The Bank Administration Institute is stirring the retail banking pot again.
During its Retail Delivery Systems conference on Thursday in New Orleans, the institute will release a study that foresees a radical shift over the next few years in the ways consumers deal with banks.
The study, a joint effort with First Manhattan Consulting Group, may be the first to prescribe in detail how the banking industry must retool branches and other service channels to meet changing consumer needs and preferences.
The findings could jolt some tradition-bound bankers out of their complacency. Or they may just generate more controversy about the pace of change and bankers' readiness for it.
|Trying to Shake Things Up'
Either way, the institute will feel it has done its job.
"We are trying to shake things up at the decision-making level," said Nik Banerjee, director of retail programs, explaining how the institute wants to be different from other trade group.
"We think the whole concept of retail delivery systems should offer banks a competitive advantage - if they have the right information about the customers, the costs, and the management will to make it happen," said Mr. Banerjee. "The BAI can be a catalyst for all of that."
The strategy took shape last year, when the Chicago-based institute used its delivery systems conference to showcase a new, senior-level, consumer banking orientation. With the vocal support of influential executives like its chairman, Luke Helms, a BankAmerica Corp. vice chairman, the institute attracted 1,500 people to the 1992 meeting in San Antonio.
Attendance this week could be up by as much as 1,000, said Mr. Banerjee, a former Maryland National Bank executive who is an architect of the institute's programs.
The New Orleans agenda is lively and timely, beginning Wednesday with what Mr. Banerjee promises will be a substantive keynote address by Karen Horn, chairman of Bank One Cleveland.
Trend Away from Branches
But thanks in part to an adroit publicity buildup, all eyes will be on the convention hall Thursday morning when James McCormick, president of First Manhattan Consulting Group, and Eugene Lockhart, executive vice president, present their report, "The Future of Retail Banking Delivery."
Using transaction data and other inputs from some of the biggest banks in the country, the study found that a majority of consumer transactions are already being performed away from branches.
About a quarter of transactions are being done over the telephone, and almost a third at automated teller machines.
"The trend away from branches is clear, and will be accelerating through 2000," Mr. Banerjee said.
While hints like this have been trickling out, the quantifications - using statistical and behavioral models - await the actual report.
Mr. Lockhart said the evolution will be "reasonably quick" for some consumers, less so for businesses and individuals who prefer to be branch-dependent.
Striking a Balance
Bankers' challenge is to strike a balance between market demands and their cost structures. Few bankers are prepared for the "cross-functional planning effort" required, he said.
Dwight Ritter, a Hanover, Mass., consultant and author of a new book, "Relationship Banking," said he is skeptical of any sweeping conclusion about a decline in branch banking. The one major change he has observed has been the shift of routine teller transactions to automated teller machines. Mr. Lockhart sees that as an indication of what lies ahead.
While he did not deny the continuing importance of branches for selling and marketing, Mr. Lockhart said, "If people are not coming in, there is less opportunity to sell, and some of the nonbranch channels will have to take up that slack.
"First we have to understand the customers, the products they use, the channels they use, and how they are likely to change."