Study Finds Paradox In Achieving Front-Line, Branch Goals

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Financial institutions, including credit unions, are wrestling with overcoming a paradox on the front lines: they are dependent upon a high level of skills from employees who are the least likely to have them.

That's a key finding in a new study entitled "The Front Line Factor," conducted by BAI Research, Oracle Corp., and De La Rue Cash Systems, Inc. The study, which sought insights into the challenges financial services providers face executing relationship-based strategies at the front line, surveyed 500 respondents representing banks, savings institutions and credit unions of all sizes and conducted in-depth phone interviews with 38 executives from the nation's top 50 banks.

Where The Challenge Lies

"As branch networks continue to expand and perform an increasingly important role in driving overall profitability for financial services companies, the need to attract, hire and retain front-line employees who can interact with and service customers in a way that fosters long-term, profitable relationships increases," said Thomas P. Johnson, Jr., BAI CEO. "The challenge lies in developing higher order relationship-building skills in employees who have traditionally been at entry level, and increasingly on a part-time basis."

"Banks and other financial services companies strive to deliver a relationship-oriented approach with an emphasis on service quality, and they have made enormous investments in relationship-based strategies in recent years in the hopes that they would produce better customer interactions," said Paul McAdam, managing director of research at BAI. "But financial services executives say that their companies are falling short of achieving their goals at the front line.

According to the study, common obstacles identified by respondents were:

* Staff lacks required sales skills.

* Staff does not receive adequate sales training and coaching.

* Front-line staff focus is on internal activities (such as counting, balancing and paperwork) versus serving the customer.

* Front-line employee turnover remains high.

* Teller transaction activity is too time consuming.

* Too much pressure is placed on front-line personnel to cross sell.

"The challenge for financial services human resources executives is finding branch employees who excel at accurate cash handling and who exhibit an inclination toward inspired customer service-yet are willing to work for entry-level wages for the industry," said John W. Smith, senior vice president of marketing and strategic development at De La Rue Cash Systems in Lisle, Ill. Increasingly, he says, financial services companies are hiring retail sales professionals to fill these branch roles.

'Most Important Channel'

The study notes the relationship with customers/members begins at the point of an account opening, and most new accounts are opened in branches. Benchmarking conducted by BAI reveals that the average retail banking customer conducts two or three branch-based transactions a month. "Branches are arguably the most important retail delivery channel," said McAdam. "Financial services companies measure customer relationships through the branch because sales and service there directly shape revenue potential."

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