Fixing Friction in the Branch Banking Experience

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Intro: This is Believe in Banking, a podcast series for decision makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. 

Gina Bleedorn (00:17): Welcome to our Believe in Banking podcast. I’m Gina Bleedorn, President and CEO of Adrenaline.  

Juliet D’Ambrosio (00:24): And I’m Juliet D’Ambrosio, Chief Experience Officer at Adrenaline. 

Today we are talking about a subject that is near and dear to both of our hearts and really near and dear to the hearts of everyone that we’ve been talking to across the industry – community banks, credit unions, big banks, regionals, super regionals. Everyone has customer experience on their mind and ways to improve it in a landscape where there is pressure to become more digital. And there is also pressure to create branch experiences that really get at the heart of why people want to connect with others in banking. And I wanted to start our conversation by sharing an anecdote with you about a conversation I had recently with one of our clients. 

So, this is a community banker in the southeast, and was relaying to me that there is a person who comes into one of their branches every single day. It is a small business owner. There is absolutely no reason for him to come into this branch every single day. He can make his deposits through an ITM. There are digital channels, there are drive-up channels, but this person chooses to pull up, get out of his vehicle, walk into the branch, and do his banking in person. And it has become a ritual. It has become something that is clearly more than just a to-do that he crosses off of his list of a small business owner, and it’s something that is fulfilling a need that this small business owner has.  

And so our client was opining on this person and saying, “What if our branch wasn’t there? Where would this person go?” And he wakes up our client every day thinking about how to best serve this particular customer. And so interesting. It’s maybe a unique story, but my guess is not all that unique. 

The idea that there are power users of the branch, there will always be power users of a branch, and they’re the exception, maybe not the rule, but they do shine a light on the driving force that does bring people into the branch and leads us to the question of why branches still matter when we’re thinking about creating the kind of experiences that draw customers in. And you’ve been doing this kind of work a long time. You are a thought leader who really puts branch banking front and center. And I’d love to hear you talk a little bit about your perspective on why branches still matter and what kind of future you see them continuing to have. 

Gina Bleedorn (03:39): Well, Juliet, I want to do that by actually injecting my own anecdote into the one you shared. Although it is just one customer, I believe it’s emblematic of the customer in many ways, certainly or one aspect of an archetypal customer. And I’m going to give a second one, and it’s about me. And this time, a recent time, I had an experience with my bank, a national bank to remain nameless, where I had fraud on my card. They called, actually didn’t handle it very well, had to call me back multiple times, put me on hold, made it very difficult for me, but they were able to cancel the fraudulent transactions. That was okay. But a couple of days later, my husband noticed there was a big withdrawal of $22,005 and called the bank. They didn’t have any good answers. They said, “We’ll submit it to fraud and get back to you in a couple of weeks.” 

And turns out a person went into a bank branch in Cupertino, California, and somehow had a false identity, withdrew $22,005 from my account, and no one stopped him. He was able to do that. Ironically, I even got a customer survey about my branch experience in my email for that branch experience, of which was not I and the bank did end up restoring the funds without any communication just a few days later. But they let it happen, and didn’t flag it. And as a result, I am going to switch from the same bank I’ve been with for the last 35 years.  

And the point of all that story, besides really questioning some practices going on internally at this bank from a fraud prevention standpoint and branch controls around that, I am looking for a new bank. And the primary criteria of a relatively young person that doesn’t ever go into a bank branch is that I will open that account in a bank branch, and I need to have a bank branch nearby. And I believe that the small business person you talked about, Juliet, is one kind of customer archetype. I think I am another, that story of what actually matters when I’m going to look for a bank really exemplifies branch presence still has that important key place in decision making. 

Juliet D’Ambrosio (06:15): A 100% for the small business customer for the relatively young, we’ll give you that, Gina. We know that you are the very first Millennial. I’m a relatively young person, and dare I even say it, younger people, Gen Z, who use branches three times the amount that Millennials actually do, and Boomers will go into a bank branch. So, there is a need that people have, whether there is a fraudulent withdrawal or there is just a need to look at the person that you’re giving your money to, and having those kinds of conversations. That it’s a human need, and it really gets down to that sense of person-to-person, trust-to-trust. And what we’ve uncovered is that trust is really the driving force at the heart of customer experiences. And so we wanted to understand what the unique dynamics are that underline that trust and that create it and that make the difference between a great customer experience and an okay one, lest we say it, one that’s so bad that you actually end up switching banks. 

