The Bank Branch Manager's Wish List

Now is the time for wishes. And if I were a branch manager, given all of the demands on me, here is what I would wish for:

1. Clarity of Expectations. Do you want me, your branch manager, to grow small business customers by being a trusted advisor to small business owners within a five mile radius of the branch? Why don't you tell me?

2. Clarity on Accountabilities. If you know me, you would know that I am a big fan of making branch managers responsible for the continuous improvement of their branch's income statement. All other accountability schemes you might have in place are unnecessary unless the branch manager is on a performance improvement plan. Number of net new accounts? Why do you care if the branch continuously improves its profitability? Aggregate deposit growth? What if the branch manager doesn't grow deposits at all, but replaces maturing CDs with small business deposits, and grows small-ticket business loans?

3. Empowerment. Stop calling me about waived overdraft fees. So long as I own my branch's profitability, if knowing the unique customer's situation leads me to waive their fee, so be it. Do you know the customer's situation better than me? I know a waived fee reduces my profitability. I'll find it somewhere else.

4. Support. My favorite line from Grease: "If you can't be an athlete, at least be an athletic supporter." You know those nasty e-mails I get from operations because I didn't fill a Know Your Customer line- item out correctly? You might want to pay a visit to operations and give them a lesson on how the bank makes money. I'm not saying that I shouldn't be trained how to do it right. But sometimes the self-righteousness coming out of HQ demonstrates a profound misunderstanding about who drives profits... customers, and who serves customers... me. So create a culture of empathy and wanting to support people that have customers sitting across their desk.

5. Offload Operations. Do you really want me counting vault cash, reconciling daily branch capture, and servicing the ATM? Take inventory of operational duties given to branches. Yes, there will be people other than the branch manager that can execute on them, but the manual timecard checks, continuous hounding about BSA training, printing and signing forms then rescanning because nobody can use our imaging system as intended, is a bit much. Always, always look for ways to reduce operational duties of people that are the tip of the spear between bank and customer. 

6. Develop Me. I have no idea how to use the small business loan underwriting system. Our online account opening solution has no relation to how we open accounts in branches. So I can't help a customer when they call me from home wondering how to advance past a certain page. Merchant services? Nobody trained me on that. Small business cash flow management? Isn't that what you mentioned in Clarity of Expectations above? If you want me to be awesome at what you expect of me, help me get there. 

Because I want to be awesome. And so too, do your branch managers.

~ Jeff

Bank Branches: A New Model

This design or that design. Digital, pods, low square footage. All the talk around the branch of the future is about design, staff levels, square footage, and technology. 

Yet the people that carry balances, the boomers and older, can't figure out where to go when they come in for a teller transaction. And the younger generation want help managing their budget, using the improved technology tools, and applying for loans.

Sorry youngster. But look at our cool design! 

The slimming of our branch networks, both in number, square footage, and number of staff was used to increase our technology spend, compliance costs, or dropped to the bottom line.

Well I propose something different.

A Different Branch Model

I have a habit of asking almost every head of branches I encounter if they experienced, at any time in their career, a support center person transferring to a branch. In all of the years I've been asking, only one said yes. Because of a toxic boss in the support center. Otherwise, crickets. 

Why? Why doesn't anyone transfer to branches? Why is the branch so important to the execution of strategy, yet nobody wants to be there?

The reasons I hear most are: hours, pay, accountability. They want to transfer to the back office for greater pay, regular hours, and little accountability.

And I have personal insights because I was once a branch manager. Granted in the mid 90's. But still. Then as now, it was a stepping stone for me. No intention of remaining in the branch. The pay wasn't enough. And it was organizationally a thankless position. No thank you. 

Has it changed?

But I propose it should. Because what I hear in community bank strategy sessions, the branch is an important if not critical portion to an enduring future. Why? That one-on-one relationship can't easily be replicated by technology, a bot, or a phone call (when not accompanied by an in-person relationship). 

Survey after survey continues to show that a local branch is important for customers or would-be customers, no matter the age. 

Yet we're blowing it. 

We continue to make the branch a waypoint for our most promising employees. So here is what I propose:

1. Increase the pay- At least two branch employees should earn household breadwinning pay. Right now, the way we pay branch managers, either they are supplementing family income or are young without the outsized financial responsibilities of supporting a home and family. We think increasing teller pay, in the face of rising wages led by larger banks, is enough. It's not. It's branch leadership that needs to earn breadwinning pay. This may increase compensation expense in branches. According to my firm's profitability database where we measure hundreds of community bank branches, each branch generated 2.19% in total revenue as a percent of deposits (spread plus fees). And the median branch deposit size was $61 million. To cover the extra costs, that $61 million branch would have to be $65 million. Would greater talent with the ability to deliver on what people want a branch for in today's environment get you there? I think so. And then some.

