Pub. 7 2012-2013 Issue 5

January | February 2013 23 Extraordinary Service for Extraordinary Members. A SDIGITAL TRANSACTIONSREPLACE most in-branch activity, bank executives are challenged to understand the role that branch banking will play in the future. At the same time, advancements in IT and mobile banking are transforming the industry at a wild and exciting pace. Fortunately, the recent disruption in branch banking can only be matched by the opportunity it presents to rede- fine how branches serve their commu- nities. Capitalizing on this opportunity, however, will require bank leaders to think differently about every aspect of strategic planning. For decades, bank performance has been dictated by one-size-fits-all branch planning strategies that don’t take into account branch-specific chal- lenges and opportunities. Currently, bank executives do very little to differentiate at the branch level. In the branch of the future, individual branch offerings and marketing will be highly tailored to the market being served. It stands to reason that branches eventually will be managed like fran- chises, a sharp contrast to today. This tailored approach to branch management requires banks to re- spond to local and broad market changes with nimbleness. For that reason, today’s bank leaders must tackle branch planning from two points of focus: a short-term focus on branch efficiency and profitability, and a long-term focus on viability, growth, and transformation. Determine the Right Metrics for the Right Operating Strategy. A wholesale-funded institution and a core deposit-funded institution are vastly different. Yet, both institutions are typically evaluated using the same key metrics (e.g., branch deposits, revenue by FTE). The problem is that these metrics provide little insight without the context of operating strat- egy. Focusing on the right metrics for the right operating strategy is crucial. Evaluate Marketplace Capac- ity, Competitive Landscape, and Rationalization Opportunities. Bank executives typically analyze pro- jected household growth to determine market growth opportunity. Once again, this metric is empty without context, such as how saturated the market may be or what competitive differentiation opportunities exist. Instead, banks should look at objective data, including household and businesses per branch and peer-based market saturation, to determine additional capacity in the market. This granular level of insight also can help identify differentiation and customer segmentation opportu- nities. For example, an institution may discover that a seemingly saturated market still has opportunity for growth in small business lending. As executives increase their un- derstanding of marketplace capacity and competitiveness, they must use this knowledge to determine which branches are performing well, which are underperforming compared to the competition, and if these branches are underperforming in areas of high or low market saturation. Q Future — continued on page 24 Reset the Mindset Planning for the Future of Branch Banking Andrew Grinstead , SVP & Senior Bank Strategist, Bank Intelligence Solutions from Fiserv Uncertain times breed creativity, innovation, and progress—but not without risk. This couldn’t be more true for today’s financial institutions.