News

Research: Strategies for transforming the branch channel

April 30, 2014

Branch reinvention has been underway for some time, but has accelerated recently as financial institutions seek ways to improve branch efficiencies and effectiveness. One promising approach is the new hub-and-spoke model being tested and deployed by some FIs.

In new research, "Update on the Full-Service Banking Branch Channel," Mercator Advisory Group reviews the transformation taking place in banks and credit union branches.

Ed O'Brien, director of the banking channels advisory service at Mercator Advisory Group, and author of the report, commented on the changing nature of the branch:

Most financial institutions still see the value of branches even though some are reducing the number and size of their branches to reduce costs. The question isn't whether branches are relevant — it has been established that they are. Rather, the role of today's branch channel is changing fundamentally from just a transactional channel to a more effective tool to educate and dispense advice to existing and potential customers for the sake of cross-selling and generating new revenue as well as deepening customer relationships.

Highlights of the report include:

• new branch configurations and tools FIs are deploying to improve branch efficiencies and effectiveness;
• strategies to optimize customer satisfaction through varied levels of touch and interaction;
• description of a new hub-and-spoke model featuring interconnected branches of various sizes and configurations that serve differing purposes; and
• Mercator Advisory Group survey data on consumer willingness to try new methods of branch interaction.

One of six exhibits in the 10-page research note: