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Who cares about branch transformation?

November 7, 2013 by Terrina Rishel — CEO, ATM Authority, LLC

Thinner margins, loan losses, economic pressures, expensive regulation and stiff competition have created the need for banks to conduct an in-depth analysis of their brands and how they can remain relevant in today's challenging marketplace.

Financial institutions have struggled to improve their bottom lines, and have been forced to re-evaluate how they do business. They understand that cost-cutting measures must be balanced with revenue, or eventually it will lead to increased customer attrition.

FIs are realizing that if they want to survive, they must create a long-term strategy that is not centered on "evolving over time," but rather is focused on radically transforming the way they perform in the near term.

The data is clear that change is inevitable; demographics are growing more demanding, financial markets will be difficult for the foreseeable future, and savvy competitors are using technology solutions to attract the best consumers.

For most, branch transformation is the end goal. However, a specific list of objectives within this strategy must be adopted in order to achieve it this goal.

Key branch transformation goals

Reduce costs: FIs desperately want to reduce costs by eliminating inefficiencies and by leveraging centralization and innovative solutions.

Expand consumer base: Both non-traditional as well as, traditional banking sources are fighting for the same consumers. The challenges of attracting Millennials while catering to the older generations has become a delicate balance.

Migrate expensive transactions: FIs need to find ways to move the traditional teller transactions (1:1 teller-consumer ratio) to a more cost effective channel without creating customer churn.

Expand markets: With tighter capital budgets, FIs need to use solutions that allow for branch expansion without the hefty price tag of the large brick-and-mortar footprint.

Increase revenue: With all banking leadership, finding ways to increase product sales and revenue growth is top-of-mind. Central in many branch transformation strategies are intensified revenue initiatives. 

One of the interesting trends that has begun to emerge is an ever-shifting focus of capital budgets. As more FIs commit to less tradition in their service delivery models, we are seeing a pattern develop of less spending in certain areas.

Monies historically set aside for ATMs and other traditional branch equipment have, in some cases, been re-allocated to solutions that focus on branch transformation goals specifically.

Bleeding-edge investors in video teller devices have discovered that this product is positively affecting all of the above branch transformation objectives. Therefore, they have captured the lion's share of capital expenditures recently.

With solutions where the teller controls the device and the consumer does not need to use an ATM card, FIs have been able to migrate expensive transactions into a new, centralized, remote-assisted channel — with a 90 percent consumer acceptance rate.

When you understand "who" cares about branch transformation and why they are so focused on it, it becomes apparent which solutions are appropriate.  Moreover, FIs are not looking to transform their less expensive transaction channels, which is reflected in their spending choices.

Branch transformation goals aim to streamline branch networks so that processes are centralized, costs are suppressed, and employees are able to focus on revenue. This will remain a hot topic for many years to come. As we all know — true transformation takes time.

Read more about banks and credit unions.

About Terrina Rishel

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