Branching out

Branches and Banking Transformation

In its recent quarterly earnings, Bank of America reported that mobile deposits overtook deposits in financial centers for the first time. On the earnings call, CEO Brian Moynihan told investors that Bank of America now processes 76% of its transactions through ATMs or on mobile:

“By investing in client capabilities, we make our clients’ lives easier, more efficient, and more effective and their satisfaction goes up. Our costs then in turn go down because our process will become more automated.”

If you can perform most basic financial tasks via a phone, why would you ever want a visit a branch and why would a bank want to maintain costly real estate? This is not a new discussion. That the narrative hasn’t shifted in at least five years demonstrates how structurally and culturally complex retail banking transformation is, particularly at a time when consumer trends are evolving at an unprecedented rate.

This is borne out in the underwhelming yet ubiquitous ‘me-too’ innovation at many banks. They nod to digital transformation with their mobile apps, sure—but poor functionality means those apps don’t provide the instantaneous notifications that smartphone users expect. Spending data can appear hours, sometimes days, after a transaction occurs, while monthly statements offer no insights or tools to manage records, analyse spending, or plan future budgets.

Digital capabilities, such as mobile deposits, killing the branch is a lazy narrative. Transformation and building the next generation of services that enable and engender loyalty is not a technology project, nor a brand re-design strategy.

It is a re-imagination of how financial services are conceived, designed and delivered. It is how the brand that offers those services listens, understands and communicates to its audience – at an individual level.

However, as digital transformation becomes ever more pervasive, branches will retain their importance.

Innovating around the customer

The future of banking is one where individual consumers sit at the centre of their personal worlds and access the services that fit best into their lives thanks to the data about themselves that they choose to share with brands that they trust. This is trust on a personal and emotionally engaged level, customers have come to expect from the tech titans, not a utility-style trust that things will work the same way next time we need it.

Our financial lives are increasingly complex, which means that we want to feel confident in our financial decisions.

In the past, we viewed banks as guardians of our money, safely stored in a fortress-like building. That confidence now stems from the empathy and understanding of a financial coach, of feeling that the customer is being treated as an individual with unique requirements, financial means and aspirations. Aspirations that can change on weekly, possibly daily basis.

This, in turn, makes certain in-person interactions, with the trust and reassurance of face-to-face relationships, crucial.

Institutions with physical branches also have the added perceived responsibility of contributing to the local community as an essential part of the urban and suburban architecture. This perception is critical to their rational ‘intangible’ brand wealth in terms of heritage and value to consumers, rather than as an acquisition or servicing channel.

It is also a double-edged sword in terms of balancing the diverse financial needs and brand perceptions of society with efficiency and delivery costs. However, as the notion of life-first financial services rather than products continues to evolve, so too will the concept of the physical branch and how it delivers truly customer-centric propositions.

It requires a nuanced understanding of customers’ lives and journeys, of an individual’s financial hopes, dreams and fears.The future of the bank branch, and bank transformation as a whole, is about humans. It is customer choice, it is pre-emptive suggestions on smart phones, it is about new branch formats and more complex customer journeys differentiating leading banks from also-rans.

Research shows a majority of customers prefer branches for complex services such as sales and advice. Shifting to mobile channels is not a panacea. While mobile transactions cost less for the bank – just $0.19 compared to $4.00 in the branch based on data from 2014 – they cannot entirely replace the experience of branches – that is, the physical connection to people.

We are moving away from transactional relationships to something more emotionally engaging where the customer has explicitly agreed to share data in the expectation of receiving services that work. This is the start of something far more than a battle for share of wallet or even share of mind; it is becoming the battle for the share of heart and life.

Evolving the Branch

Branch customers should feel as if every product, service, and interaction is personal to them. The bank is a space oriented around service. Customers want banking to be accessible, allowing them to feel confident and empowered by their financial choices from every interaction on every channel.

While established banks feel weighed down by their portfolios of branches, viewing them as part of larger ecosystems of consumer interactions can help to relieve that burden.

Frank & Oak is a great retail example. The Canadian-born menswear brand, which provides a unique product collection each month, saw its physical presence as a complement to its digital shopping platform. After launching as online only, the brand ultimately saw the need to launch flagship stores where consumers could set up appointments with curating Style Advisors, drink coffee, and even benefit from barbershop services.

Now, imagine that you are a direct bank. Why would you open a physical branch? And what would that branch be like? The branch is not one-size-fits-all. Customers demand choice, tools and physical architecture to deliver desired experiences.

Bank branches still matter, but there are distinct classes with specific roles. And these discrete classes must ultimately support customers and their desires for a seamless blend of digital and physical spaces.

Banks are typically developing four types of branches, each with separate objectives. The distinct types are:

  • Destination or flagship branches, typically in urban centers, such as the Umpqua branch in San Francisco
  • Smaller, nano branches where there is generally less foot traffic, such as BMO’s studio or neighbourhood branch
  • Pop-up branches where there’s seasonal demand, as seen with PNC in Atlanta and Citi Lounge in airports, or mobile banks on- wheels; and
  • A network of self-service tools and ATMs, such as Bank of America’s Teller Assist.

Emotional connections to customers

Consumers see banks in a different light today – less as austere gatekeepers and more as lifestyle-enablers. Consumers do not expect long wait times, they expect to be waited on. The tables are turning.

