Over the past years leading retail banks have launched initiatives to improve branch performance, aware that branches remain the predominant relationship and distribution channel.
Although these changes have made an incremental improvement to branch performance, there are a number of challenges that limit the ability to deliver significant, sustainable improvements in profitability. These include:
- difficulty engaging customers that are using the branch network purely on a transactional basis
- low levels of customer confidence that branch staff have their best interests at heart and are not simply ‘pushing’ products
- lack of staff motivation to meet targets created and imposed by head-office.
To drive branch profit contribution, branch managers need to be made directly responsible for profitability and be given the control and flexibility to influence it. Implementing a radical change of this nature can yield a step increase in performance – one of PA’s international banking clients has already increased sales from its branch network by 30%. Achieving this magnitude of performance improvement is possible by challenging traditional retail banking paradigms in order to:
- transform the role of the branch manager
- return specific customer interactions to branch control
- create a focus on the local market.
Shifting the focus of branch managers from achieving head-office targets to owning and leading the business, thereby making them the ‘Branch CEO’, is the key component to making a step change in profit contribution. The key areas to change are:
- making the Branch CEO responsible for business planning to create ownership of financial outcomes
- enabling the Branch CEO to use their assessment of performance to adjust business plans and activities
- ensuring people with the right types of skills are attracted to the Branch CEO rol
- adapting the role and responsibilities of head office.
Banks have successfully reduced the cost of the branch network, largely through centralisation of administrative and service related roles. An undesirable by-product of the centralisation has been to disenfranchise large groups of customers. By returning specific core customer interactions to branch control, staff will be given greater opportunity to engage the customer and overcome the view that branch banking is impersonal and commoditised. Key areas of opportunity are:
- enabling branch staff to act on individual customer circumstances by giving them control of selected personal outbound communications
- ensuring that customers have the option to have telephone calls dealt with consistently and effectively by the branch
- creating opportunities to engage customers by encouraging them to use the branch instead of direct channels.
Giving the Branch CEO responsibility for leading local market activities will mean that they can directly influence how they will meet their business targets. This will mean devolving control of decisions that have traditionally been the preserve of head office.
