Rebooting the branch: Branch strategy in a multi-channel, global environment

December 2012
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Rebooting the branch: Reinventing branch banking in a multi-channel, global environment

At a glance

The digital consumer and the high cost of infrastructure have branch strategy in flux. Learn how leading banks are strategically responding to market changes.

Evolving branch strategy and marketing initiatives to align with changing consumer and economic realities can help banks boost ROI and position themselves for the future. An increasingly digital consumer and the high-cost infrastructure of physical banking locations point to a declining ROI for branch networks.

The rise of the digital consumer and the high-cost infrastructure of physical banking locations are leading to a declining ROI for branches. If the branch model stays on its current course, it will become a financial burden to banks, cutting deep into cross-channel profitability. Decreased traffic and cost inefficiencies shouldn’t signal the demise of the branch. Instead, these factors should be a warning that urges banks to take the next step in their branch channel evolution. Branches remain an important interaction point, playing an essential role in complex product sales and relationship building for both retail and small-business customers. But as consumers transform the way they bank, the value proposition of traditional branches is in question. Evolving the branch strategy to align with changing consumer and economic realities can help banks boost ROI and position themselves for the future.

The branch of the future has a critical place in banks' overall channel strategy. But branches can't survive in their traditional form. Leading banks are moving away from "managing branches" and instead are "managing distribution" across all of the bank’s channels. Banks will have to consider their branch strategy in the context of their overarching distribution strategy including direct/self-service channels. As part of their multi-channel distribution strategy, leading banks’ branch channels include a variety of branch models that balance retail and small-business customer needs in the local market with the cost of delivery. Not all models work for all banks. Adopting a combination of branch models based on target customer segments in the local market as well as the bank’s strategic goals is the most effective strategy.

If executed well, the branch strategy of the future can be mutually beneficial for banks and their customer.





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