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BankThink

It’s up to bankers whether tech will make them productive or obsolete

My younger son recently returned home from his part-time job at a large grocery chain with good news: The chain would be raising its minimum wage.

I agreed that was, indeed, great news, while also half-joking that he better focus on being worth that increased wage. When he gave me a smirk, I found myself going into a soliloquy similar to hundreds of conversations I have had with bankers about the future of branches.

Put simply, I’ve suggested that in the future, I see branches with fewer, but bigger, and likely higher-paying jobs.

In my son’s case, I gave advice that I’ve given to many young men and women. Strive to produce more than what is asked of you. Always look for opportunities to expand what you know and what you do. Make yourself worth more than whatever an employer is paying you.

In fact, that is sound advice for everyone, regardless of age, experience or position. As technology allows us to increase the productivity of individual employees, we absolutely must increase the productivity of individual employees.

I’m not saying this to be critical. What I am suggesting is that technology will either make us more productive — or obsolete.

As improved technology increasingly frees our teams to do fewer transactional tasks, their individual capacity for business development and growth activities increases. Moreover, it must.

I’ve long preached to branch bankers that improved and increasing self-service technology is an ally, not the enemy. It allows them more time to focus on vital roles such as problem resolution, customer engagement and business development within their branches and in their communities.

Improved self-service technology is also increasing the viable target markets of individual branches. The practicable service areas of individual branches continue to expand as customers’ needs for physical branch visits decrease.

When describing this phenomenon to bankers, I often use a diagram with what I refer to as "shopping circles." There is a range — a circle on a map, essentially — in which people consider a store or place of business convenient enough to be their primary provider of a product or service. The range most would consider close enough is smaller for a place they visit twice a week than it would be for a place they visit far less frequently. Crucially, this means as the number of physical trips needed to conduct our banking has decreased, the range considered convenient enough for a branch by a customer has increased.

This is one of the reasons we see banks expanding into markets previously judged too difficult or expensive to enter. As the total number of branches needed to provide “convenient enough” access to markets falls, the number of markets feasible for a bank to enter successfully expands.

And yes, branches do matter. Access to a bank branch remains at or near the top of the list for why customers select or choose to stay with their primary bank. Even most customers who do not regularly rely on physical branch visits consider access to a branch a must-have.

What I repeatedly point out to bankers is that customers are not demanding physical access to a branch. They want physical access to a banker.

Customers do not visit a branch to admire the furniture or read the promotional material. They want the ability to personally interact with a banker. We just happen to keep our bankers in branches.

Organizations that do the most effective job of attracting, developing, retaining and deploying good bankers are going to be the winners.

All that said, there is little reason to believe that branch networks designed to serve markets 20 years ago remain ideal today. Staffing models and job descriptions appropriate to properly operate branches have also evolved. But the quality of the bankers we employ and deploy remains central to our prospects for growth.

When we help our teams see that the changes implemented by our organizations are happening for them and not to them, they are far more likely to embrace these changes, adapt as needed and increase individual productivity.

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