Webinar from Adrenaline and Curinos addresses innovative strategies for expanding into new markets
While digital strategies have a role, retail bank and credit union branches are critical to bringing quality customers in the doors. As a result, the focus among financial institutions has shifted over the last 18 months from cost-cutting to growth, expansion, and rebalancing branch networks in strategic ways. “We’ve seen a rebound in announcements for investment in branches,” says Andrew Hovet, Managing Director at Curinos, in a recent webinar. “[Financial institutions] need to be able to access new pools of customer growth, and one of the ways to do that is through establishing new branches.”
While new branches are a piece of the growth puzzle, no one’s writing a blank check. As a result, it’s important to understand when to invest resources toward building new branches and when to modernize existing branches to attract and retain customers. Plus, where does it make sense to close branches to find savings to fund investments? Being strategic and intentional is critical. That means making decisions based on data and a strong retail banking strategy that aligns with institutional goals.
Effective network planning starts with analytics market data connected to a strategy. “If you’re not creating an experience and then building a branch around that experience, all you’re talking about is branch aesthetics and colors,” says Ben Hopper, Managing Director of Retail Strategy at Adrenaline. When using data to inform strategy, one framework focuses broadly on “grow, defend, fix, harvest” to evaluate performance, competition, and market opportunities. Network equity is another useful framework. Used in conjunction with the four-factors approach, network equity evaluates whether a financial institution is getting its fair share of deposits within a particular market.
Billboard value adds a third analytic framework. As bank and credit union branches become less about transactions, their marketing value becomes even more important. Branches are effectively becoming brand billboards. “I want to make sure I’m placing my branches in places where they will be seen, where people will be aware that I’m open for business,” says Andrew. “And I want to make sure that you know that I’m here.” Advanced analytics, including mobile geolocation data, now allows banks to score locations based on consumer activity patterns. This offers a critical third lens for comparing potential investment sites.
While the analytics inform the strategy, an effective network plan requires a strategy that aligns with organizational goals. Stakeholder buy-in from across the institution is critical. Retail branches offer direct business value, from technology to customer service to marketing. For example, customers who do research online often come into a branch to learn more and sign up for products. And customers go into their local branch for help when they need more support, offering an opportunity for branch staff to solve a problem and retain the business. Framing retail as both a growth engine and a driver of brand loyalty can help build critical collaboration and alignment among departments.
Branch archetypes offer a useful guide for designing for a specific market, community, and strategic purpose. A flagship branch is built for acquisition, and thus every process and procedure in that location should be designed to grow that market. An advisory branch is designed for cross-sell, acquisition, and loyalty; a neighborhood branch to retain a foothold in must-stay markets. Convenience branches are about efficiency while maintaining visibility and brand presence. This archetypal design approach also helps to guide where new investments are needed versus where simple renovations can uplift the brand and provide a better connection to the community.
When the branch design aligns with the strategy, the result is a retail network that feels intentional and cohesive. But understanding success depends on effective measurement, including not only account growth, but also awareness and other early signs of market potential. In addition, measurement should be tied to what the branch was intended to do (e.g., acquisitions, loyalty, and so forth). Branch scorecards and peer benchmarking offer mechanisms for assessing value and tying measurement structures and associated incentives back to the purpose of that branch. Ultimately, being able to measure the effectiveness of the strategy is essential – and it can inform future network planning.
To learn how your financial institution’s retail network can be optimized for growth, get in touch with the retail banking experts at Adrenaline.
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