Bank Branches' Role Shrinks as Their Target Market Expands

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When making a point to banker groups about how much the week-to-week banking habits of Americans have changed in recent years, one simple question tends to create much side chatter, nods and chuckles.

I often ask bankers the following: "How many of you – who work in a branch every day – will sometimes go one month…two months… maybe three months or more… and never have to use your own branch to handle your banking needs?"

Without fail, branch bankers begin smiling and nodding and saying things like, "Oh my goodness… I never thought of that." I then point out that this shouldn't surprise them as much as it apparently does. 

They are regular folks with regular banking needs and habits. The fact that they are employed by a bank and are standing in branches each day doesn't increase their need to use them to conduct their normal banking activities.

And that's not an indictment on the services they provide in a branch. I would argue that across the industry, the environments, quality of personnel, marketing, and overall customer experiences may be better in branches now than at any time in our history. 

We're better at running branches than we've ever been. And in spite of this, foot traffic in our branches has been dropping in recent years and will inevitably continue to drop going forward. And while that fact presents a multitude of challenges, I'd respectfully suggest that it creates a few new opportunities as well.   

When customers needed to access a branch weekly, the difference between being 5 minutes away and 20 minutes away from them was indeed a big deal. It is becoming less important by the day. 

I sometimes give the example that I require the stores I buy milk and bread from to be within 5 minutes of my home. I'm willing to drive a bit farther to buy suits. I do the first frequently. I do the second far more sporadically.

It's usually around this point that I stress a couple of things to avoid a "woe-is-us" vibe.  First, the fact that branches are becoming somewhat less integral to customers does not mean they are not important. Time and again, customers cite the availability of a physical branch as a factor in their choice of bank.

But we need to remember that what constitutes "accessible" is being redefined by customers each year.  It can now mean "across town" instead of "across the street."

Second, the declining reliance on branches by customers does not mean that the importance of bankers is declining.  In fact, in an increasingly commoditized industry, the human element is more of a differentiator than ever.

There was a time when I may have been more willing to put up with mediocre service or a lack of appreciation for my business because of the convenience of a particular branch. That is no longer the case. There are now acceptable alternatives in most markets, even without the addition of new branches in those markets.    

For visual impact, I sometimes show a Google Map satellite shot of the facility I happen to be in at the time.  First, I show what folks would have historically believed to be the "service area" of the average branch – usually the equivalence of a 5 to 10 minute drive.

I follow that by expanding the map to show what a 20 minute drive looks like. The differences are stark and I can usually tell that folks have not been in the practice of thinking of that sized area as being a branch's target market.

The area that an individual branch can effectively service is larger than ever. A branch's potential customer base is bigger than ever. But customers are less likely than ever to be found "shopping" in a branch. If we're waiting for them to walk in and find out what we have to offer, we're in for a long wait.

Go online this week and take a look at the market a "20-minute-radius" from your branch(es) encompasses.  How many small businesses and neighborhoods, especially in the "outer 10 minutes," are you personally familiar with?  More importantly, how many do you think are familiar with you personally (not simply with your bank)?

Chances are, not as many as should be. It's time to get out there and change that.

Dave Martin is an executive vice president and chief training consultant at NCBS, a SunTrust Banks Inc. subsidiary that offers consulting, training, design and construction services for retail banking programs. He can be reached at

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