And so we are proud to announce the publication of our latest report, entitled Closing Customer Experience Gaps in Branch Banking. And we went through a series of over 50 mystery shops of US banks and credit unions, geographically diverse between banks and credit unions, all different sizes, and have collated and analyzed that data and driven it down to several key takeaways that everyone in the industry needs to be aware of as they are designing experiences, as they should be, around the member and around the customer. I do also want to pick up on something that you said that in your search for a new banking relationship, you need to be able to have a branch nearby. That branch also needs to know maybe what you look like and that a big withdrawal in Cupertino, California when you don’t live in Cupertino, California is something perhaps to flag.  

We’re seeing that across the industry. Seven out of 10 banking customers say, I need a branch within 15 minutes of me whether I’m going to go in there every day like the small business customer, hardly ever like you in between like a Gen Z, 65% of customers look at branches and see a sense of stability. This bank, this credit union is here for me, they’re not going anywhere and I can trust them. And that trust becomes such a big driver of how relationships are opened and ultimately how they deepen over time. 

Gina Bleedorn (09:19): Ultimately, Juliet, it’s the in-person experience that’s able to be a human triage to receive and adapt and address in a very human way, in a very meaningful way, whether it’s a problem or a business opportunity. And that’s why we’ve talked about on the podcast before. The data trends are so severe in digital-only relationships, in the lack of meaningful retention and ultimate profitability versus originated in the branch relationships that are seven times, 10 times more profitable, more longevity, every metric you can think of, they’re just more quality because it means something so much more when you are in person. And that insight you referenced, Juliet, about it’s not even a banking thing, it’s a human thing. It’s about the human need for security and stability, and knowing that my family is going to be okay and my future is going to be okay. And ultimately, I think that route is why there are provocative naysayers, even some recent ones that have dropped wanting to get attention by saying things like, in a provocateur way, the branch is dead, why the branch is going to be dead. 

Which, by the way, people have been saying since I think the advent of the ATM in the 70s, and it still hasn’t happened. And, of course, branch banking has changed the experience, changed all of those things, but ultimately it’s because of the human need for human-to-human connection when it comes to something as fundamental as financial security – why physical matters. But that gets to then, okay, physical matters. But what happens in the physical matters as mentioned in my story, going into a bank branch and not having an experience or in this case, security controls of something that happened inside a branch led to that wasn’t even me, led to me wanting to leave this bank. But think about both the upsides and downsides of what happens when that experience is not optimal or is poor.  

So Juliet, I’d love you to talk about what our specific findings are around what these gaps are, and what institutions can do about them. 

Juliet D’Ambrosio (11:37): Yeah, I’d love to, and I want to just caveat this by saying that mystery shops and the way we go about gathering this data is not about pointing fingers; it is not about making anyone feel bad about the experience that they offer. What it is meant to do is to identify the areas to improve, and that’s it. And what we see is that financial institutions that leverage mystery shopping say they see a 31% improvement in customer satisfaction, which means they are better delivering on customer experience, and 24% fewer regulatory compliance violations. So there’s just a lot of reason to leverage things like mystery shops as part of an annual branch experience health checkup. The data that we uncovered, and again, the mystery shops involve people coming in and walking through a typical member or customer journey. They’re not real customers of a bank or credit union, but they pretend to be for the purpose of gathering these insights, having interactions, and recording those in a way that we can then analyze. 

So the vast majority of branch staff are friendly. They want to serve, they want to be there. The gaps that we see in the biggest way are in relationship-building, in the design of spaces, and in digital readiness. And so just a couple of examples of that – 58% of experiences as you enter a branch happen without a welcome upon entry. And I will tell you that I can go to my local Walmart and have a welcome. Somebody is happy to see me there. It is one of the cornerstones of a great retail experience that someone looks at you, acknowledges you and says welcome in, or whatever is appropriate there once they are welcomed in. When we talk about that idea of real relationship-building and trust, almost 70% of all interactions felt very product-led rather than needs-led. So, the mystery shoppers felt like they were being sold to. “Here’s our latest HELOC. You want a mortgage? Check out our low interest checking, rather than getting to know them what their needs are, what they were looking for.  

