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InStore Banking: Core Competence in Daily Execution

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Success of Commerce Bank has indirectly legitimized in-store banking ... 80-85% of retail bank profitability is driven by deposits ... – PowerPoint PPT presentation

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Title: InStore Banking: Core Competence in Daily Execution


1
In-Store Banking Core Competence in Daily
Execution
  • Margaret Kane
  • President and CEO
  • Kane Bank Services
  • 488 Hopkins Road
  • Sacramento, CA 95864
  • 916-488-0660
  • margaretkane_at_earthlink.net
  • www.kanebankservices.com

2
  • Todays Topics
  • Whats New This Decade
  • Keys to In-store Success
  • In-store Banking Success Model
  • Strategic Alignment
  • Sales Management
  • Human Resources
  • Network Integration
  • Sales Process
  • Marketing Excellence
  • Role of the Champion

3
Whats New This Decade
  • Its back to basics
  • Cashless branch delivery has largely failed
  • Large in-store programs sharpen their focus on
    tried and true activities
  • Wal-Mart has grown and has opened up its network
  • Its inability to expand its banking through its
    TD partnership leads it to focus on leasing space
    once again
  • Face-to-face personal service is no longer
    shunned
  • Executives wake up to the fact that customers
    want to use tellers they want transactional
    convenience

4
Whats New This Decade
  • In-store banking has entered a period of
    stability and maturity
  • Big players stay big
  • Few new big entrants into the market
  • Citizens expands
  • Retail practices have more cache
  • Success of Commerce Bank has indirectly
    legitimized in-store banking
  • Retail practiceslonger hours, selling stages,
    and straightforward product lines
  • are now mainstream
  • Deeper understanding of the value of checking
    accounts
  • Fee income is prized
  • DDA is the gateway to the overall customer
    relationship

5
Whats New This Decade
  • In-store practices have slowly worked their way
    into the mainstream
  • We have hardly noticed the range of is impact
  • The changes have been evolutionary not
    revolutionary

6
Old News Questionable Strategies Are Now
Mainstream
The strategy is a very simple one. It revolves
around convenience. The thing that we do here
that makes us successful is that we are open
seven days a week and 360-plus days a
year. Lynn Nagorska, president of TCF
Financial They view the grocery store markets
as a convenience and a deposit gatherer and
thats all that they worry about doing there.
Most other banks dont think grocery stores are
sexy enough because you cant sell trust and
investment management there, you cant sell
commercial loans there Timothy Willi, an
analyst at A.G. Edwards and Sons Inc. TCF Plans
to Stock Up on Store Branches, American Banker,
September 12, 2000.
7
Past Weaknesses Can Now Be Seen As Strengths
  • Although 3 in 10 consumers have used a
    supermarket branch, less than 10 have opened an
    account or applied for a loan at a supermarket
    branch.
  • Synergistics Report, New Directions for
    Branches and Banking Centers, October, 2000
  • The results reveal, at least from the consumer
    perspective, that supermarket branches are
    transaction facilities, not sales centers. It is
    clear that branch planners must reassess their
    objectives and tactics regarding supermarket
    banking.
  • William H. McCracken, CEO of Synergistics
  • New View Supermarket branches can have a
    powerful impact on the network
  • The whole of greater than the sum of its parts
  • There is less pressure to extend hours to the
    traditional outlets
  • New View People who use branches are more likely
    to make use of alternate banking channels such as
    ATMs, the telephone, and the internet.

