Optimization means creating an integrated, highly efficient, cost-effective delivery system that does the best job of attracting new customers while also deepening and enhancing relationships with existing customers. If done correctly, this will have a direct and positive impact on the bank’s profitability.
In general, this process involves analyzing your bank or credit union's marketing, sales, customer, competitor, and compliance data. That analysis provides the data-driven insights that you need to make smart decisions about how to improve your branch network.
In general, here are the steps of BNO:
We'll go into more detail about this process in the "How" section, chapter 6.
What about ATMs?
Many experts also include ATMs in this analysis, because ATMs can sometimes replace branches or provide essential services to customers in a market.
If your bank or credit union's network has any of the following characteristics, Branch Network Optimization could be a good fit for you:
Tried-and-true isn't tried-and-true anymore.
Banks and credit unions today face a unique set of challenges. New technologies, changing consumer behavior, and compliance pressure mean that the old strategies for success don't always work anymore. Market consolidation and the sheer cost of branch banking add to the challenges.
Branches have always been a big investment, but in the past, they were a safe bet. Today, that's just not the case.
Building a new branch typically costs between $700,000 and $2M in construction costs. Additional associated costs, such as rent or mortgage payments and utilities aren't included in that number. Plus, you'll have staffing costs, marketing initiatives to promote the new branch, and potential compliance risks, which aren't included in that figure.
If you're closing a branch, you again have to consider compliance risks, but you also should consider customer attrition and other factors that directly impact your bottom line. What you save in rent or mortgage payments may be outweighed by other impacts to customers, sales, and public relations.
Branch Network Optimization provides the strategies you need to ensure that your branch and ATM network is setting you up for success, today and tomorrow.
Typically, the Board and senior leadership will all be involved. Some institutions do involve compliance early in the process, while others opt to involve their internal risk managers later on.
Best practices recommend that you identify a partner to help you with the analysis and data-driven decision-making at the very start. Why? Because this partner will be integral to developing your overall strategy for success.
Changing your branch network is a big investment. The right partner will help you protect that investment. They will help you develop a clear picture of your performance, identify your key goals, map important metrics to those goals, and help ensure that you achieve those goals.
TRUPOINT is committed to helping our partner institutions achieve their profitability, growth, and risk management goals by focusing on a data-driven approach to branch network optimization.
Some institutions will start by reaching out to realtors to identify a branch location and architects to help design it. Unfortunately, this approach is less likely to be successful because it doesn't put the customers' needs at the center of the decision. Nor does it consider the compliance risks that arise from changing your branch network. Finally, a realtor or architect can't help you achieve profitability goals.
In general, we recommend that you start considering BNO and researching partners as soon as you begin your strategic planning for the next fiscal year.
That timing is different for every institution.
In addition, the process for conducting BNO is also different. Optimizing the branch and ATM network of a very complex institution will likely take longer than optimizing that of a simpler one.
The process for conducting Branch Network Optimization is straightforward. Here are the steps you would take in a Branch Network Optimization project with TRUPOINT:
Gain a deeper understanding of your market and customers, and learn how to serve them better. In particular, you'll assess customer and transaction attrition rates and growth potential associated with any changes to your branch and ATM network.
Gain a 360° assessment of each branch and the entire network to identify opportunities to improve. From opening, closing, consolidating, and relocating to replacing branches, every decision will be designed to increase market share, enhance customer service, and improve profitability - without incurring unnecessary compliance risk.
Enable your financial institution to be more competitive in your market, and allow leadership to more accurately forecast revenue, profits, and branch usage within specific markets.
There are a few different companies out there that offer Branch Network Optimization solutions. Some focus on providing consulting to help you with the interior design, while others may focus only on customer acquisition. Still other companies provide analysis, but don't help you understand the results.
We use the insights delivered by the data to design a strategy that considers both the qualitative and quantitative factors at play. This team will visit future site locations, take pictures, and include that in the software platform so that all of your data is in one easy-to-access place. In addition, we take it a step further by considering the compliance implications of any changes to your branch network.
This software, called Branch Network Analytics, is available for you to access wherever and whenever you want during the duration of your relationship.
The cost of a Branch Network Optimization engagement will range, depending on the engagement. Here are just a few of the many factors to consider:
At TRUPOINT, we use software to help with Branch Network Optimization; this means we can provide the answers and insights you're looking for more quickly and more efficiently than other potential companies. We're able to pass those savings on to you. And while we don't want to put a ballpark price online, because it may make you think the solution is either too cheap to be valuable or too expensive for your bank, we are confident you'll be pleasantly surprised by how well Branch Network Optimization can fit within your bank's budget.
With proven analysis expertise and experienced consultants, you'll have the support and guidance you need to build a more efficient and profitable branch network. We work with you to develop a customized, actionable strategy that will help you achieve your unique growth and risk management goals.
If you're ready to learn more about whether Branch Network Optimization is a good fit for you, details about a potential partnership, pricing, or even just to meet the branch strategy team, we will be happy to help.
Just fill out the form below, and help us understand what details you're looking for. Someone from our team will be in touch within two business days with answers to your questions and customized support as you explore Branch Network Optimization.