How Can Banks Improve Branch Quality?
Banks are looking for ways to improve branch quality to attract more banking customers and retain existing customers. As a result, it’s more important than ever for banks to focus on their physical branches. In our latest surveys of over 280,000 households and businesses, 74% told us that branch location is very important to them, and 77% said branch quality was very important to them. The vast majority still want to be able to walk into a branch to get help from a human being and perform complex transactions such as wire transfers and loan applications.
The quality of branches varies widely, according to each institution’s customers. Of the 5417 institutions, we currently track, 34% of them have high-quality branches, according to their customers. But 29% have low-quality branches, again according to their customers. Do you know where your branch quality ranks among your banking customers?
If you’re going to stand out, you need to be better than the competition.
Understand Your Current Banking Customers
Acquiring new customers can be costly, with the average cost at $301, but if you understand and meet the challenges of new customers, the cost drops to $198. The problem is that not all newly gained customers stay with the bank — more than a third switch back within a year. So, to keep new customers, ensure you deliver on your advertising promises.
Maintaining customers delivers more value to your financial institution. On average, household banking customers stick with their chosen institution for 17 years, creating a value of $3,852. Keeping loyal customers means meeting or exceeding their expectations and understanding their challenges.
ATMs Affect Branch Quality
Much like the branch, ATMs are not dead; they’re not even dying. The Federal Reserve’s 2019 research revealed banking customers made 5.1 billion cash withdrawals during the prior year. Consequently, ATM quality matters to banking customers. Low-quality machines are slow and problematic for customers and often malfunction, requiring repairs.
The vast majority of households (82%) have told us that good-quality ATMs are very important to their banking relationship decisions. Yet, only 42% of banks and 31% of credit unions excel here, according to their customers. So, upgrades are essential, but only if they position you to rise above your direct competition.
Improve Security and Authentication
Data breaches are always a concern since financial institutions are prime targets for cyber threats and malicious attacks. According to IBM’s recent data breach report, the average cost of breaches during 2021 jumped to $4.35 million, a 2.6% increase from the prior year.
Thus, banks must balance making it easy for customers to access accounts and preventing internal or external fraudsters from gaining unauthorized access.
Most banking institutions are doing an excellent job in this area: 59% of community banks and 64% of credit unions get very high marks from their customers. However, about 6% of institutions get very low marks from their customers so it is important to get unbiased feedback from your customers. Know where you stand on digital security and determine whether to make any adjustments to your security protocols.
If you haven’t done so already, consider updating security measures by doing the following:
- Implementing multi-factor authentication
- Creating internal policies to monitor all internal privileges
- Monitoring for data leaks and suspicious activity
- Updating all software and cloud technologies
- Ensuring quality control with a comprehensive code review policy
You can also improve branch quality by investing in customer service and providing a convenient, user-friendly experience. By taking these steps, your financial institution remains competitive in the ever-changing landscape of digital banking.
Banks should focus on their branches to attract more banking customers and retain existing customers. The quality of your branch and its services matter to banking customers, who still want the personal human experience of visiting a physical branch location.
Enhancing branch quality with customer experience is critical. Today’s banking customers expect more from their banks than before. However, to keep new and existing customers returning, it’s equally important to ensure you always deliver on your promises.
- Rivel research