Tomorrow's branch takes shape: the focus will be on financial advice. Teller transactions will be de-emphasized. Branch staff will use tablet computers when interacting with customers on the floor. Plus, there will be a community resource center.

• Author: Stewart, Deb
• Position: Company overview

HERE ARE THE QUESTIONS THAT ARE ON THE MIND TODAY OF EVERY BANK MARKETER: Will branch traffic continue to decline? Will financial pressures on retail banks continue? Is the bank branch as we know it irrelevant? And if it is, what should we do about it?

We'll look below at some of the trends that are changing the branch--and examine how several different banks have responded in divergent ways to the above questions.

What's changed?

There are just not as many customers in our branches as there used to be. Teller transactions continue to fall at a rapid rate. There is an expectation that the rate of decline in check deposits, in particular, will accelerate in corning years as more businesses and consumers adopt remote deposit technologies and electronic transfers. Retail-bank economics have been hard hit by low interest rates and reductions in fee income.

Considering these changes, what's wrong with the current branch paradigm? In a recent Voice of the Customer study by Capgemini, a global consulting company with North American headquarters in New York, there is some good news. It found that in the Americas, the branch channel edged out the Internet as the most important customer channel, while in Europe and Asia-Pacific, the Internet exhibited a slight lead over the branch. Mobile was considered the least important channel in all the regions, although with a 70 percent increase in mobile data traffic last year and the steadily increasing penetration of smart phones, this preference is expected to move up.

"Branches won't go away," says Bill Sullivan, global head of Capgemini's Financial Services Market Intelligence, "but the challenge will be for banks to find a way to differentiate themselves not on the basis of product or price, but rather on customer experience--being very aware of the market segments they are targeting." For example the study found that the difference between branch customer experience perception for young and old was pronounced. In North America, 74 percent of customers aged 65 years and older have positive experiences with the branch, compared to only 48 percent of customers aged 18 to 24 years.

"The high expectations of this younger audience for information gathering and purchasing may be driving this lower satisfaction," Sullivan continues. "Banks may be too slow in developing service and product models that these target segments will value. Banks need to be prepared for continuing shifts in consumer behavior. That means being agile and being able to react to change relatively quickly."

"Before launching a new branch design or business model to react to these shifts, banks need to reassess their strategic objectives for the branch channel--what sorts of business are they trying to drive and what do their customers actually need," says Sullivan. The Voice of the Customer study concluded that banks must overcome numerous obstacles when it comes to optimizing the layout and design of their branches:

* Awkward and outdated layouts leave customers confused about how to navigate the branch. These layouts also decrease efficiency.

* Generic branches fail to generate interest or the sense that the bank is able to deliver a personalind customer experience.

* Inefficient service models require staffers to spend more time on administrative tasks than customer service, increasing costs and leading to negative customer experiences.

* Low-tech, older branches fail to recognize that the branch is moving into an advisory role where customers need to feel welcomed and comfortable addressing everything from their most basic to their most advanced financial concerns.

* A lack of integration across channels leaves customers confused and branch staff frustrated.

Capgemini identified three core approaches being taken by banks to address these obstacles and redefine their customer interactions:

* Branch redesign.

* Branch automation to improve convenience.

* Customized branches for different segments.

Below is a look at how several different banks are working across these three approaches to the new branch configuration.

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