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Branch Optimisation

With the maturity of two relatively new channels — call centers and the Internet — traditional retail banks now face a completely new competitive environment.

Branch networks, long seen as a valuable and protected channel, are becoming a liability, incurring high costs that hamper price competitiveness, particularly against virtual banks. A significant factor in ING Direct’s rapid growth (12 million clients) has been its ability to offer rates for its Orange Account that traditional banks struggle to match. Faced with this situation, and notwithstanding their own efforts to develop new virtual channels, traditional banks must develop strategies to leverage their investment. Experiments with nonfinancial services have proved disappointing, and many banks have already initiated network rationalization programs. The remaining option is to maximize the value-adding and differentiating factors the branch system offers.

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