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No amount of wishful thinking is going to change the cold reality: Branch banking as we know it is headed down the same

path as the dinosaurs, says author and banking consultant Brett King.


author of the new book. Owning the physical network infrastructure is not enough to save your business from changing consumer behavior. In June of 2010. 97 percent of U. editor of ABA Bank Marketing magazine. you should look at another example of a massive shift in technology adoption that is taking place with respect to telephone landlines and mobile telephones.IS THE BRANCH DOOMEd? INTERViEW BY WALT ALBRO I Photograph © 2012 GettyImages.AUGUST 2012 | ABa BANK MARKETING | 15 . “Branch / ShutterStock.” He argues that changing customer behavior will kill your bank—unless the bank adapts to evolving consumer attitudes. Then along came the mobile telephone. In 1997. By 2015. recently spoke with Brett King and asked to him for more details about his vision for the future of banking. the percentage of households with a landline is expected to drop to 36 percent. according to banking consultant Brett King. the National Center for Health statistics stated that one out of every four Americans has given up their landline phone and are now using their mobile phone exclusively. Their conversation is recorded below. households had a telephone landline. Walt F YOU WANT TO UNDERSTAND WHAT IS GOING TO HAPPEN TO BRANCH-BANK NETWORKS IN THE FUTURE.S. Gone Tomorrow: The Case for the Death of Branch Banking. JULY.

contextuality and consumer buying behavior over the next few years. You buy a home and the mortgage facilitates the purchase of that home. Banks right now are subsidizing branch real estate with other fees. Banking needs to become a great deal more about creating great customer experiences when you need a bank to facilitate a solution in your life. You can’t have that Brett King magnitude shift in channel priority without an impact. there’s another factor emerging that will strongly influence your selection process in banking.Is the existing bank branch distribution system going to die? Not completely. That’s around 400 times a year. will be building customer advocacy. For books it was the “ebook” and the online bookstore. Some might claim that the system is already in its death throes with plummeting in-branch activity across the board. Customers don’t walk down to the branch and pick up a brochure on a product anymore—it’s just not convenient. The problem for branches is that those same customers are likely only to visit the branch one or two times a year in 2016. To illustrate: You don’t buy a mortgage from a bank. Hulu and iTunes. Today around 88 percent of Internet users start their journey looking for a mortgage or a new bank account online through search. when it comes to social media. but after that their need to visit a branch is almost nonexistent. The only reason it hasn’t already happened is that the industry lags in key processes like know your customer (KYC) that force customers to come into the branch when they don’t really need to. Currently we treat the financial transaction as a completely separate process to the home purchase transaction. 70 to 80 percent of Y-Gens and Digital Natives will use recommendations from friends before they purchase a product. What is it about changing consumer behavior that is hurting the branch? The same thing that killed bookstores and video rental stores—a change in core distribution modality. The fact is that we’re realizing that the branch is a poor fit with the day-to-day behavior of most customers. for products it will all be about enabling an application or purchase as seamlessly as possible when there is a need. but will also move onto the mobile phone. streaming. but some may very well call a 50 percent reduction in branch numbers over the next decade the death of branch banking. there’s a great deal more attention on those fees. By 2016 the average customer will use his or her mobile phone to access the bank 20 to 30 times a month and Internet seven to 10 times per month. The key for banks. Often I’m asked what banks can do to get customers back in the branch? I ask how they’d get customers back into a bookstore ….S. Borders and Blockbuster both found this lesson to be painful in the extreme. so that 16 | ABa BANK MARKETING | JULY. and that’s social media. then clearly at some point the economics of the business no longer work the same. but that will change with mobility. mobile payments. This will become embedded in search also. The same is happening online. Where are consumers going to begin their search for information about a bank product? Today around 88 percent of Internet users start their journey looking for a mortgage or a new bank account online through search. then in most developed clearly at some point the economics of the economies. The core problem right now for banks is that customers might visit a branch to open an account. and as a bank we’ll need to respond to that need.. Since 1995 we’ve had a 90 percent drop-off in average customer visits to a branch If people aren’t coming to your branches. Internet banking and the loss of many physical artifacts associated with banking (checks. NetFlix. Journeys to a bank product or service may start anywhere at anytime. Those journeys will start with a need. A product like a mortgage will have more success if we embed it in the process of buying a home. Right now. While we’ll still have brand marketing and advertising to build advocacy. That will continue. to journeys that enable the customer to solve his/her problem or facilitate a need. Already in markets like Japan and the U. coming to your branches. However. For video it was downloads. This shouldn’t be a surprise. How is bank advertising going to change in the future? The current methods of campaigns that “push” an offer to a customer or the industry practices of emphasizing product features and rate will largely disappear over the next decade. application forms and soon the card itself). If people aren’t business no longer work the same. there’s way too much friction in applying for bank products—the cycle we’re in right now is attacking that complexity. paper statements. but since the Durbin amendment. rather than requiring the customer to stop the home buying process to negotiate with his/her bank. For the bank it is mobile banking. so it stands to reason that the economics of the business will be under significant pressure. We’ll need to shift from product advertising.AUGUST 2012 .