8
Past Weaknesses Can Now Be Seen As Strengths
  • These outlets are good at serving younger and
    lower-income peoples transaction needs but have
    not evolved into the selling channels many banks
    had hoped they would be.
  • New View In-store branches allow banks to
    acquire customers that they might not otherwise
    have access to
  • Those with incomes of 15,000 to 24,900 are
    more apt than wealthier consumers to visit
    supermarket branches more frequently.
  • New View Account base is a good source of fee
    income
  • Source In Brief Store Branches Sales
    Disappoint, American Banker, November 7, 2000

9
In-store Banking Success Model
Sales and Delivery Processes
Management Processes
1 Strategic Alignment Channel Strategy Products
and Pricing Goal Congruence Organizational
Structure Facility Design 2 Sales
Management Daily Disciplined Processes Observe,
Assess, Coach, Reinforce Sales Tracking Recognitio
n Programs Compensation 3 Network
Integration Channel Roles Channel and Network
Managers Delivery Costs 4 Sales
Process Multi-Channel Approach Sales Tools and
Creating Sales Opportunities Scripting and Sales
Models Best Practice Models 5 Marketing
Excellence Branding Strategy POS Materials Sales
Campaigns Advertising 6 Human Resources Channel
Specific Recruitment Job Descriptions and
Performance Evaluations Dedicated Training Career
Path
10

Strategic Alignment
  • Channel Strategy
  • Products and Pricing
  • Goal Congruence
  • Organizational Structure
  • Facility Design

11
Strategic Alignment Channel Strategy
Value proposition to the customer is
convenience The beauty of supermarket banking
is that it brings banking to the consumer. Sooner
or later the light goes on for consumers. The
question is Am I going to two places to both
bank and shop or just one? Inevitably they will
choose convenience Dennis Hudme, SVP of CFS
Bank, Westbury, NY Value proposition to the bank
is sales Winners in the supermarket banking
business focus on a core set of behaviors that
lead to the ongoing acquisition of new customers
to the bank and the ongoing cross-sell of those
customers.
12
Strategic Alignment Products and Pricing
  • The products and pricing must support the
    convenience strategy and the daily process of
    sales execution
  • Best in class institutions focus on a
    straightforward and simple product set
  • Free checking accountsSavings products with
    attractive ratesHome Equity loans/lines
  • Product design should encourage electronic
    delivery
  • Customers must be encouraged to use alternative
    channels
  • Profitability is about deposits
  • 80-85 of retail bank profitability is driven by
    depositsIn-store banking must be operated as
    the low cost channel for deposit acquisition

13
Strategic Alignment Goal Congruence
  • Front-line goals, expectations and rewards must
    support the channel strategy
  • Common disconnects between strategy and execution
  • Strategy based on customer deposit
    growth Incentives / tracking / management
    focused solely on unit productivity
  • Best institutions connect strategy and execution
  • Reward new customer acquisition
  • With customer incentives
  • With sales incentives
  • Focus on growth of deposit and loan products

14
Strategic Alignment Organizational Structure
  • A key requirement is organizational focus in
    must have areas
  • Marketing Human Resources Performance
    Information Operational Differences
  • Various, successful organizational structures
  • Dedicated channel team Geographic management
    with specialized or dedicated staff support

15
Strategic Alignment Organizational Structure
Emerging In-store banking program
16
Strategic Alignment Organizational Structure
Mature In-store Banking Program
17
Strategic Alignment Facility Design
The facility should support the strategy
18
Strategic Alignment Facility Design
The facility should support the strategy
19
2
2
Sales Management
  • Daily, Disciplined Processes
  • Observe, Assess, Coach, Reinforce
  • Sales Tracking
  • Recognition Programs
  • Compensation

20
Sales Management Daily, Disciplined Processes
Daily sales activities and behaviors aisle
promotions / visitations telemarketing product
focus Consistent scripting for customer
interaction Do you have ____? Where do you
keep____? Where do you bank? Use of customer
profiling Understanding how customers manage
their money, borrow their money and save their
money. Planned, on-going customer contact
processes
21
Sales Management Observe, Assess, Coach, Reinforce
  • Constant observation of selling behavior on the
    part of branch managers
  • Regular branch visitation by market managers
  • Quarterly staff assessment process
  • Supervisors who lead by example and show
    employees how to do it
  • Reinforcement of agreed upon behaviors
  • Regular Focused Coaching

