ALPHARETTA, Ga.-The days of ever-growing branch volume are over, and as a result, credit unions and banks alike need to pay more attention to staffing levels, according to the 2013 FMSI Teller Line Study.
Upon analyzing the current state of branching, FMSI found a decline in the ratio of population to branches as well as a recent decline in the number of branches and concluded that the market was "overbranched." As a result, FMSI encourages financial institutions to consider the possibility that they have too many branches.
One of the first steps FMSI took during its analysis was to consider what has changed since the last time it conducted a teller line study. Among the biggies: compliance issues. Between the Dodd-Frank Act and Obamacare, a whole host of new costs and challenges have cropped up, leading FMSI to point out that one overlooked area to decrease overall expenses is the reduction of staffing levels on the teller line.
"Look closely at your teller line workforce optimization," the firm said. "With the potential of $30,000 per year, per branch in excess labor costs, you may be leaving a very big rock unturned."
The advent of mobile banking is also a factor in this, FMSI said, noting that this channel isn't going to suck huge numbers of transaction away from the branch overnight, but over time, the impact is expected to be significant, particularly as the "video game generation" grows up.
Another "alternative channel" that is expected to impact the teller line is the various types of remote teller systems.
Meanwhile, branch operating costs are increasing due to:
* A 45.3% decline in branch volume since 1992.
* An 84.2% increase in salary and benefits since 1992.
* A 123.6% increase in labor cost per teller transaction since 1992.
* Productivity has decreased 18.9% since 1992.
Interestingly, in comparing credit union performance in these areas to that of banks, credit unions have fared better, FMSI said (see charts), but credit unions are still taking hits in each of these areas, as well.
To combat this, financial institutions need to take a hard look at staffing levels and how they are scheduling their tellers, FMSI concluded.
