather than praying customers will stumble into a branch for conversations, banks should be engineering how customers can easily establish a personal contact with someone at the bank the moment an inkling of a financial need arises.

051711bReality #2: Creating a financial retailing “experience” is harder than serving up coffee or iPods. For years, branch designers and marketing experts have waxed about making branches a unique retail “destination.” We’ve seen some interesting ideas with the old WAMU Occasio branches and the couch-cozy, coffee-pumping Umpqua branches. For the most part, these have made branches more inviting and less institutional, but they haven’t driven in droves of new customers seeking an edgy retail “experience.” Is this pleasure-seeking foot traffic really something we can hope for? 051711cCan signage, couches and java really boost new sales volume, or is the challenge much more complex? Don’t get me wrong. The average branch office should definitely look cooler than it does today, and no one minds a little high-brow feel when they come to talk about their money. We just need to get over the idea that families will look forward to the Saturday drive down to see the banker and young couples will hold hands and sip Cappuccino as they while away the afternoon talking about home equity loans and tax-deductible interest.

Reality #3: Conversations totally suck without knowledge. In thinking about a future vision of the branch, it is absolutely critical that bankers remember we do not sell consumer gadgets, edible treats or stimulating entertainment. Here’s the cold, hard truth: we sell knowledge, and to sell a lot of knowledge we need to be … what’s the word? Oh yeah – knowledgeable. Bankers should rely less on what the branch looks like and more on what the staff knows. Building meaty staff skills will be the heavy lifting in the next era of banking. One caveat: please don’t confuse building knowledge with the last 20 years of sales culture. I’m not talking about a top-five “annoy my customers today” calling plan or an inane next-best-product message on every mouse click. I’m talking about financial staff that can birddog any payments issue, explain consumer/mortgage loan products, quickly help a client set up bill pay and alerts, and discuss the ins and outs of college and retirement savings with ease. Here’s a challenge: look at the training budget per employee for branch staff and see if it feels like the resource allocations for effective future conversations are lining up well!

Reality #4: Lightning-fast and pain-free fulfillment makes conversations have impact. The Apple store is more than good looking. It’s a work of art in the fast and painless fulfillment of purchase transactions. Enrolling in NetFlix on a child’s Nintendo platform is a beautiful portrait in the study of “user friendly.” As we try to drive a more high-value branch experience, one of our industry’s Achilles’ heels is this: the processes that follow a sale regularly make our customers frustrated and impatient. While I don’t want to partake in another flogging of our industry for its poor customer information, processes with re-keying of data or dumb delays in activating accounts, it’s important to remind ourselves that only the banks that knock out the hard work of systematically improving fulfillment processes will see any meaningful revenue from their investment in stronger sales conversations.

Reality #5: Great conversations are cumulative, not one-time events. If banks are going to drive greater and deeper financial revenue through their customer bases, they must get over the “white whale” of a dream conversation where an individual walks into a branch with a simple question and leaves with Dick Kovacevich’s eight great financial products sold. Nice dream … doesn’t happen. Talk to any great banking relationship manager and you will find their secret sauce is cultivating cross-sell and deeper relationships through conversation after conversation, month after month, year after year. They build on one impressive sales and fulfillment encounter to be ready for the next moment of truth with the same customer. Rather than pigeonhole the branch as the dedicated “walled-garden” for conversations, bankers need to remember that success will come by equipping relationship managers with an awesome assortment of in-person, voice, and electronic conversation tools. We live in a world where conversations can take place anywhere, anytime, anyhow. Technology today can help accelerate the “mating dance” of building trust with a customer because communication can be more responsive, and useful content can be piped to the client in real-time. (Think of the visually appealing mortgage product comparison emailed immediately to a client with a personal phone call to discuss it five minutes later.) So, GonzoBankers, look around at your bank and ask yourself these questions:

  • How are we better equipping relationship managers to carry on conversations with customers?
  • How are we making the conversation process efficient and pain-free with technology?
  • How are we making our relationship managers smarter with tools, content and training?
  • How are we keeping track of these important conversations so that we are on our game next time we talk to the same customer?

While branches aren’t going anywhere soon, it’s clear that their overall cost, role and positioning will remain a significant strategic issue as bankers watch Borders book stores and Blockbuster video outlets shutter their doors around us. Morphing our branches into steroid-juiced Apple stores for financial products is not as easy as it sounds. Re-positioning banker knowledge and innovating the conversation process will be much harder than upgrading desks and coffee makers. To begin this journey, bankers need to start with a hard look about how customers actually behave and how they prefer conversations to actually unfold as they navigate their financial lives.

Notes from Williams:

  • My thanks to my friend and branch-genius Steve Reider at Bancography for keeping me informed on the number of branches and average square footage nationwide.
  • Tip of the hat to my buddy Butch Leonardson at BECU for passionately promoting the value of “conversations.”

Strategic Vision in Need of a Reality Check?

If you’ve acknowledged that it takes more than comfy couches and free coffee to create the ultimate customer experience but could use a little help developing and maintaining a strategy to get – and keep – customers engaged, let’s talk.

For more than a decade, Cornerstone Advisors has been singularly focused on assisting banks and credit unions develop and implement focused strategies to improve their competitive position and bottom line. So what are we waiting for? Let’s get a conversation started!

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3 Responses to “Conversations in the Branch and Transactions in the Cloud”

  1. I believe that financial institutions that dress-up their facilities with contemporary stylings, coffee and comfy chairs are trying to make the experience more enjoyable, more memorable for those who come in. I don’t think they expect a flood of new customers to come pouring in opening accounts simply because they have cool branches.

    There may be a few exceptions here and there, like Union National Bank’s “Gold Cafés” (which failed) and ING Direct’s Orange Cafés (which seem to work), but I’m pretty sure that most FIs haven’t deluded themselves into thinking they will ever be a “retail destination.”

    It might help to view these modernized, visually-appealling branches as a customer service investment vs. a customer acquisition strategy.

  2. Rob Stuart says:


    As usual you nailed it!!!!! the question still remains how can we turn a banking transaction into the similar level human satisfaction as with purchasing Rush 2112 from iTunes…..? We need to change human preception of banking to a want versus a need.


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