There is a future for
This report is based on the results of a quantitative survey of 700 branch banking customers during the summer of 2008. The aim of this research is to understand what customers expect from their bank branches and how these expectations will evolve in the future. It specifically looks at primary customers’ likes and dislikes about their branches.
The answers to these questions have far-reaching implications for retail banks in terms of how they can improve the customer experience at branches. The research addresses all Belgian retail financial institutions and samples retail, personal and business customers. Although this report focuses mainly on retail banking customers in Belgium, a similar study was also conducted in The Netherlands, of which some elements are presented in this report.
In uncertain times, it is crucial for banks to maintain a competitive market position. This may mean refocusing their customer and channel strategies. The currently restricted availability of capital means that both management and stakeholders are demanding that strategic decisions are underpinned by fact-based evaluations of the alternatives.
This report is meant to provide a better
understanding of how customers feel about their bank branches, their expectations, and their likes and dislikes.
Every new technology prompts predictions of the end of retail bank branches. Emerging channels such as the internet, ATMs, self-service banking, call centres and mobile phones have always triggered questions about whether the 4,200 branches in Belgium can survive. Although large amounts are invested in branches, do banks really know what their customers want? Branch design and layout are clearly part of the customer experience, but they are not the most important differentiating factors for customers. Do bank branches still make sense for the customer? And if this is the case, how should banks then use the branches to deliver the best value?
The results clearly show that branches are here to stay.
Focusing on what Belgian customers are really looking at in their retail bank branch, this report will be of wider interest for two reasons. First, it summarizes the customer experience and expectations about Belgian bank branches. Secondly, it analyzes the Belgian retail market and draws conclusion in terms of branch strategy.
The survey was conducted before the start of the current banking crisis. It would seem safe to assume that recent events will have further reinforced the threats identified, such as low customer loyalty and lack of confidence in banks, and reduced levels of trust even more.
Patrick Callewaert
Partner Deloitte Belgium, Head of CRM Consulting Group for EMEA
Prof. Dr. Kurt Verweire
Partner, Associate Professor in Strategic Management, Vlerick Leuven Gent Management School, Competence Centre Entrepreneurship, Governance & Strategy
The retail distribution
landscape is shifting from a
branch-dominated paradigm
to one of integration and
balance between multiple
channels. Nevertheless, the
branch remains a key
channel for Belgian retail
banking customers. The
new paradigm demands a
fundamental shift in the
position and role of the
branch.
Executive summary
Branches are important for the customer Our customer survey confirms that the branch is still highly valued by Belgian customers.
• Bank branches are highly visited.
79% of personal and 89% of business customers visit the branch at least once every 6 months against 59% and 84% for internet banking and 65% and 44% for self-banking.
• Although internet is used for getting information on financial products, visiting branches is the preferred channel during the whole sales cycle.
71% of personal and 79% of business customers consider the branch as their preferred sales channel. • Most customers would not carry out complex
transactions or apply for complex products entirely via direct channels.
72% of personal and 65% of business customers would certainly not apply for complex products entirely online.
• Most customers would like their banks to review their financial positions and proactively propose relevant offers to them.
80% of personal and 65% of business customers expect more proactivity from their banks. • Some customers are even willing to pay for
face-to-face contact and professional advice. 23% of personal and 35% of business customers are
willing to pay for professional and personalised advice. The survey indicates that Belgian retail customers demand face-to-face contact and will continue to visit their branches. However, they are not very satisfied with the services provided by their current branch and bank. Better customer service and access
The survey highlights that customers are not satisfied with branch services and access.
• Advice provided at the branch fails to satisfy 1 out of 3 customers.
27% of personal and 30% of business customers are not satisfied with the quality and the promptness of the advice provided.
• Access to the branch is too limited. 38% of personal and 41% of business customers
consider the possibility to make appointments after closing time as the main area for improvement for branches.
• 1 out of 2 customers believe that bankers act in their own interests.
50% of personal and business customers think their banker acts mostly in his own best interest. • Banks do not know sufficiently well their
customers.
50% of personal and 39% of business customers do not think that their bank knows their history and current situation sufficiently well.
Banks will have to address these issues if they are to reconnect with their customers and control churn. According to our survey, 10% of personal and 12% of business customers intend to change their main banks in the next 6 months.