will discuss the outlook for branch banking and other trends in the financial services industry including: the scramble for dominance of the mobile wallet. Champion/challenger analytic approaches to offers and messaging will become the norm.MarketMatch. King. Understanding where a customer is or what he/she is doing that provides the back drop for a bank product will be perhaps the most sought after skill. You’ll look for a solution from your bank when and where you need it. “Branch Today. By the time the data is actually available. 23-25 at the Manchester Grand Hyatt in San Diego. We need to figure out how to make customers delighted. generate MOMENTUM and prove RESULTS.C.” In the future.aba. and then data mining projects around this can take weeks or months. etc. King’s latest book. aba. will be a key skill set. and the explosion of social media. The challenge marketers will need to solve is extracting that data and processing it efficiently. and how to get happy customers to talk about their experience with our brand. it’s application or value may itself be and look under “Training & Events.” and “Marketing Conference.Want to Hear More of Brett King’s Forecasts? Plan to attend Brett King’s keynote presentation at the ABA Marketing Conference Sept. While we’ll have creative themes and artwork around core segments and behavior. as a group. and that will require more visibility on the data along with outsourcing and external data smoothing and what the industry calls “story extraction”—finding the usefulness in the data. go to www. for example. Marketing essentially will need to become more real-time.blogspot.” then “Conferences. you’ll get an offer perhaps for a competing store close to your x (866) 501-2233 x www.” (www.aba. If you shop frequently at electronics stores. We approach marketing from the scientific and creative sides to provide FOCUS. So bank marketing will become heavily personalized and n ABOUT THE AUTHOR WALT ALBRO is the editor of ABA Bank Marketing magazine. Washington. the products your friends recommend or “like” will float to the top of the search results. Take.AUGUST 2012 | ABa BANK MARKETING | 17 .com Reach this advertiser through http://links. we’ll match offers for card usage based on what you’ve purchased before. Right now we group customers into segments and then blast offers at them for a specific promotion—“Use your Citibank Gold Visa Credit Card at Best Buy this month and get 10 percent off.. more relevant and timely. This is tough for banks that use it all. So if you like Italian food. the expectations created by tablet computing. the operationalization of cloud computing.” was published this year. credit card marketing and usage offers. D. E-mail: Walbro@aba. What is future bank marketing going to look like? Banking won’t be a place you go to anymore. To register online for the ABA Marketing Conference. agencies will be chosen for their ability to be rapidly adaptable to outlying opportunities in the data stream.marketmatch. This sort of brand sentiment will be exposed heavily in the near-term and start to drive purchase behavior too. It requires specific programming or scenario JULY. You won’t come to a branch or even the bank website necessarily when you need a product. Analytics Relationships Messaging Design Experience What skills will future bank marketers need in order to be successful?   Behavioral analytics. you’ll get a deal for a local Italian restaurant pairing your card. The problem right now is that analysis of data takes months. For other products they might be triggered by an activity or event—such as walking into an airport after you’ve made a ticket purchase—and offering you travel insurance. universally disliked since the global financial crisis. aspx) or telephone 1-800-BANKERS. a consultant who is based in New York and London. rather than the current incubation cycles around creative and campaigns. Strategy Process ROI www. Gone Tomorrow: The Case for the Death of Branch Banking.. a subset of what we’re calling “Big Data” now.