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Millennials and the Branch: Strange Bedfellows
Thursday, July 6, 2017 6:35 AM

Anthony Burnett, Customer Experience Director, LEVEL5, LLC

Question:  How do financial institutions connect with Millennials?

Answer:  The marriage of science and art.

Earlier this year, the financial industry received shockwaves as study after study echoed the same message: Millennials highly value the branch. Though Millennials and all consumers look at a digital-first connection with their bank and credit union of choice, the branch is equally important to consumers.

Human Connection.
Research by Bain and Fiserv point to an inherently human response during the banking process: establishing trust and demonstrating value through relationship. Relationship is the heartbeat of the financial services industry, and relationships are established over time.

Branching is about relationships. Banks and credit unions all offer similar products and services (at slightly different rates), but the motivation to buy (a loan) from one company over another comes down to relationships. And consumers of all demographics are coming to the branch for that connection. In fact, the Fiserv study found that Millennials are the most likely demographic segment to visit the branch, and the most likely to apply for and receive a loan through the branch. Therefore, a key question all banks and credit unions should ask is: How can we better connect with a demographic that wants what we have?

Science and Art.
When it comes to branching, there are no silver bullets or secret sauces to success. However, there are guiding principles—call them natural laws that govern victory: the marriage of Science and Art.

Science of Branching.
If there's one step financial institutions skip in their pursuit of connection with consumers through the branch, it's developing a business case. In our industry, we have data at our fingertips, and it's plentiful. But the science of branching is not about the data; it's about the interpretation of the data for a specific outcome.

Market Conditions.
Specific data collected about the local market conditions around your existing branches or proposed new ones reveals more than you could imagine—the preponderance of consumers who desire what you have:  loans. It shows how they want to connect with you (mobile, automated, and the branch), and it reveals the specific products and services you should offer in branches.

Product/Consumer Behavior

The index data above is much more than good local information about product and service demand. With this data in hand, we can go to the next level to establish the total headcount and function of the branch. Instead of staffing branches “how we always do,” we can staff for a specific outcome based on what local consumers want today and what they will need tomorrow.

Loans and Deposits.
Furthermore, all data collection for branching should result in a specific loan and deposit forecast for that opportunity. Only with this information can we build a business case that will allow for measurements of return on investment.

Historical experience has proven that a freestanding branch’s profitability comes into focus at $25 million (deposits and loans). Nevertheless, as branches get smaller and more flexible, perhaps lower opportunity can be feasible. Understanding the opportunity and starting to develop a detailed plan—if it’s a 70 percent one—will create a greater likelihood for a predictable outcome.

Market Rating

Art of Branching.
Certainly much of the business case for the branch is art as we interpret the data; however, the art also flows into design. The function and headcount of the facility are finite components, so that's the science of it. But how we integrate those into our consumer experience is unique to the local community we serve and your business, and that is an art.

A Unique Consumer Experience.
The way you connect with the local demography, the community, and your consumers is unique to your business. The experience should be well planned and purposeful, always remembering that your personality and value proposition are unique to you. A consumer experience begins before the consumer walks through the door and continues through the branch environment. The beauty is that we have the freedom of creativity to build connection, and as a result, the branch experience takes on the different personalities of each community we serve.

Training Drives Performance.
The glue that holds it all together is your human capital—your people. Nothing in branching drives success better than training your staff to learn how to connect with people and opportunities.

For many FIs, this means adopting the Universal Banker model for their business. This means we combine skills training to optimize each opportunity our staff has to connect with consumers, to shift the employee mindset and branch purpose from order-taker to advisor, teacher, counsel, and guide through the consumer's financial journey. Every consumer is at a different stage, and they look to their bank or credit union for help. Your success depends on your ability to capitalize on those opportunities.

So, What’s Next?
What's next is up to you. The process outlined above is but an overview, a mere glimpse into a portion of the process of connecting with consumers who want what you have in the branch.  So, a good question follow-up question might be: What's the business case for the branch in a fintech world?

Level5 is an endorsed business partner of Credit Union Resources, a wholly owned subsidiary of Cornerstone Credit Union League.