A question following a recent presentation had me smiling and thinking that maybe the more things change, the more they stay the same.
My co-presenters had shared the impressive results they were achieving in attracting small-business customers to their in-store branches. During the Q&A, a young woman asked if they were worried that their nearby traditional branches might become upset. When asked to expound, she said there was a concern at her bank that if their in-store branches proactively courted small businesses, customers would be annoyed that multiple bank representatives (from different locations) were contacting them. Apparently, this concern is brought up by certain members of their management team whenever branch strategies are discussed.
My friends explained that in their organization, multiple sales calls were not an issue for them at all. I felt obliged to share with the young woman that I've heard some version of that "concern" ever since my first days in banking.
As a rookie branch manager, I was warned by some of the more experienced managers to be careful not to call customers out of my territory. I initially assumed they meant not calling on another manager's existing customers. And sure, I understood that. But then I learned they were talking about geographic territories, regardless of whether someone was a customer or not.
And yet, whenever I did drop in on prospective customers along my commute, I found the incredible majority of these folks had never been visited by anyone from our organization. And if anyone ever had visited, it was almost never in recent memory.
The story often went something like, "One of your people called on us years ago. We told him we were happy with our bank. We never heard from you again."
I explained to the young woman with the question that those concerned folks at her bank had just described a problem I'm guessing most banks in America would love to create. In twenty years of working with hundreds of banks, I don't remember one with the problem of overwhelming potential customers with too much attention.
I suggested the far greater problem is that no one is calling on most of these businesses. The nods and chuckles from the rest of the audience seemed to back up that assertion.
In fairness, I understand the logic behind organizations having pretty rigid territories in the past. I didn't always agree, but I understood.
But as our industry evolves, the concept of "calling territories" has to evolve as well. For one thing, the geographic area that any one branch can effectively serve has expanded considerably and will almost assuredly overlap branches of the same bank.
Technology has greatly reduced the frequency of branch visits by individuals as well as many small business owners. As more handle their day-to-day banking without visiting a branch at all, they are increasingly less tethered to a branch.
They "have" a branch that they won't use all that much. They'll communicate with and transact as much (or more) as in the past, just without compulsory trips to a branch.
I'm a glass-half-full guy on this subject and point out to management that reduced dependence on branch transactions means their better, more proactive managers and branch teams now have even larger potential target markets in which to grow their businesses. Whether we choose to restrict them with possibly outdated "territories" is another subject.
Another seed I try to plant with bank management is that we are close to the point where we can retire the phrase "competitors in our markets." Historically, this primarily meant competitor banks with a significant branch presence.
Going forward, we need to understand that every bank and financial services provider is in "our market". And some of the more formidable competitors will be those utilizing models not dependent on large buildings and expensive real estate.
Branches still matter a lot. Access to a branch continues to be a big factor in customers' choice of banks. But customer behavior suggests their concept of branch access has changed. Many banks may need to catch up to them.
Increasingly, our markets will be defined less by where we place branches and more by where we send our best bankers to engage with existing and potential customers.
Where will your best people bring your bank today?
Dave Martin is an executive vice president and chief development officer at Financial Supermarkets Inc., a Market Contractors subsidiary that offers design, construction, consulting and training services for retail banking programs. He can be reached at firstname.lastname@example.org.