In my endeavor to get bankers to “think about how they think” (MetaCognition), I focus a lot of attention on the fate of the retail bank branch. Certainly something that deserves attention and innovation. So I was very interested to read an article about Bank of America deciding that it had 5 years to transform all their branches (http://www.americanbanker.com/news/b-of-a-gives-itself-five-years-to-save-branch-banking). Now if one of the largest FIs in the U.S. takes this bold of a stand, it is worthy of notice. I agree that there is a short period of time for bankers to become relevant to millennials. My timeframe is 8 years but 5 might be accurate. But I took issue with their stated goal of increasing the amount of automation as a way of addressing future customer requirements for a retail banking office.
I struggle with the concept of an automated mini-branch. Other than getting cash, what is it that I can do in the BofA automated branch that I cannot do on my phone or tablet? The only reason to go into a branch is:
a) I need to speak with someone in person (where consultative selling occurs)
b) to get in person education
c) to solve a vexing problem that cannot effectively be done over the phone
Interestingly, it is these 3 things that occur in an Apple Store. Coincidence that the Apple Stores are a) consistently slammed full of people and b) yield the highest per square foot sales of any retail store in the world. People don’t go to a destination to have an automated experience. That experience is actually quite good but I can have that experience wherever I am at any time of the day or night with whatever device i happen to have in my hand.
People will go to a destination but not for transactions. It is my belief that branches must convert from transactions to engagement. There is a continuum of Transactions to Transformation to Transcending, where (eventually) financial institutions will assist consumers and businesses in understanding that the physical branch exists for a totally different purpose than they have ingrained in those customers over the decades.
It is the physical contact of engaged, highly trained people that makes the Apple Store such a draw. In fact there is little automation in the store itself relative to transactions. You can check yourself out with an app on your smartphone but you will not see any kiosk or other attempt at automating transactions at an Apple Store. Each employee simply uses their device, smartphone or tablet to checkout a customer. Why can’t banks do the same? The technology exists. It is simply the refusal to buck tradition by senior FI executives, worry over perceived risk of losing existing Baby Boomers, and the lack of appropriate staff retraining that keeps FIs mired in traditional transaction focused processing.
FIs should stop trying to automate the few transactions that still exist in the branches and get engagement going. Physical branch transformation can follow but you can start holding classes in your lobby, in the place where the desk where no one works anymore was removed, with 8 folding chairs and a stool for the instructor. Less than $500 invested but the payoff long term is priceless …