American Banker recently featured an article on how banks too often take a “one-size-fits-all” approach and do not tailor strategies for specific branches. They give an example where “a bank might opt to put wealth managers in all their branches when a better approach would be to staff up only those branches in more affluent neighborhoods.”
We also observe that banks do not differentiate strategies across branches and markets as much as they could. Some banks have extended hours for all branches, but typically only certain types of branches see any benefit from longer hours. The cadence and scope of remodels should vary across branches, but many times banks spend the same for each branch and remodel all branches on the same cadence. Not every branch will warrant investment in new ATMs that can handle multiple deposits at once and provide video conferencing.
Our perspective differs from this article in that APT does not believe market research is enough to figure out the right approach by branch for every strategy. Understanding the demographic, economics, and competitive environment and surveying customers on their preferences does not tell you the exact impact of adding a wealth manager on balances, account generation, and ultimately branch profitability.
Instead, banks should be executing business experiments to test new strategies and understand the exact impact of those strategies. From there, determine where the program actually worked well and was profitable. Did the wealth managers only work in more affluent neighborhoods? How affluent did the area need to be? Did that story change when there was a competitor across the street who historically has been strong with wealth management?
The world’s leading organizations are constantly leveraging big data to get smarter and develop more targeted strategies. A key component is to test out new ideas and learn from those trials to inform the optimal approach by branch and by customer.