Building Branch Relationships
The goal of providing a pleasant multichannel experience is more to retain customers than to acquire them. And capitalizing on the existing customer base is crucial to stave off losses, contends Margot Vaughn, global practice leader for acquisition and online with MasterCard Advisors (Purchase, N.Y.), speaking specifically of the rise in card delinquencies. "This is why you're seeing an emphasis on cross-selling to existing customers -- you know their history and already have the relationship," she says. "Their risk of going bad is less. The challenge is aligning customer, product and channel."
As relationship building and cross-selling become key to banks' survival, First Horizon's Livesay emphasizes, it's important to reexamine the role of the branch. "Does the bank want the customers in the branch?" he poses. "It's a philosophical question. If it seems like having people come to the branch helps you understand them better, then that's fine. Is it part of your bank's identity? The branch question is important. A lot of banks are discouraging people from coming into the branch. I don't think this is a good idea given the trust situation today."
While the recent goal has been to move customers to lower-cost, self-service channels (i.e., online, mobile, ATM), doing so could cost an institution valuable cross-sell opportunities, adds Paul Schaus, president of CCG Catalyst, a Phoenix-based consultancy. Customer relationships built on self-service, he asserts, are not as strong as those forged in the face-to-face branch environment.
"Self-service is good," Schaus quickly adds. "But you have to change what the branch is, what it does [in order to maintain its value]. Now branches are moving from being transaction centers to being support centers for those times when people can't do something in a self-service channel."
According to Michael O'Laughlin, general manager of NCR (Duluth, Ga.) Financial Services, self-service capabilities nonetheless remain critical to banks' channel strategies. "In this new environment the self-service channel can be a very valuable tool -- not just in new customer acquisition but in making existing customers more loyal and more profitable," he says. "We're also seeing more and more banks take advantage of marketing across their channels to grow their business."
The Branch of the Future
There definitely is a place for the branch in banks' channel strategies, says Citi's Kay. But like any channel, a bank has to make it relevant to its customers, he adds, noting that self-service capabilities can be adapted to a branch environment. Kay points to Citi's highly automated commuter-focused branches in Singapore. "They are all digital for commuter customers who value their time," he explains. "They're all designed relevant to the mode the customer is in -- commuting. It's an entirely different customer experience."
Kingston, N.Y.-based Mid Hudson Valley Federal Credit Union ($600 million in assets) has been successful in welcoming people to the branch, while saving money and maintaining the relationships, relates Patti Osterhoudt, MHVFCU's SVP and COO. In March 2008 the credit union invested in virtual teller machines from uGenius (Sandy, Utah) as a means to cut teller costs and encourage customers to serve themselves -- in a way. MHVFCU's Personal Teller machines go beyond the traditional automated kiosk, connecting customers with a "teller" via a live video feed.
To support the Personal Tellers, the credit union operates a dedicated call center (in addition to its traditional call center) that employs 20 people, according to Osterhoudt. The machines -- and the human representatives -- are available 24x7 (about 60 percent of transactions occur after-hours, she reports). Retail customers can perform many of the routine transactions at the Personal Teller machine that they would at the teller line, such as depositing checks (the image of the check appears on-screen for teller and customer to read, front and back).
"The rep is on-screen and you're having a conversation with them," Osterhoudt describes. "The goal is to have one machine in every office. We can reduce our cost as we move forward because we're not going to need as many tellers. All of our new branch deployments will have Personal Tellers. We won't have to deploy branches of the size we originally did in the past."