One model does not fit all
All retail banks do not need to develop a branch network. Banks need to adapt their branch and channel strategy according to their strategic positioning. Our analysis has identified four types of banks and two branch strategies:
• ‘Universal banks’ and ‘Community banks’ need to implement a multi-channel strategy that fully integrates their branches.
• ‘Discount banks’ and ‘Direct banks’ will focus on direct channels. The branch is seen as a trust contributor rather than a channel. It is used as a window to deliver brand promises and supplement the customer experience for highly, profitable customers. Additionally, our research shows that customer needs and habits can vary dramatically from one country to another, certainly between Belgium and the Netherlands. Belgian customers value the relationships and advice they have in face-to-face branch contacts much more than their Dutch neighbours. In the Netherlands, the internet is the key channel for getting information on financial products, with the branch channel playing a more supportive role in closing the sale. This dissimilarity means that role and strategies are different for the branches in the Netherlands and Belgium.
Customers demand
face-to-face contact and will
continue to visit their
branches, but are not
satisfied with the services
provided by their current
branch and bank.
Bank branches are
important for the customer
We observe a considerable adoption of new channels by retail banks’ customers, among the 700 customers interviewed, only 17% of the personal and 10% of the business customers did not use any direct channel in the past 6 months. PC banking is more and more well liked, 70% of the respondents did use PC banking in the past 6 months, and 55% did use self-banking. Not surpris-ingly, older respondents (>65 year) and respondents in the lowest social class use the least of these channels.
Nevertheless, 42% of the residential customers and 76% of the business customers visit a branch at least once a month (see Figure 1). This percentage is even higher within the senior (>65 year) and inactive respondents.
Several times per week Several times per week 1 / week 1 / week 1 / every 2 weeks 1 / month 1 / month 1 / every 2, 3 months 1 / every 2, 3 months 1 / every 6 months 1 / every 6 months 1 / year 1 / year Less often Less often Never Never 1 / every 2 weeks 8% 4% 8% 4% 9% 11% 19% 23% Figure 1 - Branch visit
How often do you visit a branch (not Self or ATM)?
Personal customers 1% 3% 31% 21% 7% 13% 11% 8% 5% Business customers 14 %
Despite the growing influence of direct
banking, our survey shows that the branch
remains the key point of contact with the
customer.
Preferred channel for getting info on financial services
buying financial products
after-sales Figure 2 - Channel preferences
Other Other sites on internet Bank sites on internet Calling local branch / AM Personally visiting a branch
Personal customers Business customers 48.2 44.7 67 67.1 64 53.9 9.8 22.4 9 15.9 15 31.5 28.9 22.4 12 7.3 13 7.1 7.6 3.5 3 1.2 4 0.4 5.5 7.1 8 8.5 4 7.1 In terms of channel preferences, the branch appears to be the favourite channel during the whole purchase cycle while the internet is mainly used in the beginning of the cycle, to search for information (see Figure 2).
For getting information: 58% of the personal customers and 37,5% of the business customers prefer to visit or call their branch against respectively 36,5% and 25,9% choosing internet.
For buying and after-sales: Visiting and calling the branch is the most preferred channel with about 80% of the respondents choosing this channel to buy or get after-sales services.
Customers are using the internet for getting
information on financial products while
visiting branches is the most preferred
The branch adoption can be explained by the need for face-to-face contact. This is the most expressed branch advantage, with 65% of customers identifying it as the main reason for going to a branch rather than using direct channels. Even further, 25% of personal and 33% of business customers claim to be ready to pay for face-to-face contact.
Customers choose channels on a holistic basis; multiple paths are therefore possible (see Figure 3).
As a conclusion, banks should give customers clear directions on where and how to find what they want, not just within channels, but between them.
The customer should never be blocked during his purchase cycle whatever channel(s) he is using. Banks should make channels work well separately and together to enable customers to become informed via one channel and finalize a sale via another channel.
Figure 3 - Multiple purchasing paths
Contact Centre Internet
Inspiration Orientation Buy After-sales
Branch
Illustrative paths
Client C
Client B Client A
Only very few customers appear to be ready to apply for complex products entirely via direct channels. 72% of personal and 65% of business customers would certainly not apply entirely online for insurance, investment, retirement, credit or mortgage products (see Figure 4).
Customers are not ready yet to carry out
complex transactions or apply for complex
products entirely via direct channels.