2. Rethink the hours- Nothing that customers say they want branches for requires 44 lobby hours and an additional eight drive-thru hours. How about 7-3 M-T, and 11-7 Wed-Thurs and 9-5 on Friday? That allows time for early morning people to bank and after-work people to bank and see your bankers for their more sophisticated problems. Put an inter-active teller machine (ITM) in your man trap or drive up for doing transactions during other hours. This would allow branches to have four FTEs, assuming one is absent at all times for training, customer visits, PTO. You can make up some of the costs of paying people more by having fewer people. Floaters can cover crunches.

3. Design should match emerging needs for branches- Taj mahals are not necessary unless you are using a hub and spoke where the hub is in larger towns, and spokes in lower footprint branches such as the 1,000 square footer. But pay attention to design to make sure you convey the look and feel consistent with customer needs and what you want them to think about you. Check out Associated Bank's design (a couple pictures from their annual report). They took part of the savings from reducing their number of branches by investing in the look and feel of the remaining branches. Check out my post from nearly four years ago on branch décor for more on this. And oh yeah, don't spend money on making your branch a destination. Because people don't want to hang out in bank branches. 

4. Automate support functions- Want to save money? Look at HQ. The promise of AI looms large.

If we believe in strategic alignment, that our day-to-day actions should be consistent with our strategy, then we need to re-think how we feel about branch staff. Because I don't know many banks that want their branches to be staffed with our lowest compensated, highest turnover employees. 

Yet here we are.

Thoughts?

~ Jeff

The bank branch is dead. Long live the branch.
https://www.forbes.com/sites/forbesfinancecouncil/2019/04/10/the-bank-branch-is-dead-long-live-the-bank-branch/#6d595a2f32d0

Regions New Branches
https://www.youtube.com/watch?v=wycNfFk6Dic

Chase Branch Design
https://www.youtube.com/watch?time_continue=45&v=yCe9yPKyd9Y

Breaking Branch Mediocrity

Another day, another convoluted organizational structure that includes “small business bankers” that are dispersed into the branch network to shore up branch capabilities. If not small business bankers, it’s “cash management officers”, or “business development officers”. Why add a protective wrap of additional employees around your branches?

Because branch staff are too busy with operational duties to go out into the community and pro-actively hunt for business. I’ve been to a lot of branches as I travel the land looking for opportunities for banks to improve profits. I rarely see a “busy” branch. One time I saw a line for a teller and was so amazed at the site that I snapped a photo. The bank security officer set me straight. Don’t case the joint.

If bankers were truthful to themselves, they would recognize that these branch wraps, i.e. additional employees with fancy titles, are nothing more than covering up for the perceived shortfall in branch staff skills to be the face of the bank in our communities and pro-active business developers. If you are nodding your head in agreement, read on. 

If you are irritated at the theory and are scrunching your eyebrows like you bit into a lemon, then continue to add the layers to your organizational structure and move on to an article about the “branch of the future”.

Instead of adding staff and layering the cost onto an already burdened branch network (who pays for the compliance analyst you just hired?), why don’t you get the most from the investment you already make in your branches? I have four suggestions for you to improve the abilities of these critical profit centers.

1. Hire to execute your strategy. This assumes you have a strategy that is more focused than “we’re a bank”. If your strategy is to be the number one business bank in the markets that you serve, then hire branch employees that can speak intelligently to business owners about how your bank can better serve them. If those employees are inept at balancing a teller drawer, then so be it. If your staff is highly capable at ATM replenishment but cringe at the thought of speaking to a small business owner about a sweep account, read on…

2. Develop your branch staff. In my experience, the percent of banks that have specific training curricula for branch staff that goes beyond operations and compliance is somewhere south of Pi, if Pi were a percent, and I actually knew what Pi is. But you get the picture. When I was in the military, we had a training calendar for every functional position that included on-the-job (OJT), computer based, self-taught/correspondence, and classroom training. Each sailor was responsible for matriculating through the training program when they were not forward deployed. When they completed certain stages, they received certificates and were deemed “South-East Asia qualified”, or whatever designation the training was intended to accomplish. Do we have a “Small Business Qualified” designation in your training curriculum? If you are not satisfied with branch staff abilities to execute your strategy, and have invested the time and energy into developing them without results, then perhaps you have the wrong staff.  But don’t complain about staff capabilities if you have done nothing to improve them.

3.  Provide meaningful incentives. If you have heard me speak, I bang the drum loudly about branch incentives. You want branch staff to be the tip of the spear for small business relationship acquisition but give those that succeed a 4% raise and a $500 holiday bonus while those that are not successful a 3% raise and a $400 bonus? Why are we surprised that we have to build a “wrap” of different employees around branch staff? Instead of providing incentives based on deposit balances, how about branch profitability? Imagine the behavior differences if branch managers were charged with improving their deposit spreads, fee income generation, and managing their expenses? Would you get the desperate phone call for a rate exception for a $200,000 CD for a single-service customer to “keep the money at the bank”? Doubt it, because that $200,000 would be generating far less spread than the $40,000 operating account from Joe’s Tire and Battery. Even though Joe leaves grease at your teller counter every time he comes in. Why not pay branch managers for the important position that they hold in executing your strategy? Would it be beneficial to make variable compensation a greater and more meaningful component to the overall compensation package?

