Do Business Customers Need Branches?
The future for branches is a source of active discussion and debate and rightly so! Analysis by McKinsey & Company on the needs of the customer for a seamless multi-channel strategy and shows that 65% of customers interact with multiple channels. (Blow up your old distribution strategy) The focus of the research is on generic 'customers' and does not differentiate the branch needs of small business.
How might branches serve the needs small business in the future?
- Branches process cash and check, both deposits and dispensing notes & coins. The adoption of alternatives such as ATM and RDC have been more successful with personal customers. It is unclear whether this is an issue of adoption by small business or a lack of appropriate solutions by the financial institutions.
- Small business customers use more devices provided by their financial institution including check readers, POS terminals and coin counters. Local access to replace these in ‘real-time’ ensures continuity for the small business.
- Increasingly small businesses are using virtual addresses with people working from home or being ‘on the road’. The local branch can provide lockbox payment processing, business addresses and even meeting rooms for small businesses.
With workplace banking and relationship managers that visit small business customers, it is beneficial for financial institutions to have local hubs for their own employees to plan, interact and co-ordinate their service delivery in the local market.
- Interaction and education is key to the success of small business as they experience new challenges every day. The branch provides a destination for personal advice from their banking partner. It can also be the place where small business can meet their peer small businesses in the locality and gather advice or obtain new customers through education and networking events hosted by their financial institution.
Not enough is known about the motivations and needs of small businesses in their multi-channel interaction. As the financial institutions try to catch up with the digital needs of small business, the discussion about the role of branches for small business is lagging the discussion of personal customers by about 2 years. There is a risk that financial institutions will transform their branches without due consideration for a very important customer segment - small business.