Question: Given the nature of the physical costs related to the typical brick and mortar network, along with the rise of alternative delivery channels, i.e. the internet, my bank finds itself consistently challenged with meeting our retail branch profit goals. Is online banking the answer, or should we still be considering expanding through physical world branches?
Answer: Faced with mounting pressure to control costs and grow income, banking executives need substantive data and facts to guide their decision-making process as to how to invest their branch network dollars. Before building a case for sales lift and return, it's important to step back and recognize the "sea change" going on. Or, perhaps in this situation, recognition for the lack of "sea change" is more accurate. An important research study by the TowerGroup released in April of last year finds that even in today's highly technical world, customers are slow to adopt e-channels and that financial institutions must continue to emphasize multi-channel delivery.
According to the TowerGroup research, only 18% of all U.S. households have tried using online banking. That number drops to 13% when framed up in the past 30 days. And even among the current online users, an 85% majority still used brick and mortar in the past month.
Most importantly, a full 92 percent of all U.S. households have used a bank branch within the past 30 days. Most retailers would kill for visit frequency like this! Furthermore, a study by Phil Hudson of Aspen Consulting notes that 65 percent of a bank's most profitable retail customers visit a branch at least once a month.
Brick and mortar not only lives, it rules!
Customers continue to rely on brick and mortar services for their banking needs. Product line proliferation since deregulation makes the branch more important than ever before in presenting complex product offerings, reinforcing your brand and supporting your sales staff. Recent research has also demonstrated that a properly implemented merchandising system can provide an uplift of 10 percent to 11 percent in product sales creating a new sales culture within the bank. Cross selling of products to existing customers increases customer retention and a retained customer is 5 to 10 times more profitable than acquiring a new one. In short, with a properly implemented merchandising system, the bank branch remains the core of financial services delivery.
Eduardo Alvarez is Senior Vice President; Director of Strategy and Design Services for Willey Brothers Inc., a leading provider of dynamic financial retail branch environments. Eduardo brings invaluable knowledge and experience in various global markets to Willey Brothers, and is a frequent speaker at international financial and service industry conferences as well as a contributor to numerous retail banking publications.
Willey Brothers believes a retail space must deliver tangibly and consistently on the brand promise. We call this, making brands real. Willey Brothers partners with financial organizations to positively influence consumer buying behavior through market intelligence, brand translation, retail merchandising and environmental solutions. Willey Brothers has provided point-of-purchase solutions to more than 1,600 financial services companies and 20,000 branches worldwide. Clients depend upon Willey Brothers' turnkey services to help maximize a financial institution's most visible, and often most under-utilized asset - the branch environment. Visit www.willeybrothers.com for more information or contact Geoff Walters at 800-732-3999, or gwalters@willeybrothers.com.
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