As consumers change the way they approach their banking needs, institutions must make some tough decisions about how to staff branches and manage other parts of the workforce. Banks need to start overhauling traditional staffing models because mere tweaks to existing workforce strategies just won’t be enough.
It is a pressing need: Novantas predicts that banks will see three-quarters of their staff turn over in the next four years as the shift to digital banking creates upheaval in traditional staffing and labor markets tighten with economic growth.
But this major challenge should also be viewed as an opportunity for branch workforce strategy. Stronger talent, fresh strategies and new tools are needed to keep the field workforce performing at high levels. The changes won’t be easy, especially since traditional bank staffing models aren’t terribly sophisticated.
First, banks need to upgrade and rethink everything about traditional staffing models. As fewer people use branches, needs are shifting from “peak-and-valley” transaction management to a focus on the appropriate use of the sales force.
Second, they must provide support for skilled bankers in the field so they can be more productive.
Third, they must balance the workforce availability so that employees can be utilized appropriately. That may mean having the employee visit a customer’s home or workplace, or use technology to re-route calls that come into a busy location to a less-busy office in order to limit customer holdtime.
Banks must also position themselves to be the employer of choice if they want to win the war for talent. Novantas is seeing a growing number of banks recognize that embracing a flexible workforce can be used as a tool to attract strong candidates.
AN EVOLVING BUSINESS MODEL
The need to modernize field staffing comes against a backdrop of significant changes in the way consumers pursue traditional banking needs. With accelerated adoption of digital technologies, customers are looking at their bank differently.
For example, online account opening is increasing to more than 20% of bank sales at some leading banks — and could potentially rise to 40% or more in the next five years, depending on the pace of consumer adoption.
Branch-based product sales stand at the lowest levels in four years, down 6.2% from 2016, according to Novantas research. There are also fewer and fewer teller transactions taking place in the branch each year, while digital transactions are growing at a rapid pace. Conventional wisdom has always been that there would be a floor to the number of transactions in the branches, but it now looks like that floor may fall to ‘near zero’ with only the most complex transactions requiring a branch visit.
It isn’t as if banks aren’t already trying to adjust for the changes in customer behavior. Indeed, the industry has seen a continual decline in average branch FTE over the past four years. The FTE decline in branches has been 5-7% per year over the last several years. At the same time, banks have expanded their non-branch personnel, especially in segment-based, non-branch sales staff.
Still, banks are expected to see a 70-80% turnover of personnel over the next four years, according to Novantas estimates. And the remaining workforce will look totally different as banks move to universal bankers from tellers and shift to market-centric specialists from branch-centric sales generalists.
ADAPTIVE STAFFING MODELS ARE KEY
Banks have always grappled with high labor costs, but just cutting those expenses won’t be enough this time. In fact, traditional staffing models heavily focused on historical workloads and transaction forecasts shouldn’t dominate a bank’s investment in staffing tools. A better view into day-to-day and week-to-week dynamic activities, such as sales volume and short-term staff disruptions, multi-dimensional activities, will be much more important.
Novantas anticipates a migration of the historical “static” staffing and scheduling methods to more dynamic and adaptive tools. Imagine being able to respond to common weekly scheduling needs with automated, intelligent response models that can manage unanticipated turnover or sales that are running behind plan, or sudden pricing changes that impact sales.
Some forecasts of workload in the branch, such as transaction declines, already are very reliable. Many banks are starting to take a harder look at “the long tail” of other branch activities, such as account maintenance. On the sales side, we see an emerging shift of basic products like checking account sales to online account opening. As a result of all these changes, complex sales and advice will be a growing proportion of the work in the branch.
OVERHAULING WORKFORCE ROLES
Universal bankers, who are able to flexibly shift from service to simple sales, represent up to 50% of branch workforce now and that is likely to rise. But many banks are still working through the staffing and choreography challenges that a more flexible role introduces into the branch. We expect banks to place more emphasis on the importance of this role, which can also educate and migrate customers to digital channels.
Novantas also expects specialists, who are typically untethered to a single branch location, to proliferate as the focus on advice and proactive sales grows.
A clear understanding of the current and future needs of both roles will guide HR teams to pursue appropriate local recruiting tactics.
WINNING THE TALENT WAR
Given the emerging focus of advice activities in the branch, it’s obvious that keeping and attracting good people will be required to fill the roles of the future. The bank’s brand and reputation will be critical to success, especially as many talented young prospects think that branch banking is a dying business. To manage the change, banks need to become a preferred employer. Basic HR programs to fill vacancies won’t be sufficient. For example, banks like Chase have begun to focus on actively recruiting members of the military. Providing military-specific resources, such as the flexibility to fulfill military obligations, are hallmarks of the program. We see this as part of a larger trend to identify attractive sub-segments of the population to target for employee recruitment, much as companies traditionally segment customers for marketing purposes.
As banks develop more precise methods of workforce management, employee skills need to become more specialized in order to achieve the ultimate goal: getting the right associate in front of the right customer at the right time.
Director, New York
EVP, New York