Don't Miss the Mark With Your Branch Strategy

May  23 
Bob Meara  Senior Analyst, Celent 

Instead of transactions, look to experience and engagement to measure success 

Digital technology has had an undeniably disruptive influence in retail and business banking, including changing what it means to deliver excellent customer service. In response, the branch experience has often played second fiddle to digital investments, particularly mobile initiatives. 

Is that a good strategy? Be careful before you answer. 

Digital advocates point to the irrefutable growth in the number of channels and a corresponding decline in branch traffic. But those metrics are transaction driven. From our research, we know that transactions and customer engagement are two different things. If your investments are based solely on transactions, you may miss the mark.

Some point to the growing use of social media and video chat for personal reasons as evidence for the branch channel's eroding relevance. But as it turns out, consumers' personal digital habits are a poor predictor of their preference for interacting with their bank or credit union. 

How Consumers Prefer to Engage With Their Financial Institution

In 2018, Celent surveyed U.S. banks to understand when and how consumers prefer to engage with their financial institution. We found just 6 percent of all adults – and 7 percent of millennials – prefer a fully digitized banking experience. That means across all age and income brackets, 94 percent prefer at least some face-to-face engagement with their financial institution. 

It gets better for the branch.

When asked how they would prefer to ask their bank a quick question about their finances, such as disputing a charge or reporting a potentially fraudulent transaction, very few people chose text, chat, video chat or social media. Instead, across all age and income segments and to varying degrees, those surveyed said they would rather call or go to the branch to ask their question. 

In response to fraud, identity theft or a lost or stolen card, 53 percent of consumers prefer contacting a call center, and 27 percent prefer the branch. When applying for a new checking account or credit card, 51 percent prefer an in-branch interaction.

Across all segments, 45 percent of consumers prefer face-to-face interactions for learning about mortgages, student loans and auto loans. For more substantive conversations – getting advice, talking about goals, applying for a new account or a loan – 77 percent of consumers prefer to engage with their banker face-to-face.  

But how critical is the customer experience in the branch? Second only to "too many fees," 47 percent of adults said a poor branch experience would make them likely to switch banks. That's particularly true for higher income earners.

In Celent's view, our survey results underscore the importance of an omnichannel retail banking experience. While consumers are increasingly digitally driven, the branch network still serves an important, strategic purpose. Financial institutions that ignore any channel, including the branch, do so at their peril.