Banks Are Not Airlines: Seeking to Re Invent Your Branch Network in a Self Service World? Looking at the Successes of Nonbank Companies Aids Creativity, but Has Pitfalls
Anyone who has traveled lately can't have helped but notice the scarcity of airline staff at the check in counter. Where there used to be a crowd of gate agents there are now just a few and they are busy helping passengers "roll their own" most of the time. Over a period of just a few years U.S. air carriers, in spite of, or more correctly because of, woefully thin margins and many years of red ink, were forced to focus heavily on cost containment in their service mixes. They lopped off almost all the customer service staff "fat" and instituted automated services that by and large work. Scan a passport, insert a credit card, touch some screens, drop off a bag if you dare and you're on your way, usually with no intervention from the airline's staff even for changing flight schedules. Similar automated approaches are now business as usual in most grocery outlets of any size and, in fact, at most large retail establishments. Minimum wage earning clerks have been displaced by "scan it, authorize payment, and bag it yourself" automation. So far, banks haven't made as big a leap in self service, at least inside the branch. While a retail bank branch may sit next door to a big box home improvement center or a major grocery chain's mega mart (or even be inside one) its customer functions can only be assumed to be similar at some risk. When looking to other industries' successes for inspiration, it helps to understand the differences between bank automation and the automation used by other industries. Less change than you think Banks are not airlines, not retail merchants, and not possessed of exactly the same management philosophies or motivations. Banking is a cautious, consensus seeking business because it has always been, at its core, about accepting risk instead of optimizing delivery. This core hasn't always blended well with rapid change and it is not likely to develop a "pedal to the metal" flavor in the future, either. Besides, airlines and major retailers operate in a much more oligopolistic market where a few can "lead." Banking, in spite of mergers and acquisitions, is still a long way away from this. [ILLUSTRATION OMITTED] Bank automation has occurred for years, of course, but has been less "in customers' faces" than in other fields. Think about how your typical branch looked and operated 20 years ago. That's a couple of lifetimes in technology cycles, but in actual years, it was only 1989 not exactly the era of punch cards and tail fins. In 1989 the shag carpet had long since disappeared, at least in most banking outlets. The dedicated "computer terminal" was disappearing under siege by the PC. Most branches with any volume had an ATM either in the parking lot or through the wall. What's changed? Not that much compared with the check in counter at LAX or the check out line at Safeway. but more services automated There is a key difference between banks and the rest of retail America, however: Banks can and do deliver more electronically than businesses engaged in non financial commerce. The change has been electronic as opposed to physical but equal in scope. Delta can't fly you to Topeka on line and Home Depot can't (yet) let you smell the paint or find the un warped 2x4s from your keyboard and screen. But First National Bank can do just about everything online for customers that they have traditionally done in the branch (personal remote deposit capture being a fun new frontier) But this automation is invisible. From a customer perspective, most branches don't look or operate significantly differently from the way they did 20 years ago, leaving aside flat screen displays and the in branch coffee bar. This doesn't mean that bankers aren't doing things that, in a banking sense, move customer service to a higher level of automation. Looking back, the ATM was the real genesis of this progress an expensive, high maintenance machine (in the early years) designed to send the minimum wage earning teller into conversations about the good old days.