By Anargyros Antonopoulos
What makes a financial institution’s branching strategy successful?
Many experts point to “more locations and branding.” Agreed. However, what if the target community doesn’t have any suitably sized site options within the desired market? Or, what if there is not a lease space available?
This brings up another question as well: What about branch network density? Should a financial institution continue to invest in branch density given the advent of new technologies that may lead to a decreasing need for branches?
On the other hand, what if these new technologies such as digital channels, interactive teller machines (ITMs), and smart ATMs don’t decrease the number of branches, but rather enhance the capability of the branch to better serve consumers? Is it possible the micro-branch can be a solution for these facility questions?
What is a micro branch? It can be whatever you dream up! As long as it has a small footprint, is heavily branded and uses smart technology. For instance, it can be a shipping container converted into a permanent freestanding branch, equipped with an ATM and a universal banker office. Or it could be a 1,000 to 1,500 square foot free-standing branch equipped with ITMs, ATMs and staffed with a few universal bankers. These imaginative facilities can contribute to branch density through a downsized, refined package while still offering similar services as larger branches. We have the technology; let’s use it!
The micro branching movement is putting the spotlight on a new way of thinking about service facilities. Here’s how:
- Speed to market. Micro-branches provide financial institutions the opportunity to enter the market quicker because design and construction durations are much shorter.
- Cost does matter. Because of the reduced branch size, these facilities require less real estate, and the cost to build and maintain is lower compared to a more conventional cornerstone (hub office) or community branches.
- Staffing. Micro-branches typically have a reduced staff. The staff is focused on services and sales—the high value customer interactions—while technology handles the more mundane transactional activities.
- Resiliency. Micro-branches provide agility in decision-making for financial institutions needing to quickly adapt to market changes. For example, a container facility can be converted to a cashless-transaction location, or, possibly due to a shift in market dynamics, the micro-branch can be converted to a loan or mortgage facility.
- Dream big with less. Micro-branches give financial institutions opportunity to venture into markets that previously were not considered possible due to lack of site options. For example, in a highly dense retail area where room is snug and will not accommodate a community-size branch, a permanent container facility or small prefabricated facility may be a quicker and more effective solution for market entry.
- Deliver the deliverables. Micro-branches are outfitted to deliver the intended service solutions for targeted communities. In fact, these facilities give greater flexibility for branching density strategies by providing the financial institution greater access for entry into specific markets of interest.
- It’s on the menu. Micro-branches can have full-service capabilities such as ATMs, ITMs and even drive-up lanes. And micro facilities can be constructed “your way” with the same high construction quality and architectural brand identity as seen with a traditional branch.
The beauty of the micro-branch, besides its lower cost, is that it can meet the desired financial needs of a community, creating better opportunity for customer loyalty and satisfaction. Obviously these facilities are targeted for certain market and community conditions to enhance the financial institution’s ability to provide product and service offerings to a community while contributing to branch density. The micro-branch is an option that gives financial institutions greater flexibility to enrich its intended branching goals and improve its presence in those communities once thought to be out of reach.
Anargyros Antonopoulos is a Project Manager for LEVEL5, an Atlanta-based consulting firm that helps financial services institutions to develop and brand branch locations.
