Financial Marketing and Cross Selling Blog
Mary Beth Sullivan from Capital Performance Group, in her recent blog article The Future of Branches: Reinvention in the Banking Strategies section of the BAI website proposed an interesting solution to retail branch profitability. It’s called sales. She referenced a huge market that banks can own by leveraging their branch network. This market is people who are looking for advice. Martha Stewart realized this a long time ago and built a business around it. People want to be told what to do. It holds true in personal finances as well. People are looking for simple and easy to understand information and guidance from someone they trust. And they will do business with the one who is there to provide it. This includes the enormous baby boom generation that has been turned upside down by the Great Recession. They want to be told what to do as they face retirement – without the confusing jargon.
It’s not a surprise but in a recent American Bankers Assocation survey report it shows that the online channel is now the #1 place for customers when it comes to conducting their banking tasks. The survey spoke to 1,000 consumers over the phone ages 18-55+ and 25% said they prefered going online then to any other channel. Branches came in at #2 with 21% saying they go here to conduct activities (This includes all age groups). If you segment out the 18-35 age group the online channel is a whopping 38%!
The moblie channel appears to have gone backwards. This raises a few eyebrows considering the massive amount of new moblie phone users and the number of new banking applications that have been developed over the past year.
But no matter how you slice it, more and more people are moving away from what was and still is the heart and soul of the community bank – the branch.
I’m a member of a local golf club and over the past few years I’ve volunteered to oversee the management of our course maintenance.
Every year our costs go up. Labor costs go up. We try to see if we can get by with fewer people, but we need to have enough people to operate at peak times. It’s tough to always have the right number to match our daily needs. Real estate taxes go up. It costs more for fuel. It costs more to maintain the machines.
By and large, these costs are the same no matter how many rounds of golf are played. If it’s 1,000 rounds per year or 25,000 rounds per year we still have to maintain it. The grass needs to be cut the sand traps need to be maintained and on and on.
Every year we struggle with how to pay for this. We start by looking at every line item and try to take it down. Do we really need this? Do we really need that? Can we get one more year out of that mower? After that exercise is over, it always seems to be the same – we can’t cut anymore and we still have a problem – too much expense – not enough revenue. How do we close the gap? We have an asset with a fixed cost and to pay for it we only have two options. Increase dues or admit more members.
Well, I hope I’ve made my point. The cost of operating a branch is pretty flat, no matter how much traffic comes through. Yes, you try to schedule staffing so you... Read More >>