Branches will not die any time soon; however, the definition of what a branch is, its purpose and how this purpose is delivered, is evolving.
Bankers recognize that branch banking must change, but there are pitfalls on the branch transformation journey. A project that re-paints the wall, installs a coffee machine and upgrades the ATMs is unlikely to fail and may even generate some short-term benefits. But superficial projects such as these do not create sustainable business value.
Branch transformation needs to be based on a clear understanding of customer behavior, customer profitability and branch performance. It allows bankers to design a sound strategy, which can then be executed at three different levels:
- Distribution: How resources are distributed geographically across markets
- Delivery: How services are delivered inside the branches
- Digitization: How digital technologies can enable the new service delivery models.
Branch-related expenses often represent one-third or more of a retail bank’s operating expense. They are also where deals are closed and relationships are built. The importance of branches requires banks to see through the hype and carefully design the strategy, service delivery models and enabling technologies. No matter where you are in the branch transformation journey, IBM has the expert resources to help you succeed.