As consumers change their banking behavior and brand preferences post-COVID, the financial services sector is gaining some new traction in our new era, and it might not be where you think.
While digital transformation may be high on banking’s list for post-pandemic changes, branches and what happens there are priorities, too. Realistically, trust-building and personalized experiences are now expectations of post-COVID banking, providing new opportunities to deepen relationships and expand local influence at the branch. Throughout the pandemic, banking leaned into that sense of local connection and commitment to customers.
Examples of banking doing well and doing good were all around with community institutions proving their mettle by delivering real value to people at the moment of need during a very tenuous time. Gina Bleedorn, chief experience officer at Adrenaline says, “Through all of the things that happened during COVID and especially PPP and small business lending, it was those smaller financial institutions that took the time to call up their customers and say, ‘How can I help?’ and the big banks just couldn’t do that. So, trust is a business currency that matters.”
That trusting relationship largely leans on the local branch. Understanding the vital role of that local channel, 97% of FIs are planning on redesigning their branches over the next two years. Even as people adopted digital methods for transactions during COVID, they’ve remained deeply connected to their local bank and the relationships they have there. So, while banking must adapt to digital demands, they must also drive trusting relationships and personal experiences at the branch. And the time to leverage that trust is now with one out of ten people considering switching and 25% of businesses expecting to shift their banking relationship this year.
Making an even stronger case for the need to leverage local and take advantage of opportunities post-COVID, new data finds that overall trust in banking is down. Differentiated from customer satisfaction, trust in a bank’s ability to look after consumers’ financial well-being dropped 14 points in two years. What that means is that while consumers may be satisfied with how their bank supported them throughout COVID, they don’t trust their primary FIs to look after their long-term health. While this may sound like discouraging information for the industry, given that the top six banks control over half of the market share, this presents a concrete opportunity for community banks and credit unions to step up.
The good news in building these new relationships is that data consistently shows that local branches represent banking to consumers. Whether it’s that they want to be within 15 minutes of one, use appointment banking or expect great experiences, the branch channel is the locus of consumer banking activity. Most consumers, even post-COVID, still want to bank face-to-face, and that’s consumers across all demographics. Even though there may be a more traditionalist mindset in older generations, people in all demographics want that in-person experience at the branch. But for many banks their branches are not optimized to make the most of those interactions.
In Part I of our Branch Transformation series, we looked at data from McKinsey that found those banks that made bold moves in transforming their networks during COVID outperformed those that didn’t by four times. Those productivity gains didn’t come from cuts alone. Banks got better results from the branch network because they weren’t just reducing; they were transforming. Gina Bleedorn says, “They were piloting and extending new branch models like micro branches and ITMs. They were optimizing their staffing, migrating to cash, implementing automation in TCRs, shifting simpler transactions to self-service, and reimagining the branch experience in hubs and flagships to better align with what consumers want.”
In our next article in the Branch Transformation series, we’ll look at market performance measures and how to develop an analytics-based approach to transformation that will help decision-makers determine where to prioritize and what actions to take. Also, be sure to tune into Believe in Banking as it tracks the big trends like branch transformation, that are impacting financial services and informing the banking experience. For more insights on branch and brand strategy, contact Adrenaline’s experts at firstname.lastname@example.org or call (678) 412-6903.
Adrenaline is an experience design agency that creates and implements end-to-end branded experiences through creative and environmental design. We enhance our clients’ customer experiences across digital and physical channels, from their branding and advertising to design and technology in their spaces. After transforming an organization’s brand, Adrenaline extends it across all touchpoints — from employees to the market to in-store environments. And, we focus on serving industries that sell human experiences including financial, healthcare, sports and entertainment.