Is Your Branch Network Ready for the Next Growth Opportunity?
In the business world, it’s all about being ready to capitalize on the opportunities of today and those that will emerge tomorrow. Is your branch network set up for peak performance across markets to provide the greatest return on investment?
Until recently, a branch network expansion strategy helped many financial institutions fuel growth and conquer new geographic markets. According to the Federal Deposit Insurance Corporation, the total number of branches in the United States grew at a total rate of 50% with a total branch increase count of 32,533 between 2001 and 2011.
On the downside, it is estimated that nearly three-fourths of existing branches worldwide are inadequate to meet the needs of today’s customers because of the focus on new branches, according to an article in Talaris Interactive, Revitalizing Channel Distribution
(Autumn 2009).
The 75 percent ratio holds true within the United States. Out of 120,000 total banking offices, including credit unions and savings banks, more than 80,000 locations are at least 10 years or older. New prototypes built within the past 10 years generally have not been integrated across entire branch distribution networks. Nor have new retail concepts been introduced into older, legacy branches, creating a jarring disconnect for customers.
How should legacy branches in the branch network be put to work for the organization? A cost-containment-only branch network strategy has considerable downside. Closing under-performing branches during a time of economic contraction can spook already unsettled customers, sending an unintended message of instability.