Summary:By modernizing physical spaces, creating community hubs, and blending digital tools with personalized service, CFIs can ensure their branches are vital, customer-centric destinations now and in the future.
Did you know some organisms can adapt to, and with, one another, through a process known as coadaptation? For example, hummingbirds have developed long thin beaks to sip nectar from certain flowers, and those flowers have adapted to produce a nectar that appeals to the birds which then spread their pollen, benefiting both in the process. Like hummingbirds and flowers can adapt to each other to survive, community financial institutions (CFIs) are seeing a need to adapt their branches to the changing needs and expectations of their customers, as well as rapid advances in technology. We look at some of the key factors that CFIs should be considering to ensure their branches are not only profitable, but fit for the future.Branching Into the FutureDespite a record number of bank branch closures in recent years — on average, 1,646 branches have closed annually since 2018 — recent research suggests that branches still play a very important role in the banking ecosystem. In fact, 72% of new current accounts opened in North America in 2023 were opened in a branch. 021325-McKinsey account openings chart.png88.27 KB Source: McKinsey & Company State of Retail Banking reportTo provide a seamless and efficient banking customer experience across all channels, CFIs need to understand how, why, and when their customers choose to use their branches. They also need to ensure that their branches provide a modern, high-quality, in-person experience. Leveraging technology can also help to revolutionize the in-branch customer experience, and strengthen a CFI’s ties with the local community. Here are three key considerations for an institution’s branch strategy:
Modernize the physical layout. Customers increasingly want personalized experiences — and no one likes to stand in long lines for financial services. To improve the “traditional” in-branch experience, institutions are increasingly re-imagining their branches, creating warm, inviting, open-plan, and flexible spaces that encourage conversation and personal interactions. Offering a combination of interactive self-service screens, stations for seated one-to-one personal engagements with staff, and private areas for more in-depth or secure conversations will enable an institution to meet a diverse range of customer needs. Physical spaces can also be designed to foster the CFI’s image and brand engagement.
Create community spaces. CFIs tend to play a central role in their communities, and developing spaces that offer more than just the opportunity to complete financial transactions will help entrench this. Some financial institutions are transforming their branches into multi-purpose community resource centers, offering financial educational resources, workshops, business consulting opportunities for small businesses, and other community and cultural events alongside their normal banking operations. Others have creatively made the most of underused branch space by integrating free co-working spaces, cafes, and meeting spaces, and by collaborating with local brands. These options can attract a more diverse range of customers and strengthen an institution’s ties with its community. The $226MM-asset Williamstown Bank in Williamstown, WV has incorporated donation-based coffee shops into their branches; these not only foster community connections but also support local nonprofits.
Blend technology with a personal touch. Combining digital tools with the warmth of personal service can create unique and memorable experiences that can attract new customers and strengthen customer loyalty. Branches can be good settings to demonstrate a CFI’s digital channels and how these work together to deliver an integrated customer experience. Technology, such as interactive teller machines, video banking, digital self-service screens, and iPad-equipped tellers, can streamline services while enabling bankers to engage with customers in a more personalized, less transactional way. Front-line staff can also support customers to bank using the customers’ own devices. This can reduce friction, protect against fraud, and enhance the in-branch experience. A combination of digital convenience and face-to-face engagement can create an efficient omnichannel experience that meets diverse customer preferences.
To build branches fit for the future, CFIs must first ensure that they understand and address the specific needs of the communities they serve. CFIs can ensure branches remain a key part of their customers’ financial journeys by leveraging advances in technology and combining these with personalized service and human interaction, designing flexible, modern, and welcoming spaces, or by creating facilities that can act as community hubs.
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