Retail banks today have re-focused attention on branch network profitability, both through higher sales as well as through cost reduction through streamlining and process automation/centralization. But a renewed emphasis on branch efficiency raises a challenge: how to raise productivity without adversely impacting the consumer experience.
ISG analyses of branch operations reveal a significant efficiency gap between top quartile performers and those within a comparative Reference Group Mean (RGM), with the former achieving an average of 30 percent lower staffing levels per branch. More specifically, in terms of counter service staff, top performers employ 2.1 fewer full-time equivalents (FTEs) per branch than the RGM. The financial implications: an average-performing bank spends $60 million more per year on personnel to handle basic over-the-counter transaction processing.
We also find that certain banks have successfully introduced branch efficiency initiatives. Meanwhile, significant opportunities exist elsewhere – notably in North America – to leverage technology to reduce transaction processing costs. The findings also suggest that customer satisfaction and customer retention actually increase as a direct result of efficiency initiatives, as counter waiting time is reduced and more staff are available for dedicated customer advice.
Three specific areas of potential improvement are addressed:
1. Reduced task times for processing counter transactions
2. Increased service staff utilization
3. Increased self-service options for basic transactions such as cash/check deposits and bill payments
This ISG white paper examines each of these areas in more detail, focusing on the successes of top performers and potential benefits to be achieved.