The Branch of 2027: What Will Consumers Expect?

In the banking industry, one-time differentiators quickly get bargained down to “table stakes,” a minimum threshold for consideration by the consumer.  For example, when 24-hour call centers were first introduced, a customer may have noted “I chose Metro Bank because they have a 24-hour call center.”.  But then others match that offering, and the consumer’s sentiment quickly changes to “I wouldn’t consider any provider unless they offered a 24-hour call center.”

Fast forward a couple of decades and you can substitute “online bill bay” or “mobile banking application” for “call center,” but the decision evolution remains the same: differentiators quickly become table stakes. 

So what are the next wave of differentiators for branches?  And are there any that might provide a more durable, longer-term advantage before becoming the minimum expectation for consumers?  

Here are a few tactics bankers may want to consider, to differentiate their branches in the eyes of local consumers.

Become the new “third place.”  A sociologist defined the term “third place” to encapsulate those community gathering spots beyond a consumer’s typical two primary locations: their home and their place of work/school.  In this era of hybrid work, can your branch offer a quieter venue than the local coffeehouse for freelancers and other members of the laptop crowd?  Consider repurposing excess space in large branches that were built for a previous, higher-transaction era of banking with coworking stations, available for local consumers to use.  Offer Wi-Fi, coffee, and even access to a printer.

For that low cost, your brand gains exposure and prominence with a group of professionals likely high on your institution’s target market-segment list.  Take it a step further by hosting the work of a local artist each quarter, along with an opening reception in the branch with the artist.  Whether someone stops in to use the Wi-Fi or view the artist’s exhibit, they’re gaining exposure to your brand and familiarity with your offerings, to ensure that when their next financial need arises, your branch will be top of mind.

Leverage technology to extend hours of operation.  Even in the hybrid work era, many jobs still demand on site presence, and so most employed consumers still commute to work every day.  Many American cities continue to see significant suburban and exurban sprawl – consider that now, outer suburbs of cities, such as Atlanta, Houston, Los Angeles and Nashville, can require commutes of an hour or even more for those working in the city’s central business district.

Yet for many branches, lobby hours are something in the 10-to-5 range.  If a consumer leaves their house at 7 am for the morning commute, and returns home after 6 pm, how can we serve them?  The obvious answer in those long-commute exurbs would be to offer extended hours of operation.  However, extended hours are every branch manager’s least-favorite issue, because the scheduling becomes so difficult.  If I schedule her to stay until 7:00 or to work on Saturday, then I need to give an off day one afternoon.  Then who covers that?  It all gets very vexing, very quickly.

One solution lies in converting drive-in operations from a traditional branch-staffed model to interactive teller machines (ITMs).  Think of the ITM like an ATM, but with the option for a video-based teller to address more complex needs than a simple deposit or withdrawal.  Unlike a traditional branch drive-in window, the ITM is staffed centrally from a call center, and the call center is already designed for scheduling beyond normal branch hours.  By using ITMs rather than branch staff to service drive-in traffic, you can offer extended and/or weekend hours to those commuters who might otherwise be unable to reach your branch during typical banking hours, increasing your institution’s convenience.

Keep expertise readily available.   The largest banks in the industry are relentlessly focusing on cost control and efficiency, which often involves shunting less profitable customers with lower-balance levels to the lowest-cost channels possible: voice response units for initial inquiries, and then call center agents if the VRU cannot resolve that inquiry.  But consumers and small business owners value personal interactions, too, and the ability to interact directly not just with “a” banker, but with “their” banker.

Not every issue of the current era has a high-tech solution.  Rather, in some cases you can create differentiation simply by maintaining direct access to knowledgeable, skilled local bankers.  Maintain direct branch phone numbers, rather than routing all calls through the call center, so that consumers and businesses can reach a specific banker when needed.  Don’t be afraid to give direct phone numbers and email addresses.  Some bankers fear this can lead to branch staff being overwhelmed with inquiries – but isn’t more client contact exactly what we’re seeking?  Building relationships helps ensure retention, so that more of our sales efforts go toward portfolio growth, versus just replenishing what we lost to runoff.

Not every branch sits in a market large enough to warrant full-time presence from specialized lines of business, such as mortgage banking, commercial banking and wealth management.  However, we can still provide those services, even without on-site personnel.  Consider adopting a hub-and-spoke operating model, where smaller branches deliver those specialty line-of-business services not from officers domiciled at that branch, but rather via staff from another, nearby branch.  When a client enters and asks to discuss a mortgage, the answer is not, “we don’t have a mortgage officer here;” it’s “our mortgage officer is at another branch this morning, but she can meet you here this afternoon”

And for rural or more isolated branches where the branch is too small to support specialty line-of-business personnel, but too far to allow timely delivery of those services from nearby hub branches, consider implementing video banking access to line-of-business experts.  Of course, the technology exists for consumers to directly interact with line-of-business specialists.  But the benefit of in-branch video banking is seamless interaction – the ability for the consumer to visit their local, familiar branch officer who can then facilitate the video introduction, maintaining that key point of contact between the consumer and the institution. 

Each of these tactics share commonalities: keep consumers engaged with their local branches and branch staff; foster the familiarity and convenience that generates loyalty and retention; and reinforce the consumers’ expectation that the institution, the branch, and the branch staff are central to their community, and central to the effective and convenient fulfillment of their financial needs.