Reinvent sales

Turning around the sales approach in retail banking

Retail banks have evolved their sales practices over the past decades. From their inception with salary accounts starting in the 1960s, the inaugural branches themselves have evolved and additional services and channels have been added. The most notable additions comprise ATMs and self-service devices in the 1980s, telephone and online banking and later mobile banking since the 1990s, and outbound call center services for at least 20 years now. Yet the fundamental sales model remained unchanged.

High street lenders plan their branch networks depending on frequency of footfall. Branch concepts have been varied to cater to different circumstances, with city branches, flagships and self-service outlets being part of the mix. The general idea remains the same: Placing an outlet where there is footfall, decorating it appealingly and branding the outside, and hoping people will step inside. The bare facts, however, are devastating:

• High street lenders struggle to add customers to their base (even if supported by promotions), as our 2022 Retail Banking Monitor confirms once again - in contrast to challenger banks
• Network cuts, on the other hand, show (very) limited effects in terms of attrition, even after some time (cutting the network by half, as some have done, means losing barely more than 20 percent of customers anymore, very different to a decade ago)
• Sales KPIs do not benefit from the changes made, with sales appointments per advisor remaining between 1 and 2 per day, and the share of service over sales tasks tending to increase in a cut-down network
• Offline-only customers now account for less than 20% of the base1 - just half of their share only a decade ago, with this downward trend continuing

Alternative formulas to the main one of cutting into the network are hard to find (our analysis indicated that by 2023 40 percent of the 2019 branches would be gone across Europe). A few mass market and consumer finance-focused lenders are pursuing outbound-oriented models with branches focusing on converting leads. One of the earliest examples is still out there and is going back to the times where Citibank operated retail banks in various European markets. Already in the 1990s, Citibank branch advisors were only available by appointment - either pre-arranged or on-site, with a meeter-greeter guiding service customers to the self-service area.

Towards an outbound sales model in retail banking - with branches

Since evolutionary changes will not suffice, the branch-based sales approach requires a complete operating model overhaul – from inbound to outbound. Instead of waiting for footfall customers to enter branches (inbound), retail banks should use centrally triggered, targeted lead generation with subsequent decentralized, local follow-up of the leads to guide (potential) customers into the branches with a first view of their needs and convince them of the products and services offered (outbound).
The following example will help explain our view of the future outbound sales model:

The future branch operating model requires retail banks to engage in content marketing and leverage targeted digital advertising to guide the right customers into their outlets. We estimate that this outbound sales model will have the potential to drive customer-facing time from currently 15-25 percent to 75 percent and provide a new future for sales staff in a slimmed-down network, but also make each sales meeting more effective and targeted. Sales staff will interact with their customers both digitally and personally, to discover their needs and increase customer satisfaction.

The biggest challenge for retail banks will therefore not be about density of the branch network, but about the retail banks’ ability to embed physical branches into a digitally-driven outbound model.