A biggie that we came away with is that 62% of visits did not inspire an intent to return. That means that they felt it was just painful enough or maybe even worse, just meh enough that they don’t want to come back unless they have to. And Gina, unless they’re like you and have a big problem, that’s not when you want people coming in. You want people coming in to have those conversations that can lead to deeper relationships. Stunningly, 98% of staff did not leverage digital tools or content. So, they didn’t leverage a tablet or a QR code during the exchange. When we talk about that gap that’s happening on the digital side, a good example of this is that there is a customer or a prospect that fills out an application online at home, they get almost totally complete, and then they go into the branch to finalize it and then they have to start all the way back over again, which is really frustrating that there is no digital communication that’s happening there. 

So, creating more seamless connections across digital and physical channels is a must. Now, there could be lots of reasons for that, but we know if there is some degree of digital migration, some degree of education – the kind of experiences that today’s members and customers and certainly tomorrow’s members and customers are looking for, they’re not being met in that way. There are big gaps that can be closed. And the great news is that this isn’t rocket science. We close them through intentional design of both the space and the experience itself.  

We’ve talked about zones and creating zonal journeys that really put the customer at the center of all decision-making. And Gina, nobody talks about this better than you do. 

Gina Bleedorn (16:22): Yeah, the funny thing about zone programming or experience zone mapping – many people do a version of this is that it’s not that complex in theory at all – but it actually is quite challenging to execute consistently and at scale across different types of branches, different formats, different conditions that exist, and different staff. And so that’s where the rubber meets the road or doesn’t. Legacy spaces, just by nature of what banking used to do, create perceived and very real barriers because a teller line is literally a barrier. It was designed to be so for safety. So, that is by nature why teller line based AKA legacy designs are never going to be customer-centric in the way you want them to be. So, when you are dealing with a legacy space, you’re starting behind already. What I want to focus on is talking about some of those things that really matter that are hopefully key takeaways. 

Are you doing this optimally? And I’ll say also when you talk or think about modernizing or upgrading your branch experience, what our data and many other points of data have clearly shown is that experience measurements tend to be lower in almost all categories across all areas of the experience journey because legacy formats are simply not designed to support ideal customer engagement. So, making branches ready isn’t just to make them pretty. It is to enhance the experience of the customers, the members and the staff. Those journey zones, there’s really just four of them plus the staff area, customer facing, there’s just four. The Attract zone is, that’s just how you’re projecting out. That is the only zone that is also for acquisition. That is a branch as a billboard, and 76% of consumers entered a store they had never visited before based simply on its sign. 

And so if the sign isn’t there, the billboarding isn’t there, we don’t know you’re there. But pro tip for enacting an Attract zone is inside-out and 24-7 illumination, particularly if you can have areas of color, digital movement, brand texture, a view of interior activity happening in the space. The more inside-out you can create, the more impactful your Attract zone will be. That doesn’t mean every branch needs to be a fishbowl, but it does mean you need to leverage the space you have. And if you have windows that are blocking exterior view, what can you do architecturally or branding wise to make them attractive? The second is what happens when they come into the Engage zone. And clearly our data is showing that the majority of people are not being welcomed in. What it is also showing is that sometimes there’s staff jumping in to try to sell things instead of just knowing people and building relationships.  

Especially in the Engage zone, this is where greeting performance is absolutely lower in legacy formats. Think about in this zone, whether it’s people behavior or the environment, how can you support a very relevant welcome local greeting? And this is also the zone where localization is usually the most effective. Then the Transact zone, the third zone, this used to be the main purpose of the branch. It is now becoming the least important purpose of the branch. However, you still need to do it efficiently, and it’s kind of table stakes. So, customers need to know where they are going to go and get serviced as efficiently and effectively as possible. Dwell time is the #1 factor driving poor branch experiences. People don’t want to wait. So, how are you creating less perceived wait time? Meaning even if they’re waiting, what are you doing to make sure they’re engaged, comfortable or distracted while waiting? 

