Financial Marketing and Cross Selling Blog
Future of bank branches and recent news from BofA
By now you’ve most likely seen all the articles written about the statement made by Ken Lewis, Bank of America’s president, that the likelihood of their branch network being reduced by 10% is high. One publication you might have heard of, Wall Street Journal, claimed that this was what Lewis actually said. But in fact, reports now show this figure was brought up by a reporter on the call and was not a number Lewis claimed is real.
Given all the initatives that fall off the table within banks, I wouldn’t be the least bit surprised to see BofA’s branch network grow versus shrink over the next few years. However, this “hyped” story does bring about an interesting topic. Just what is the future of a bank branch?
The IT and online financial advocates will tell you that branches are irrelveant when it comes to the future of banking. But for banks to truly take on a new era of financial services they’ll have to make a strong case FOR the branch, not against.
From the beginning of banking here in the United States it has always been about personal relationships. Over time, these relationships have been harder to keep because of the technology that allows us to do bill paying and transfers right from our own home or even while on the road. The checking and savings accounts that hold our cash to buy both necessities and toys use to draw us back to the branch on a frequent basis. At one point, daily. Now, with one simple swipe of the card, those purchases are made with ease.
Thanks to credit, easy access to our bank accounts and other innovations, the bank relationship is now more a commodity where it’s easy for consumers to change brands. On the bright side, a lot of the new gadgets come with fees providing banks with new sources of revenue. But on the dark side, they’re losing relationships left and right at an alarming rate.
So what’s the answer to drawing consumers back into the branch? What kind of relationship should consumers expect to develop when entering the brick and morter? And most importantly, how does one pull their customers into the branch when all signs put to online?
When asking yourself these questions, always remember that people in general are looking for answers, not products. In today’s environment, products are secondary to information. Branding yourself as the place to go to get this information is easier said then done. But once you achieve this goal you’ll find more people are willing to come see you in person.
What is the true meaing of Cross-Sales?
A recent article in the BAI Community addressed this question and I thought it brought up some good points. Cross selling has been a hot topic for several years now in the financial world. In fact, for the past several years, increasing cross sell opportunities has been the number one initiative for bank executives according to the Grant Thornton study (80% of respondents ranked it as their number one initiative this year).
David McNab of Objective Business Services and FlowTracker Analytics Inc. wants to help define just what a cross-sale consists of in his BAI Community article. According to McNab, “we don’t think eating your own lunch is selling.” What he means is that a lot of banks gauge cross selling by the number of different products that a customer has. The problem with this calculation is “it counts products (however defined) per customer (however defined) instead of looking at the source and destination of customer money flows.”
Unless new money is involved, it shouldn’t be considered a cross sale in Dave’s approach. However, one may argue that when you move money from one account to another, the new account may introduce opportunities to increase fee income that the previous account wasn’t able to deliver. A classic example of this is moving money from a deposit account to an investment account. In this scenario, the new account has the potential to grow both the customers assets as well as the banks at a much higher rate.
Furthermore, it’s been well researched that the more products a customer has with a company, the less likely they are to leave meaning your retention rates go up. So determining cross-sell success by the average number of products your customers have could be a viable component to the calculation.
However you slice it, Dave and I agree that understanding your cross selling capabilities is extremely important. Bottom line, it’s been over two decades since regulations opened up the doors for banks to cross sell more products and services to their customers, putting them in a position to become the dominant force in our financial landscape. However, it’s clear that most banks are not satisfied with their cross selling efforts.
What are your thoughts about how cross sales should be measured? Should the number of products be included in the equation or should only events that bring in new money be valued?
Download a copy of our Cross Selling Success Factors survey at www.truebridge.com/cross_sell_success_factors_survey
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