22
Sales Management Sales Tracking
  • On-going sales reporting and tracking is critical
  • Two types of reporting informal and formal
    (official)
  • Informal reporting
  • sales officers need to proactively report sales
    dailybranches need to roll up this
    information to the market managerssuccess
    stories should be voicemailed or emailed daily
    Aisle contacts per day, quality conversation per
    day follow-up leads, number of new DDA
  • Formal reporting
  • weekly cumulative sales reports that result in
    QTD totals

23
Sales Management Sales Tracking
  • Best practices in individual sales reporting
  • Sales officers are ranked on QTD production in
    key product areas DDA Services Direct
    Deposit, Debit, Online, Bill pay
    usage Business products
  • Savings and Investment Products Equity
  • Best practice in branch sales reporting
  • Branches are ranked on QTD growth and sales
    against targets in key product areas Deposit
    growth Loan growth or loan originations Sale
    s production Transactional efficiencies

24
Sales Management Recognition Programs
  • Formal and informal recognition processes
  • Informal recognition
  • voicemails, emails, thank-you notes from
    supervisors, executive managementsmall gifts,
    lunches, movie ticketsinvitations to speak at
    meetingsarticles in newslettersframed
    customer letters
  • Formal recognition
  • Top 10 of employees and branches receive
    quarterly recognition
  • Known Performers The results of 70 of the top
    10 becomes the benchmarkCustomer service
    excellence awards

25
Sales Management Compensation
  • Be careful what you pay for you will get the
    behavior you incent
  • Individual goals versus team goals
  • Example of an individual
    compensation matrix

26
3
Human Resources In-store Banking Success Model
  • Channel Specific Recruitment
  • Job Descriptions and Performance Evaluations
  • Dedicated Training
  • Career Path

27
Human Resources Channel Specific Recruitment
  • Need balance between a banking orientation and a
    retail sales orientation
  • Use of sales propensity and behavior modeling
  • Group interviews
  • Interview scripts
  • Recruit in non-bank environments
  • Extra focus on hiring employees who want a
    professional career
  • College educated
  • Clear-cut explanation of sales expectations
  • Expect to hire 1 out of 10 resumés 1 out of 5
    interviews

28
Human Resources Job Descriptions and Performance
Evaluations
  • The best systems integrate job descriptions and
    performance evaluations
  • Emphasis on the following areas
  • Growth or profit contributionSales of key
    productsCustomer service and retentionLeadersh
    ip and human resourcesOperational
    integrityTransaction managementRetailer
    relationships
  • Performance rated in relation to goals,
    standards, or expectations each quarter

29
Human Resources Dedicated Training
  • Mix between pre-work, classroom, in-store
    activities
  • New hire training should be 2 to 3 weeks
  • Needs to be driven by line managers and their
    expectations, not just staff managers
  • What do you do to be successful
  • Goals, activities What will you be managed to
    do

30
Human Resources Career Path
  • Best in class organizations have a defined path
  • Employees should be able to move from channel to
    channel
  • Two years in an in-store branch is a long time
  • Have to allow people to move on to traditional
    and to move back to in-store

31
Human Resources Career Path
Financial Services Representative at In-Store
Assistant Manager at In-Store Branch Manager at
In-Store Retail Branch Manager Market Manager or
Business Banker
32
4
Network Integration
  • Channel Roles
  • Channel Manager and Network Manager
  • Delivery Costs

33
Network Integration Channel Roles
Best in Class institutions do differentiate
channel roles In-store branches acquire new
households grow deposits and loans by cross
selling customers educate customers on
electronic delivery provide expanded banking
hours Traditional branches grow deposits and
loans by cross selling customers educate
customers on electronic delivery sell a
complete range of complex products provide full
range of customer service
34
Network Integration Channel Managers and Network
Managers
  • Debate over the benefits of managers who manage
    dedicated channels versus managers who are
    responsible for markets
  • Focus on what needs to be accomplished first and
    foremost
  • There is a clear-cut need for focus and
    specialization this does not imply dedicated
    management
  • There is a clear-cut need for an integrated
    presence in a market, but this does not imply
    integrated management

