A case for changing branch purpose versus getting rid of them.

By June 10, 2015CCG Catalyst

We Are Open Sign_jpgHere is another article lining up behind the death-of-branching aficionados who believe branches are doomed.

This article says they’ll be gone in a decade . Here’s why I disagree – it’s very simple. The issue is what goes on in the branches.  If you listed all the things that took place in branches 20 years ago, and crossed off the ones that are in danger of dissolving into cyberspace, there’s not much left. With that, I agree. Why younger people do not use branches is simply because there is nothing in there they need or want.

If banks started thinking about changing what goes on in the branch, adding things that people actually were interested in doing, traffic would go back up. This is not a huge leap of faith, it’s a manageable step.

Next the death-of-branching disciples quote how many new tech firms are roaring in to take over bank activities. Yes yes yes, this is happening. This is why community banks need to become agnostic about outside vendors who can add value. Core systems should, in theory, be better able than ever to integrate to outside vendors because standards are coming clearer relative to security and transfer protocols. There is also a growing list of open system API’s are coming on line to hook to bank services. If Core provides are not open with integration, then they are protecting the revenue stream from your bank, not promoting revenue opportunities to your bank. Might be time to question those relationships.

All of this fear that banking is going away assumes that banking can be boiled down to an app. Compare banking to another highly sensitive utility – medical services. Money and health are the twin forces in our lives, and health is not going to a smartphone app any time soon either. We might buy “third party apps” to track our running and eating, but the doctor/patient relationship will remain. If designed to offer the right value, the banker/consumer and banker/business relationships have a comfortable place in the future too. Especially for locally focused banks.

How? It all goes back to what banks do. Are they transaction executors or financial life partners? Is the bank going to give the local restaurant a loan and a card swiper or are they going to do that and help them grow the number of customers who eat there? Are they going to push out checking accounts with rules designed to maximize bank revenue, or are they going to create win/win value propositions? Are they going to give money to national nonprofits to get PR exposure, or are they going to give to causes that make direct, measurable impacts to local people in a way that enhances the bank brands?

This is not new. Look at USAA or UMPQUA – they didn’t aim to lower efficiency ratios, they aimed to engage with their communities so effectively that customers poured in without needing a direct mail piece to tell them.