And that’s where things like digital messages come in, but then of course also staffing. How are you bringing them to a certain area? Then finally is the Consult area, and really this is the new purpose of the branch. The macro meta shift is from Transact to Consult. This is where you’re having high-value interactions. This is problem resolution, but it’s also account opening, deepening share of wallet, cross sell, etc. So, this needs to be in places of perceived privacy, even if they’re not fully enclosed, the customer has to feel like they can have a private conversation and sometimes even semi-private areas are better than totally private areas, because the customer doesn’t feel that they’re being cornered or that it’s going to take a long time.  

So that’s the experience journey, that’s all it is. And then you need to make sure by the way back of house has everything staff need to do their jobs effectively and feel valued and supported. But all of that rolls up to the ultimate point of the importance of making sure your environments are keeping up to speed with what customers really want, which by the way is also what employees want because that impacts profitability through Net Promoter Scores, the advocacy, the cross sell, the deepening share of wallet, and ultimately the retention of customers due to experience. 

Juliet D’Ambrosio (21:41): Wow. Gina, that was a master class in a very short period of time in really benchmark design of branches that are meant to take these relationships into the future. And I’m curious about your perspective. If we have a client that comes to Adrenaline or there is someone that you’re talking to in the industry or a listener who is like, “Wow, all of that? Yes, sounds great.” Give me a great Attract zone with my branch as a billboard, or I’d love a Consult zone that gives my customers that sense of perceived privacy, but doesn’t know where to begin. What kind of advice would you give them? What have we seen is the best place to start if you don’t know where to start in thinking about your customer experience holistically? 

Gina Bleedorn (22:33): That’s a great question. We’ve talked about this, but maybe not as a direct result of the question you’re asking. The answer is North Star. I guess that, in short, remember that meaning if you don’t know where to go, just know that you need to define a North Star vision for what the branch experience should be. And that could be something quite simple or something very complex. It is certainly going to be more complex the larger your organization is because in order for it to be a legit North Star, it means you need consensus and alignment among the decision-makers related to the branch, because if just one person has their own North Star and somebody else has something different, it is not an organizational North Star – it is just a personal dream. So, what you want to do is think about what you can align on internally, what really matters in the future vision of what you want to happen in your spaces. 

Then of course you have to deal with current reality. You go into how do we start to address the gaps of what is currently? And usually one of the easiest ways to address those is when you have new project opportunities coming up. These could be renovation of existing spaces, they could be creation of new [spaces]. Both have pros and cons. The good thing about a net new space is that you don’t have legacy behaviors, perceptions or expectations to turn around or unseat. And you don’t have to worry about branch operations being paused or halted. So, it tends to be easier if you have a net new location. That said, in existing locations you can create new experiences as well. You just need to do a little more staff training to support them. But all that simply goes back to aligning on a North Star vision, hopefully facilitated with experts in design because as a banker functionally what you need to happen, but how it manifests into physical space is where you need design expertise to help advise you on that. 

Then you align on what we call experience mapping, which is what is the experience I want in each of these zones of the space? Describe it: what are the feelings, what are the things, what are the outcomes? And that’s really before you are actually making things pretty and designing [the space]. So, that experience map becomes the blueprint for what you want to achieve – that’s your North Star. Then once that’s aligned and documented and on paper, you can make sure that every deployment that comes after it is trending towards it, and you’re learning and iterating that same North Star, but you’re not starting over just because it’s a new market, a new architect, or a new bank president. You are learning from the past, tracking towards an ideally data-led aligned vision that’s your North Star. 

Juliet D’Ambrosio (25:21): And the North Star is so important. I’m going to back it back up to the unfortunate anecdote that you shared. We know that’s so important because 21% of customers who closed their bank accounts, like you are about to do, cite poor customer service or a poor customer experience. So, getting this right at the branch matters. We also know that data shows 15% of the average banks’ customer relationships make up nearly 75% of its deposits and 50% of its revenue.  

Customer experience isn’t an afterthought. It’s not something that we hope happens as a result of having branches. It has to be the driving force behind branch experience, which leads to that idea of a North Star that is so aspirational today. It’s okay if you don’t get there today, but you’re always moving towards it. It’s always evolving as expectations evolve, but putting it out there and moving towards it is what matters. And there is a great deal of, as you said, it’s not about the branches being pretty. It really is about creating more profitable, long lasting, and ultimately more mutually beneficial relationships with the customers and communities that you’re there to serve. 

Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision makers, influencers, and industry leaders in financial services. 

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