What does the bank of the future look like? Branch portfolios will include different blends of formats depending on the populations and geographies served. The majority of transactions will be self-service, with an easy way to check in and validate any decisions with an informed banker. Branches will be more open plan, with fewer tellers and glass divides, oriented around customers’ emotional journeys.

The retail bank of the future will be a place you are proud to post from, a third place to escape to, a members-only lounge where you are a regular. The banker of the future, on the other hand, will be a telepath, using predictive analytics to serve your needs before you voice them. When you say you are meeting with your guru or guide, it could very well be at a bank. And, from the bank’s perspective, the branch will be a research epicenter for the brand, a lab to understand customers and prototype solutions.

In designing for branches, you must first determine what choices matter to your customers and their emotional needs within their journey.

This is not a challenge of digitizing the bank branch. This is a challenge of banking in a digital world. Your branch is no longer recognizable as your bank, but instantly recognizable as an expression of your bank’s brand; an expression of a brand the consumer can choose to affiliate with, or reject.

Digital storytelling

Published May 10, 2015

Digital is no longer a question, it’s an obligation.

Digital can democratise markets with unrivalled pace, momentum and reach. It has no respect for organisational hierarchies, preconceptions or biases. It will blast through all those to create an entirely new market, customer base and league table while you are still spinning up your steering committee.
The willingness (or at least capability) for some organisations to stifle creativity and innovation is outrageous. Incumbent banks too often find themselves paralysed by their own past story.

BCG recently posited “there’s no such thing as corporate DNA“.

“In our globalizing world, market shares are shifting fast. Companies that were hardly known ten years ago… have become not only global challengers but also market leaders in their own right. And once-great companies have slumped, disappearing either into bankruptcy or into the hands of successful rivals. Why? Because for too long, old stalwarts have clung to their company’s so-called DNA when radical change—evolution with a capital “R”—was called for. They tried to protect their heritage when new approaches were required. They emphasized continuity when discontinuity was necessary. As the CEO or other top executive, you are the trustee of your company’s tangible and intangible assets alike—and the steward of your stakeholder relationships. It is your job to develop them and, when necessary, to change them.”


They continued re-telling the old story, when an entirely new one was overdue.

The most effective and engaging CEOs are master storytellers. Telling a story is the most effective way to activate our brains.

For them to initiate a successful digital transformation, they must first have and then clearly articulate an ambitious vision. This is actually relatively easy. But to build momentum maintain focus and effect real, sustainable change, the story must continue to unfold over time. It needs regular deployments and milestones, all forming a powerful and sharable narrative. A story that the team, customers and stakeholders – can identify and identify with.

Digital is a journey, not a destination.

Where are you on your transformation journey? Are you already well into the early chapters, or barely through the prologue? Has your story truly begun or have your digital activities so far been merely helping you explore what you might do?

Digital is not an end point or a ‘thing’. It’s not an asset, it’s an attitude.
As an organisation, you need no longer wait years for a finished product before shipping. Digital transformation, done well, is an invaluable opportunity to deliver incremental iterations – as part of an evolving story that can be shared, debated and reshaped.

Don’t underestimate how alien this is going to feel to your organisation.

Just because your developers now consider themselves ‘agile’ doesn’t mean your sales teams are ready to embrace the new tool they’re going to be given, however thorough the UX research.

No, for the incumbent, the greatest challenge is to adapt organisational culture, mindset and apparatus to embrace and effect the transformation. A fundamental and widespread shift is required to create and sustain an environment where iterative, incremental improvements and advancements can be created and released.

Through these regular iterations, the overall business strategy can be propelled forward. The business can accrue immediate value from this form of digital transformation, whilst also learning from relative successes and failures.

“An organisation’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” 

Jack Welch

This new approach – which will feel unfamiliar and therefore may too easily be rejected by the organisation – provides a rare opportunity to both celebrate and course-correct. For perhaps the first time, the organisation has the chance to respond to evolutions in market and customer behaviour dynamically. Every piece of feedback, every idea, every success and failure has a place in the story.

In 2013, Sapient published a model for organisations to assess the maturity of their mobile strategy – introducing the journey from “Intrigued” through “Aware” and “Enabled” all the way to “Benchmark” status.

“Few today can question the benefits of mobile. Overwhelmingly, the problem is not that companies are without a mobile strategy; chances are that they have several well-received mobile applications. Rather, companies are lacking an effective mobile roadmap: a plan that realizes where their company is and what point they want to reach in a designated time and budget.”

Hopgood / Ruparelia

Perhaps for ‘Digital’ we might now say:

Few today can question the benefits of digital. Overwhelmingly, the problem is not that companies are without a digital strategy; chances are that they have several. Rather, companies are lacking an effective digitally-transformed business roadmap: a plan that realises where their company is and what point they want to reach.  


In the context of digital, so many organisations are still merely Intrigued or Aware. There’s no shortage of activity – nobody wants to be part of a ‘Kodak moment’ – but is there a sense of purpose, a vision, a compelling story taking shape?

To develop maturity – to survive and thrive – these organisations must urgently immerse themselves in digital – making it a critical part of their narrative.

Digital cannot be bolted on alongside the existing business. It must become the core competency.

Rewriting the story, one chapter at a time.