35
Network Integration Delivery Costs
  • Managing the customer interaction is extremely
    important
  • Educate on ATMs, online, debit
  • Multi-channel delivery systems are expensive
  • Studies show that costs can go up as much as 23,
    average transactions up 60
  • In-store is the most expensive channel for
    transaction processing
  • When transactions are above 12, 00015,000 per
    month, sales suffer

36
5
Sales Process
  • Multi-channel Approach
  • Sales Models
  • Scripting
  • Best Practice Models

37
Sales Process Multi-channel Approach
  • Channels should support each other
  • Traditional branches should promote in-store at
    new account openingIn-store should introduce
    traditional branches for higher touch service and
    sales
  • Product offers should also be consistent

38
Sales Process Sales Tools and Creating Sales
Opportunities
Use all sales methods that the store environment
offers Telemarketing standards for number of
calls madeAisle promoting standards for
quality contactsATM sales specific product
offersTeller line sales use customer database
to understand needsPromotion tables overall
awareness buildingPublic address system
branches need on-going approved scripts
39
Sales Process Scripting and Sales Model
  • Train employees what to say when
  • Use a sales model
  • Create interestExplore needsRecommend and
    obtain agreementDetermine next steps
  • Getting the right balance between needs
    assessment and product pushing

40
Sales Process Best Practice Models
  • Tell, show, share
  • Formalize process of sharing best results
  • Give best practice awardsInvite employees to
    share best practices at meetingsShare success
    stories at all meetings

41
5
Marketing Excellence
  • Branding Strategy
  • POS Materials
  • Sales Campaigns
  • Advertising

42
Marketing Excellence Branding Strategy
  • Importance of a strong brand
  • Use of retail brands
  • Wal-Mart Money Center
  • First Market Ukrops
  • Retailer brands may have a competitive advantage
  • Customers are willing to use non-financial
    institutions for their financial needs
  • Negative brand image of financial institutions in
    general

43
Marketing Excellence Point of Sale Materials
44
Marketing Excellence Sales Campaigns
  • Keep it fresh make the routine exciting
  • Change promotions every six weeks
  • Special sales, gifts with purchase

45
Marketing Excellence Advertising
  • Lend credibility to the channel
  • Promote the network whole is greater than the
    sum of all of its parts
  • Use retailer vehicles wherever possible

46
Marketing Excellence Advertising
47
Retail Store Partners
  • Alliance should exist at all levels
  • Manager to ManagerDistrict Manager to Market
    ManagerCorporation to Corporation
  • Establish regular meetings
  • Focus on joint market programs
  • Take ideas to them
  • Its hard work

48
The Champion
  • Without a champion, someone to take ownership and
    drive the effort, it will fail
  • The champions role
  • Evangelize the mission and strategyDevelop the
    point of view and pull it all togetherAssume
    responsibility for all aspects of the In-store
    Banking Success ModelKeep driving to the
    future stateDeal with internal barriers to
    successCollaborate with all managersStay the
    course
  • Who is your champion?
  • Winners in the supermarket banking business
    focus on a core set of behaviors that lead to the
    ongoing acquisition of new customers to the bank
    and the ongoing cross-sell of those customers.

49
In-store Banking Success Model
Sales and Delivery Processes
Management Processes
1 Strategic Alignment Channel Strategy Products
and Pricing Goal Congruence Organizational
Structure Facility Design 2 Sales
Management Daily Disciplined Processes Observe,
Assess, Coach, Reinforce Sales Tracking Recognitio
n Programs Compensation 3 Network
Integration Channel Roles Channel and Network
Managers Delivery Costs 4 Sales
Process Multi-Channel Approach Sales Tools and
Creating Sales Opportunities Scripting and Sales
Models Best Practice Models 5 Marketing
Excellence Branding Strategy POS Materials Sales
Campaigns Advertising 6 Human Resources Channel
Specific Recruitment Job Descriptions and
Performance Evaluations Dedicated Training Career
Path
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