They were supposed to join the telegraph and the steam engine as means of doing business that had grown obsolete. None other than Bill Gates himself had offered a eulogy.
As it turned out, having more money than half the world's countries didn't stop Gates and numerous others from being wrong.
The financial institution branch has not only not shrunk away, it's blossomed. Credit unions especially are buying and/or building branches as quickly as they can afford to do so. And that has led to numerous questions related to branch strategies, design, measuring ROI and a host of other issues.
Seeking to answer some of those questions were a trio of experts who offered their thoughts during CUES' recent Marketing, Operations and Technology Conference here. Below are excerpts from each of the three presenters:
First Mistake: Underestimating The Real Competition
NEW ORLEANS-The biggest question every credit union needs to ask itself before embarking on any retail effort is, "Who's your competition," said Cynthia Grow, vice president-creativity and imagineering with DEI, Inc., Cincinnati.
If the credit union answers that question "the banks and credit unions down the street," Grow said it is grossly underestimating its members' perceptions.
"Your competition is anyone who exceeds your expectations as a customer," said Grow. "This is why your graphics really have to pop. I like to say there's too much visual clutter in the marketplace. Whenever possible try to use your tagline in your retailing."
Like her fellow presenters, Grow cut to the chase with the issue many CEOs and boards want resolved before investing in a branch redesign: return on investment.
"The important thing is the payback," acknowledged Grow. "Yes, a creative retail branch can be more expensive. But it separates you from the competition, and people like to have fun. Think of the stores you like to go to. Your money is the same as everyone else's, your people are from the same community. What makes you different?"
The Key In Developing Branch? Developing The Payback
NEW ORLEANS-Branch designers aren't all about the pretty stuff. They know spending money on a branch is an investment-one on which credit unions expect a return.
"What's important is developing the payback," agreed Paul Seibert, principle with Emick Howard and Seibert, Seattle. "The question is how do we physically build a new member experience that delights. It's relatively easy to build a pretty branch. The trick is building one that is productive."
One problem for credit unions, said Seibert, is a lack of understanding about what differentiates them-every credit union answers "friendly service" when asked what makes them unique, he said.
"Not until that question is answered can a credit union build a branch to reflect that," he told the CUES meeting. "What key products and services are most important to your members? Not what's most important to you, but to them. We also often find credit unions not asking what's important to their prospective members. What are the cultures you're looking at and does it align with your members' culture."
Seibert suggested that few credit unions have done a good job of measuring ROI on new facilities. "You need to be able to know what the change is doing for you in dollars and cents, you need to be able to know what this pretty branch is doing for you."
His other advice on retail facilities:
* You have to build a guest atmosphere, including worthwhile information that is educational and entertaining.
* Engaging interiors viscerally connect with member values and make people extremely comfortable. It must bring people inside and in contact.
* Reengineering starts with understanding the key elements necessary to get to the member experience. It doesn't matter, he said, if it's a park or a convention center or a branch. It has to do with how you control the experience.
Seibert said the innate challenge in building facilities is not to dedicate the experience to the reason most members visit: for a routine transaction.
"Teller cash services are the reason for 80% of visits," he said. "But while they are there why not sell some other products or services? TowerGroup says that 75% of the PFI customers come in once a month, and for credit unions it's even higher, about 80%."
Seibert said that financial services, including investments, are keys to promoting branches, but often the services are in the background at the branch.
Where he said most banks and credit unions also fail is in translating the brand into the design and experience of the facility.
"You must create a comprehensive set of branch planning design and branch merchandising standards for market consistency," he said. "And you save money by doing this."
A Dire Prediction About Branches That More Than Missed The Mark
NEW ORLEANS-It was once a quote made famous by the threat it made to entire industries. Today it's equally infamous for being completely off-base.
During the late 1990s, Microsoft Chairman Bill Gates once crowed to a meeting of bankers, "The branch is a dinosaur." Today, not only are both banks and credit unions building branches at a record pace, Microsoft has a division dedicated to serving the software needs of financial institution branches.
So what does the future of financial retail look like?
"It's going to look exactly how people choose to do their business," suggested Mark Weber, president of Weber Marketing Group, Seattle. "It will be driven by the finger (online) and the feet. There's still 45% of Americans who are voting to walk inside the branch and do business with a person. That makes no sense. Are they just old people, while all young people use technology? Our studies and others say absolutely not; it's based on core values and how people like to interact. Many people like to interact with other people."
No industry recognizes that more than banks, said Weber, noting that after 10 years of heavy investment in technology by banks the industry is racing to recognize the value of the branch. And there's no better example of that than Washington Mutual, the aggressive, expansion-minded player that has burst into many a market.
Weber said that Washington Mutual's branching strategy is something it calls "Occasio," which he joked is from the Latin for "cross-sell them everything you can." "Those experiences inside a branch can shape impression of quality and of the institution," Weber noted. "What takes place during that experience is driven very much by your people. When you walk into Washington Mutual what you see is a lot more technology. This is going to be a trend. If people come into your branch and don't see what they could be doing with technology, you're missing out. But if someone got in their car and came all the way to your branch, they probably don't want to stick a card in a kiosk."
Where Failures Occur
Where credit unions also frequently fail, said Weber, is in truly seeing themselves as members see them. He showed one slide he shot of a credit union facility where upon entering members encountered the backsides of computer monitors sitting on desks with all the associated cabling.
And he reminded that understanding how the member sees the credit union involves more than just the branch.
"The second change in retail is that the consistency of channels has to be integrated," according to Weber. "The web experience, the branch experience, the phone experience should be identical. The integration piece is going to be crucial, and that's best done through branding. A big part of branding is telling people what makes the credit union different. It is a deep sense of philosophy and core values. It answers the question, 'Why is this different from a bank?' That brand has got to stand for something, and we think credit unions have a huge opportunity to do that."
Like his fellow presenters, Weber believes ROI is critical, but with a caveat.
"Measurement is going to be a key. We talk to a lot of boards and CEOs who want to know the ROI on the retailing and the branch experience," he said. "If you're measuring it on cross-sales ratio alone, that's a key mistake. What's crucial is to really think of what does this credit union really stand for? You've got to build awareness that the credit union is a source for products and services and information. The environment should support what you're people are trying to do."
Touching upon how Gates' observation really missed the mark, Weber added, "What the branching market gives you is the single greatest opportunity to shift perception. It gives you a captive audience of 10 to 15 minutes with hundreds if not thousands of members every week. Are they just coming in, cashing a check and being told to have a nice day? The key is to really recognize that the branch is the credit union's fortress."