Personal customers Business customers
Figure 4 - Extent to which customers would carry out transactions or apply for products entirely by phone or online
Certainly not Probably not Probably Certainly Apply for mortgages Apply for credits / loans Apply for retirement products Apply for investment products Apply for insurance products Apply for payment cards Carry out financial transactions 42 18 34 61 % 38 5 19 19 13 49 19 7 13 13 68 17 6 11 12 71 17 6 11 13 70 12 6 6 13 74 10 5 6 13 78 % certainly probably Certainly not Probably not Probably Certainly Apply for mortgages Apply for credits / loans Apply for insurance products Apply for retirement products Apply for investment products Apply for payment cards Carry out financial transactions 54 21 17 75 % 45 8 36 20 20 25 23 8 15 16 62 21 6 14 14 63 17 20 6 9 63 17 15 9 6 19 66 0 5 4 19 72 % certainly probably
The proactivity of the bank and knowledge about the client are perceived as average by a significant number of customers (see Figure 5).
Customers are demanding more than just the execution of transactions from their banker. 80% of personal and 65% of business customers expect their banker to provide advice and to proactively contact them (see
Figure 6), especially Generation X and Baby Boomer
customers.
Moreover, some customers are even ready to pay for advice: 23% of personal and 35% of business customers assert that they are ready to pay for professional and personalized advice.
Personal customers Business customers I have experienced a lack
of communication within the bank
I feel targeted by appropriate marketing campaigns The bank pro-actively contacts me when changes occur in my professional or private life I feel every contact knows my history and current situation
The bank pro-actively contacts me to propose and sell their products and services
59 66.3 50 61.3 46 52.9 40 42.6 22 22.7 Figure 5 - Proactiveness of the Bank
% yes 55 32.7 25 32 13 25.7 7 9.6 Figure 6 - The role of the banker
Which main role would you expect from your banker? %
Executing transactions only Periodically contact me for a financial update Pro-actively contact me when he considers it useful Providing advice, but only when asked for
Customers would like their
banker to be more proactive and
are even ready to pay for
professional advice.
Branches do not know their customers To offer more personalized services, branches should first get to know their customers better. The survey reveals that 50% of personal and 39% of business customers think that banks do not know their past and current situations. This perception is due, at least partially, to marketing campaigns reaching the wrong customers: 60% of personal and 57% of business customers do not feel targeted by appropriate campaigns.
Customer insights should be captured across all channels: any customer interaction is informative, every contact with the customer is an opportunity to further define his preferences, needs and expectations towards the bank. Transitioning to more seamless IT platforms (i.e. a single customer database interfaced with a multi-channel CRM tool) can provide banks with the highly vaunted “single view of the customer”, which holds the key to enhanced customer service.
As the key point of face-to-face customer contact, the branch is in a good position to capture the voice of the customer. The branch should gain complete and up-to-date knowledge of the needs of their customers, make sure to get a clear understanding of these needs, and attempt to demonstrate this understanding each time the customer visits the branch. By capturing customer data, branch employees can play a significant role in
Banks should meet service
expectations of customers to
increase trust and
Branches need to enhance
the customer experience
Personal customers Business customers Lack of privacy / discretion
Anonymous relationships Opening hours Poor friendliness and politeness staff Waiting lines and time
39 46.8 6 10.2 5 6.1 5 3.4 4 2.1 Figure 9 - Areas for improvement Branch dislikes
Trendy and appealing branch design More automated facilities More room for privacy Shorter waiting lines Possibility to make appointments after current closing time
38 40 24 30.6 21 20.6 14 5.4 4 2.7 Figure 10 - Areas for improvement Branch improvements
Provide greater access and convenience Our survey reveals that access is the prime concern of customers visiting branches. Customers are bothered with long waiting lines and limited opening times. 38% of personal and 41% of business customers consider the possibility to make appointments after closing time as the main area for branch improvement.
In order to meet customer requirements, banks need to improve their branch access, for instance by expanding opening hours, allowing appointments after closing time, improving queue handling to reduce customer waiting time, etc.
