Banks Undermine Branch Power

I recall occasions when I’ve visited branches of a couple of UK high-street banks (not Barclays) because I wanted the advantages of a high-touch branch environment to put through cross-border fund transfer and other tricky transactions. However, after standing in a long queue, when my turn would come, the bank staffer would tell me to use Internet Banking or Phone Banking without exhibiting the slightest sensitivity to why I was there in the first place.

Quite frankly, with such practices, banks alienated customers visiting branches and undermined the potential of their own branch network for doing cross-selling and upselling.

By sacking financial advisors from branches, while banks can undoubtedly save costs, I strongly doubt if they can retain or grow their revenues. Spurned by the branch, customers who are only comfortable in a physical location are likely to head to the nearest Western Union or MoneyGram outlet. Whereas, customers who don’t mind the online channel will find the websites of Xoom and other non-bank remittance providers to be superior destinations compared to Internet Banking portals of their own banks which are so full of friction and suffer from inferior usability.

Barclays announced recently that it was shedding 1,000 branch jobs in a move to stop offering in-branch financial planning advice. In my personal experience, banks have alienated customers visiting branches, which is responsible for the current sorry state of affairs.

I recall occasions when I’ve visited the branches of a couple of UK high-street banks (Full Disclosure: Barclays wasn’t one of them) because I wanted to take advantage of their high-touch environment to put through cross-border fund transfer and a few other tricky transactions. I’ve done this despite being aware that in-branch service normally attracts higher fees. However, after standing in a long queue, when my turn would come, the bank staffer would tell me to use Internet Banking or Phone Banking without exhibiting the slightest sensitivity as to why I visited the branch in the first place.

Quite frankly, with such practices, banks have undermined the power of their branch network to generate incremental revenues via higher fees and boost customer advocacy via cross-selling and upselling.

By sacking financial advisors from branches, banks can undoubtedly save costs, but I strongly doubt if they can retain their customers or grow their revenues with this misguided approach. For, spurned by a bank branch, customers who prefer a physical location for transferring money abroad are likely to head to the nearest Western Union or MoneyGram outlet. On the other hand, remitters who don’t mind using the online channel will find the websites of Xoom and other non-bank remittance service providers to provide a far superior UX as compared to their banks’ Internet Banking portals that are beset with tremendous friction and suffer from poor usability.

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