Does Your Community Bank Have a 'One-Size-Fits-All' Branch Strategy?


Branch Strategy

As many community banks grow, their business plans don’t always grow with them.

According to a recent webinar survey conducted by Fiserv, 64 percent of polled bankers said their business plans didn’t account for the differences at each branch’s market area.

This can lead to several problems, according to Fiserv Senior Vice President Andy Grinstead:

  • Implementing solutions that may make sense for one branch but not for another. Setting up a brokerage or wealth management practice, for example, might work for a high-income market but not for a lower-income one, Grinstead says.
  • Setting goals that may be good company-wide, but not for certain individual branches. For instance, a goal of growing commercial loans by X percent may not be a practical strategy for a branch in a low growth commercial market or with a high market penetration.
  • Not having the right people in the right places. A bank might not realize the benefits of its top salespeople if they’re placed in their slower growing branch markets.
  • Not taking into account the different competition each branch faces.

"A one-size-fits-all plan may work for a bank with just a few branches, but it's clear that as they grow, they need to take a more customized and data-driven approach to maximize the potential for each location," Grinstead says. "At too many community banks, the same budgets and goals are given to every branch. This can result in overly aggressive goals for some and too easily attainable goals for others."

Due to the recovering economy and increased adoption of online and mobile banking, pressures on branch efficiency are higher than ever. According to the Federal Deposit Insurance Corporation, the number of U.S. branches has declined by about 1,300 from 2010 through 2011.

Because of these factors, maximizing the potential for each branch is paramount, Grinstead says. He recommends that banks consider establishing unique customer acquisition, retention and cross-selling goals for each branch. Data is key to this effort, he says, and can determine the following:

  • How each branch ranks in terms of market position and growth potential
  • What kind of market each branch serves — whether it’s mostly commercial or consumer, urban or rural
  • How well branches are competing for market share
  • Which branches are cash cows, stars, question marks, or growth focused

"Some banks are beginning to realize this and are treating individual branches like separate businesses with different tactics and goals," Grinstead says. "With the right kind of market intelligence, branches might not only have more realistic goals and smarter tactics, they could also be far more focused and better contributors to a healthy bottom line."

For a more in-depth look at how to hone branch focus, including a case study bank analysis, view the webinar online at Bank Intelligence Solutions.

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