Five Steps to a Successful Branch Transformation

global classroom: South Africa

I’ve been traveling to South Africa over the past few months, engaging with a large financial institution there to jump-start their branch transformation projects. Something I commonly encounter when I meet with FIs is that they don’t exactly know where to focus their transformation efforts, or that they launch their efforts without having a comprehensive plan. That’s why it’s so important that a member of our Global Advisory Services team is called in early to facilitate strategic conversations and roadmap planning.

Our biggest challenge is stepping into a project that’s already half finished. But for many banks, we find the first things that come to mind when they consider upgrading their branch network are immediate pain points: hardware, say, or security, or teller efficiency. They don’t necessarily think about implementing branch-transformation solutions in an all-encompassing, cross-functional way.

You can buy a product to address a pain point — but it’s a quick fix at best. An engagement with Advisory Services starts well before any particular hardware, software or service solution is identified. Instead, we employ a five-step process that leverages a structured, analytic approach to uncover the biggest obstacles to successful transformation, and provides actionable recommendations to address an organization’s biggest challenges.

Here’s how our team’s engagements unfolded during my recent trips to South Africa:

Step One: Define Strategy

Before we make any recommendations or advisements, we sit down with key stakeholders within the organization, and we talk about their challenges. These conversations ideally include staff from a wide range of departments, including IT, sales, marketing, finance, operations and security. We work to understand how the groups intersect, where there are siloes of activity and how the organization functions. In South Africa, I met with both executive-level stakeholders and branch staff to gather feedback and learn about their current branch transformation initiatives.

Step Two: Assess Performance

This is where it gets really interesting. We physically tour and audit a series of branches to better understand the dynamics of an FI’s network. During one of my last visits to the region, we went to six different branches. Some were located in upscale areas, others were in grittier communities. Every single one was anchored in a mall.

I couldn’t help but think of the similarities to Latin America. In both areas, there are large branches with long lines and up to 25-30 employees staffing a single location. These are very, very busy branches, yet often there’s very minimal automation. Consumers might come in and be greeted by an employee, who has them sign in to a paper log so they can be directed to the proper line. There are a multitude of queues, and it’s not uncommon for people to end up in the wrong queue. And often, the FI is improperly staffed because its staffing model is based on certain transactions and interactions taking a set amount of time — when in reality, interactions can take much longer than the allotted time.

Adding to the confusion is the fact that in South Africa, there are 11 official languages — not to mention scores of regional dialects. Banks struggle to address their wide diversity of consumers with signage that’s only printed in two languages (English and Afrikaans), ATM prompts that not everyone can read, and deposit slips that only a few can understand.

While banks in other parts of the world might not face this particular challenge, the issues raised are universal: how can this FI provide a better consumer experience? How can they employ technology to better understand their consumer base, and tailor branch delivery methods accordingly?

Step Three: Develop Roadmap

This is where the rubber starts to meet the road. After touring branches, talking with employees and investigating the organization’s pain points, we begin to talk about where and how we can have the greatest impact.

In South Africa, we provided a series of recommendations related to five key components of successful branch transformation — people, process, design, sales and marketing, and technology. These recommendations were aligned with the bank’s strategic objectives to improve operational efficiency, reduce costs, improve the consumer experience and drive incremental revenue.

Like many institutions, there are a plethora of opportunities to pursue, so we also provided a prioritized roadmap to ensure the bank first implemented those initiatives that would have the greatest impact on their success. Some of these recommendations involved technology solutions — teller automation and cash recycling — but many did not. We also considered what metrics we’d use to evaluate ROI and measure the results of the bank’s branch transformation program.

Step Four: Implement Solutions

Hardware, software and services solutions come into play during this step in the process, but we don’t just “set it and forget it.” During our conversations, we didn’t simply discuss a solution (such as adding cash recyclers to their ATM network, or suggest a new branch design to enhance the consumer experience). We also discussed the best ways to introduce the new technology, how to prepare both branch staff and consumers for the change, and other process and design issues that needed to be addressed before implementation could occur. Instead of a sale, an engagement with Advisory Services becomes a true partnership.

For example, one of the biggest challenges in South Africa is to migrate routine deposit transactions from the teller to the ATM. Many consumers have little or no experience with ATM depositing and need to be educated on the process by a knowledgeable branch employee. Most deposits are made using cash, so the self-service terminals need to be capable of handling high volumes of notes, some of which may be in less-than-desirable condition. And if there is a problem with the deposit, the bank’s problem resolution process needs to be streamlined, which we found was not the case.  Consumers have to go into a branch, wait in one or two different lines, and typically don’t have their problem resolved until one or two days later, even though the branch staff services the machines. It’s not surprising that the next time the customer needs to make a deposit, they may wait to see the teller rather than use the ATM. Our Global Advisory Services team suggested a series of programs to educate branch staff and consumers about ATM deposits, and also a number of process recommendations to help drive adoption and ensure appropriate uptime of the self-service terminals.

Step Five: Monitor Improvement

Our engagement with an FI doesn’t end at implementation. We revisit stakeholders and branches to talk about what’s working and what’s not working. In South Africa, those conversations might revolve around updated statistics on ATM uptime, transaction migration rates, or the success of employee readiness programs supporting new technology. Our experts examine the impact of the new operating model on consumer experience and sales, and we assess whether any changes are needed. Over time we can continue to engage, refine and evaluate, because our team is structured to support an FI’s end-to-end innovation lifecycle. Our collaborations certainly don’t end once a solution is in place — and ideally, they begin well before a solution is even considered.

Find out more about Diebold’s Advisory Services team here. If you’d like to talk to me or another member of the team about where your organization is at from a branch transformation perspective, let’s start a conversation.