Providing more flexible opening hours and reducing the waiting time is only a start. To enhance convenience and access even more, banks should go further and optimize the branch environment. The survey shows that Belgian customers do not value fancy design very much. Focus should be on understanding the customer flow in the branch and adapting branch design, but also the way the staff interact with customers accordingly. Careful consideration should be given to how customers move around a store. Queuing is one of several steps in a customer visit; entering, looking for information, making a transaction, making a sale and leaving play equal roles in a customer experience. The physical separation of different branch modules can significantly improve the customer experience, especially when combined with clear signage.
Banks should address the main customer
concerns: provide greater access and
Provide higher quality advices
Regarding the advice provided, bankers do not satisfy customers: 27% of personal and 30% of business customers are not satisfied with the quality and/or the promptness of the services provided.
Personal customers Business customers Rarley a quick
nor satisfying A satisfying but not always a quick answer A quick but not always satisfying A quick and satisfying answer 73.1 69.7 12.3 17.4 8.9 9.6 5.7 3.4 Figure 11 - Banker advices
The survey explains that customers are sceptical about the advice received in their branches. They believe the banker acts in his own best interest. This is very likely to hurt customer loyalty and retention capabilities. To build customer loyalty, bankers should evolve from tellers to trusted advisors (see Figure 12). Trusted advisors know their customers and deliver attentive, individualized services. They have sufficient information about the past, current and expected future financial situations of their customers to select the best offers for their customers and proactively propose these to them.
Staff turnover is another explanation for customer dissatisfaction. 36% of Belgian personal and 48% of business customers consider that personnel turnover affects them. Senior respondents (>65 year) especially care about staff turnover within the branch. Banks should review the typical career path of branch staff to reduce employee turnover, which has a negative impact on the customer experience. They should adopt the necessary incentive plans to retain employees.
Figure 12 - From tellers to trusted advisors
Basic Offer Active advisory Trusted advisor
• Develop a good understanding of clients’ private and professional circumstances • Act in best interests of the client • Deliver attentive, individualized
services
• Focus on professional advice, not on products • Tailor services
• Offer an account management for most valuable customers
• Promote evenly the product offering to all customers • Provide reliable basic services
• Manage customer care reactively (complains handling, after-sales assistance, etc.)
Degree of trust required Potential depth of r
Branches risk losing their customers
Very alarming is the fact that a significant number of customers do not trust their banker and that some of them are ready to change. 50% of personal and business customers think the banker acts mostly in his own best interest and 10% of personal and 12% of business customers intend to change their main banks in the next 6 months. The higher the revenue, the more likely people are to move to another bank. 53% of personal and business customers do not think that their bank differentiates from its competition. How to reconnect with customers? Banks should first address the main customer concerns: provide greater access and convenience, and provide higher quality advice.
Figure 7 - Trust assessment The banker acts mostly …
Don’t know In your best intertest In his best interest
11% 39% 50% Yes No 11% 89%
Figure 8 - Change assessment
Intention of customers to change their main banks the next 6 months
Banks need to restore customer
Bank branches are
important for customers but
not all retail banks need to
develop a branch network.
One model does not fit all
Different branch strategies are possible
Four different strategic positionings can be identified in the banking retail industry (see Figure 13).
• ‘Universal banks’ serve all customers and differentiate themselves by focusing on services and offering a large product breadth. • ‘Community banks’ offer specific products and services adapted to theneeds of their customers. • ‘Discount banks’ offer the best prices to their customers and leverage direct channels to attract customers in a cost-effective approach. • ‘Direct banks’ concentrate on direct access and convenience with a limited product breadth.
Figure 13 - Two main branch strategies Strategic positioning Distribution Strategy Branch Strategy
Universal bank Community bank Discount bank Direct bank
Integrated multichannel strategy Direct channel strategy
Integrated Channel Branch is part of a multichannel strategy
Not a Channel Branch is a physical presence
Branch role
The branch manages customer relationships, provides advice and completes sales of complex products and processes quality leads stemming from direct channels.
Branch role
The branch should be considered as a trust contributor. It is a physical presence that reinforces the branding of the bank and supplements the customer experience for highly profitable customers.
Key success factors
• Strong multichannel capabilities • People with right skills (advisors, experts, ...) • Appropriate selling approach
• Easy access and convenience
Key success factors • Key localisation of the branch
• Ease and flexibility to make appointments across channels • Close collaboration with the mobile sales force to enhance reach
Customer Customer
Banks need to adapt their branch
and channel strategies according
to their strategic positioning.