4. Communicate your strategy. That is, communicate it if you actually have a strategy. Being everything banking to everyone in the markets where you have branches is not a strategy, dear reader. If your strategy is the beef stew of all strategies (i.e. throw everything into the pot), then expect to be average. Wouldn’t that make a great epithet? Here lies Jeff, he was average. But assuming you have a strategy that clearly identifies the bank you strive to become, then communicate it to your employees! Who else do you expect to execute on the strategy day to day? If your strategy is to be the number one business bank, as ranked by the regional business journal, then identify objectives to achieve it and have your employees march a straight line to get there. Maybe then your branch manager will know that you want more customers like Joe’s Tire and Battery, regardless of having to use Mr. Clean on your teller counter after he leaves.

There you have it! Four concrete steps you can take to make branches more effective at achieving your strategic objectives. Did I miss anything?

~ Jeff

Note: This post first appeared as a guest post on Deluxe Corp's Forward Banker Blog in July 2014.

I Want to Draw a Cat For You: Bankers Edition

I have two TV guilty pleasures that my wife endures: Spike TV's Bar Rescue and ABC's Shark Tank. On Shark Tank, this interesting fellow, Steve, pitched for $10,000 from the sharks for his business... I Want to Draw a Cat For You. I was highly entertained by the idea. So I had Steve draw me a cat, and I'm sharing it with you.

How often do I hear bankers wish they can get more activity from branch personnel? Almost daily. So I thought I would memorialize this conundrum in a cat drawing. And yes, I did pay $9.95 for it. Enjoy!

Job Description: Branch Manager

I frequently hear lamentations about the gap between the performance expectations of community financial institution (FI) personnel and performance results. A frequent challenge is that performance expectations are not documented in the form of job descriptions. Instead, expectations are often trapped between the ears of the supervisor or senior management.

This post is geared toward drafting a job description of the FI branch manager. Although I am not an HR expert, I am often engaged in discussions with FI senior management teams on what they expect from the person occupying this position. The job description does not include qualifications or compensation, as each FI can assess what is needed based on their own expectations.

Branch Manager

Summary of Responsibilities:  Relationship management... Develop relationships with the branch's most profitable customers. Relationships should include knowledge of the customers' banking needs and their service expectations from their FI, evaluation of customer product use to determine optimal product utilization, and routine customer contact. The objective is a level of customer satisfaction that increases customer loyalty based on service and relationship, not price/rate.

Product knowledge and expertise... Develop and maintain significant knowledge of FI product offerings, with an emphasis on products most needed by the branch's target customers as per the demographic profile of the area surrounding the branch and the FI's strategic focus. Develop and maintain financial acumen in customer balance sheet and cash flow management to assist customers achieve financial success. The objective is to establish the branch manager as the subject matter expert of bank products within the branch market.

Community relations... Become the primary community representative by joining a minimum of two community organizations with an emphasis on those where the FI's target customers are likely to participate. Volunteer for a leadership position in at least one. The objective is to promote community involvement consistent with the FI's strategy and to expand the branch manager's relationships for future business development activities.

Business development... Grow branch customers at a pace faster than general market growth that is consistent with the FI's strategy. Manage branch business development efforts that include, but is not limited to, in-branch sales, outbound calling, prospect visitations, direct mail, branch-specific social media activities, etc.

Supervision... Supervise branch staff. Set performance expectations based on job descriptions and capabilities. Coach staff to exceed expectations. Manage staff training to include compliance, operations, and sales/product knowledge. Perform routine performance evaluations. Position subordinates to succeed within the FI. Coordinate with HR for developing optimal staffing levels, modifying job descriptions based on changing expectations, and filling open positions. Address performance deficiencies of subordinates.

Branch operations... Manage branch operations activities such as efficient and compliant transaction processing, correct and compliant account opening and closing, branch/teller cash, etc. Branch manager is not expected to perform these duties. Rather, the branch manager will supervise staff that performs duties and receives regular assessment on the operations of the branch from the branch operations manager and outside sources such as Audit and Compliance departments. Branch manager is responsible for the overall appearance of the branch, ensuring it is consistent with the image the FI wishes to present based on its strategy. Responsibilities include the branch physical plant. Again, the branch manager is not expected to perform these duties, but supervise personnel to ensure that they are satisfactorily discharged. The objective is for the branch to operate smoothly so branch staff has greater availability to deliver service that is noticeably better than the competition, and for sales activities.

Branch profitability... Branch manager is responsible for the overall profitability of the branch, and to establish a positive profit trend that is consistent with the FI's overall strategy.

Other duties as assigned.

What did I miss?

~ Jeff