Why Is CX in Bank Branches Still Relevant

In recent years there has been increased emphasis on improving customer experience on mobile and online channels.  Branch initiatives have focused on cost cutting: closures/consolidations, forcing customer migration to digital, reducing headcount.


Management attention to branches, and the customer experience delivered inside them, continues to evaporate.  It does not help that many senior executives believe that “the branch is dead” and that the future of banking is 100% digital.  Neither does it help to follow the belief that branches are for older and lower income demographics, and that the young and the affluent are heavy users of digital.

Our consumer research has repeatedly shown that this is a false belief.  While the branch has been losing its role in transaction execution, it is maintaining and, in some cases, increasing its role in: (a) new account opening/new customer acquisition, (b) advice and cross-sell and (c) problem resolution / addressing moments of truth.  Our consumer research has also confirmed the importance of the branch in these functions across all the important demographic groups, including younger and more affluent demographics. In addition, our research highlighted the low satisfaction level with the current in-branch experience.

Subsequent to this research, we launched a concerted research effort to systematically mystery shop bank branch networks in Mexico.  We visited nearly 200 retail branches in Mexico.  What were the main findings of our visits?

1. Transactions and other interactions are long and complicated.  When a single customer interaction with a banker (e.g., opening a new account) takes one hour, it is inevitable that waiting times will be long.  Long waiting times were exacerbated by other negative experiences: available bankers not serving customers, empty desks and teller windows, turn-related worries, and no seat availability.  There was high variability in waiting times across banks.  On average a customer had to wait 3.5x longer when visiting the worst versus the best performing bank.


2. Sales effectiveness is weak.  The ability to understand customer needs and pick up hints about his/her needs is largely absent.  Bankers know their products but fail to listen.  They always offered the same product despite varying mystery shopper needs.  They acted as “order takers” and not as advice-based consultative salespeople who adjusted their sales pitch to each customer’s needs.

3. Banks are undifferentiated.  The “litmus test” question to reveal a bank’s value proposition (i.e., its brand positioning) is “why should I bank with your bank?”  During the mystery shops, front-line bankers did not reply with a simple, compelling, and well-thought-out answer.  If any did, it was their individual perspective, not an across-the-board bank dictated script.  Most bankers gave weak answers while a few simply remained silent!


4. Overall branch experience is weak.  As customers, mystery shoppers did not feel valued, but more like a nuisance to the branch staff that had to be dealt with as quickly as possible.  Greeters were trying to “deflect” customers at the entrance to reduce the workload of bankers, including prospective customers who wanted information about opening new accounts.  Interactions inside the branch, were mechanical and rushed.  The feeling that bankers gave to the mystery shoppers was that serving them was a privilege for the customer rather than a pleasure for the banker.  The overall branch CX experience was captured using Delos Advisors Customer Experience Index (CXI - Trademark).


The CXI (Trademark) measures 12 attributes, including waiting experience, bankers’ knowledge, and bankers’ clarity, and ranges from 0-100% where 100% is an exceptionally positive experience.


 What is the impact of poor CX in branches?

Poor CX destroys shareholder value.  It lowers profitability, slows down revenue growth, and increases risk:

  • Expenses are higher due to long transaction times.  The longer transactions take to execute, the more staff are needed.

  • Customer are not loyal since banks are undifferentiated.

  • Revenue and profit per customer are lower because of poor sales effectiveness.

  • Operating risk is higher due to high variability of execution.

  • Employee turnover is higher since employees are not brand aware / brand-engaged but mere “processors”.  Many (especially the best) do not enjoy working in such “transactional” environments with poor CX and are more likely to resign.


Should we still care about branches?

Yes, we should.  Branches are shifting roles but remain as a core delivery channel.

  • Many customers still use the branch for their day-to-day transactions, even if digital alternatives exist.

  • Even among customers who prefer digital channels, most still rely on the branch for problem resolution and advice/new product acquisition (new account opening, loan application, etc.).

  • Branches are still a major component of a bank’s operating expenses and a source of significant operating risk.


There is no question that the role of the branch is changing, but it is certainly not going away!  Smart retail banks are investing on their network and using their branches and the bankers inside them as a key driver of differentiation, growth, and profitability.