Take into account local preferences
Simultaneously to our Belgian survey, a similar survey was conducted in the Netherlands, the comparison of the results reveal major differences between the expectations of the Dutch and Belgian customers (See Figure 14).
Belgian customers value much more their branches than their Ducth neighbours and have a stronger connection with thier bankers . This can amongst other be explained by a strong preference, by the Belgian customers, for face-to-face contacts in the sales process (cited as the first reason for visiting a branch for 63% of the Belgian customers versus only 25% for the Dutch). On the other hand, Dutch customers will pay even more attention to conven-ience and access to their bank (through direct channels) and personal advices being not key in their sales cycle.
Those evidence leads to a different role of the branches in the customer experience of the Dutch customers.
Customer needs differ
substantially between Belgium
and the Netherlands leading to
different models and roles for the
branches.
The Netherlands • in the Netherlands, the
usage of bank websites is the most preferred channel for all services, face-to-face contact being less important for Dutch people
• Self-Service Banking is lightly used in the Netherlands • In the Netherlands branches
play a minor role with only 9-14% of customers visiting a branch at least once a month
• Dutch customers are open to advices but they prefer to take the initiative themselves: only 15% of customers expect their banker to proac-tively contact them when he considers it useful
Belgium
• In Belgium, visiting a branch is the most preferred channel for all services, mainly because of the need for face-to-face contacts
• Self-Service Banking is heavily used in Belgium
• Belgian customers are much more inclined to purchase in the branches with 42-51% of customers visiting a branch at least once a month
• Belgian customers are much more willing to receive advices with about 30% of customers expecting their banker to proactively contact them when he considers it useful
Figure 14 - Customer needs variation
BE
• Need for face-to-face contacts • Branch network is key • Proactive advice required NL
• Preferences for remote channels • Branch is a secondary channel
• Advice required on demand Channel Pr
efer
ences
Br
anch Role
A
Conclusion
The retail distribution landscape is shifting from a branch-dominated paradigm to one of integration and balance among multiple channels.
Nevertheless, the branch remains a key channel for Belgian retail banking customers. The new paradigm will demand a fundamental shift in the position and role of the branch. The customer survey confirms that the bank branch is still highly vaued by Belgian customers.
The position of the branch is shifting from a main transaction field to a place for providing high value services and advises. This integrated and balanced landscape is necessary for serving the different customer segments.
Retail banks should carefully consider the role of their branches and develop them accordingly. Universal banks and Community banks will typically use their branch networks as key channels while Discount banks and Direct banks will focus on direct channels, assigning a branding role to the branches.
The branch network will remain key in the new distribution landscape of Universal and Community banks as customers still value the opportunity to ask their questions, negotiate and close the sales in a face-to-face encounter. But the new paradigm will demand a fundamental shift in the service offering of these branches. To attract and retain customers, universal and community bank branches need to deliver a seamless customer experience. To do so, branches will have to operate efficiently in a multi-channel environment, providing customers with more proximity, greater access and convenience, and the required personal and professional advice.
Finally, customers’ needs vary from one country to another; banks have to take them into account to build their branch strategy.
Figure 15 - Banking channels retail distribution landscape
Transactions Intensity
1980s 2008 2012
Sales and services intensity
Relative importance for clients
Low High Branch Branch Branch ATM ATM/ SSB ATM/ SSB Mail Mail cc cc cc Mobile Internet Internet Mail Alt
Intensity of transactions is set off against the intensity of sales and services for the different banking distribution channels
Branch ATM/SSB
Direct (Contact centre, Internet, Mobile) Alternative F2F
The branches remain
important for the customers
and are a key element in
delivering an uplifting
multi-channel customer
experience.
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s 165,000 professionals are committed to becoming the standard of excellence.
Deloitte’s professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte’s professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.
Contacts
Deloitte Belgium Patrick Callewaert
Partner, Head of CRM Consulting Group for EMEA + 32 2 749 57 43
pacallewaert@deloitte.com Alexandre Gangji
Senior Manager, CRM Consulting Group + 32 2 749 54 20
agangji@deloitte.com
Vlerick Leuven Gent Management School Prof. Dr. Kurt Verweire
Partner, Associate Professor in Strategic Management Competence Centre Entrepreneurship, Governance & Strategy + 32 9 210 97 94
