The Art of Bank Branching with Steve Smith from Accenture

CALEB: Well, hello and welcome to the Community Bank Podcast. Thanks for joining the conversation today. I’m Caleb Stevens with SouthState’s Capital Markets and Correspondent Banking division. This is the final show of 2024, which is hard to believe. We’re grateful for you all tuning in this year. We do this show for you, the community banker. Every show that we put out is designed to help you grow yourself, your team, and your profits. So, from our team to you, thank you for tuning in each week. It’s a joy to help serve you and help you grow as a banker. We’re going to wrap up the year talking all about bank branching. What’s the future of the branch? You know, we hear a lot about branch consolidation. You hear more about getting efficient, pushing folks to mobile.

CALEB, continued: So, how should your branch strategy relate to your digital strategy? We’re going to talk about all that and more. This conversation features our own Chris Nichols, our Director of Capital Markets, here at the bank, and also the author of the popular Banker to Banker blog. He sat down with Steve Smith from Accenture. Steve serves as a managing director and leads Accenture’s banking industry for the South. And we’ve mentioned a few times now, if you’re looking to make 2025 the best year yet at your bank, you can’t miss the opportunity to get our new e-book, “The Top 12 Winning Strategies for Community Banks in 2025.” It’s jam packed with resources, ideas, analyses, and playbooks to help your bank win in 2025. To get it, simply click the link in the show notes of this episode. And now here’s Chris Nichols and Steve Smith on the future of branching.

CHRIS: Steve, this is the long time coming. Welcome to the podcast. Appreciate you taking the time to talk to us about branching.

STEVE: Excellent. Thank you, Chris. Appreciate the opportunity. I’ve really admired the podcast and the thought leadership from afar, so really excited to participate.

CHRIS: Well, as readers and listeners know, I’m not a huge fan of the bank branch. I agree that there’s probably a place for them, but honestly, I don’t know really what the future holds. So, that’s kind of the objective today is to try to help you evolve our thinking—or at least my thinking—around the branch and what does the branch become? So, you know, I’ll start with kind of the basic question that’s always on my mind, is given the digitization of banking, you know the rise of its payments. You know, Gen AI handling, you know, the customer. Help me and not to mention, you know, aging demographics of our customer base. Make a case for why we still need to branch five years from now.

STEVE: Yeah, that’s a really, really good question. I think there’s a number of things that I’ve seen out in market, and we’ve seen with some data. I think ultimately digital channels still lack a human touch. We see the digital platforms—and banks’ technologies in particular— do a really nice job of indexing on functionality, but not really in motion. So, the platforms may be functionally correct, but emotionally devoid. And, you know, that can work until it doesn’t. And so, I think branches offer up the opportunity to bring that human element and emotion into the equation. We recently did a global banking consumer survey that took into account 50,000 customers globally and 10,000 in the US, and that’s going to be coming out in early 2025, and nearly half of the consumers from even the ages of 18 through 44—so that would be Gen Z and Gen Y—reported having difficulty finding human support when they needed it. So, that human touch is really, really important, and branches play a critical role in that.

CHRIS: So, is it more sales or is it more problems solving or what is it, you know, a combination? How should we think about our branches as a bank in terms of, you know, optimizing its usage? Is it smaller, is it bigger? Maybe talk about some of, you know, models out there. Whether I do need to one big branch to the future or, you know, some of those micro-branches or pop-up or kiosks. What are your thoughts there?

STEVE: Yeah. I mean, I think there’s a lot to unpack there. I think as it relates to the role of the branch, I think a lot of it is relative to both the sales and the servicing. But again, back to your original question of, you know, make a case for five years from now. I think that, you know, money is ultimately intimate, and customers seek reassurance. And inherently, you know, money’s nothing more than trust either, either through a piece of paper or a pixel on a screen. And, you know, we inherently have a hard time trusting what we can’t see or touch, and we’re coming up on Christmas, and we all know the famous scene from “It’s a Wonderful Life.” The Bailey Brothers Building and the loan scene. And we think back to last year with SVB and Signature and First Republic. All failed.

STEVE, continued: And bankers fundamentally get the economics behind why that happened. With unrealized losses and the percent of non-insured deposits and the over specialization into sectors. And even digital’s role. Text and Twitter, in creating inertia, but everyday retail customers think that if SVB can fail, why can’t my bank? So, the question where their money is, and you know they start to seek out banks that are too big to fail. Those money center banks. So, you know why? Back to our recent survey. You know, 56% of customers say that a removal from a branch in from their neighborhood affects trust in their bank. So, seeing something permanent and real is a strong psychological reinforcer, and I think back to your question, the role that it plays is not just transactional, but also psychological in terms of the brand and the reassurance, that there is something behind the digitization of banking technology.

CHRIS: Yeah. So, I agree with that. I think if you ask for customers, they always want to see the SouthState’s sign, but not necessarily want to use the branch. But, you know, as I look at any given bank with a portfolio of branches, do you see one more effective than the other, or do you think it actually is a portfolio? And maybe comment, you know, one model that I’m enamored with is, you know, CapitalOne. I know you’re familiar with that model of the cafe branches because it looks like you—and I watch, you know, and mystery shop and I watch that, and like they’re getting 80%, 85% of the value at a third of the cost of a normal branch. And is that a major model going forward? What are your thoughts on that?

STEVE: Yeah, it’s a great question. I think if you think about the different branch models, and you referenced a few of them, you know, we’re doing a really nice piece of work right now on where branch models are going. And, you know, I think some of the key takeaways I would say is that we talked about just a moment ago, but customers still value the branch. Two-thirds of our customers said they still like seeing a branch in their neighborhood. However, to your point, one size does not fit all. And just beyond your digital property, branches are the biggest representation of your brand. And so, whether you fulfill or break that promise to your customer has a lot to do with kind of your branch properties and your branch portfolio. So, to your point, there are flagship models, and you know you see those with mega-money centers, the Chases of the world. CapitalOne actually has one as well in New York, and even some of the regionals, like First Horizon, are dabbling in that as well. But you know those really make sense for big capital investments in the new geographies, new markets, rebranding your position.

STEVE, continued: Doesn’t make a lot of sense for kind of community banks to move into that area. You start to see banks that move into kind of the more the community-oriented. You know, you have PNC getting on wheels. They have trucks, mobile offices, sprinter vans. You have U.S. Bank that’s doubling down on specific neighborhoods in Los Angeles doing really big low digital innovation, but high community impact. Chase is moving into community centers where they’re targeting banking deserts. Yes, you see some of the bigger brands moving into those areas, and then you reference the cafe and lounges. I think that’s getting a lot of publicity right now because I think what the CapitalOne is doing domestically in places like Virgin Money, you’re doing internationally is redefining the role of the physical bank branch in and making it more than just transactions. And I think they’re looking for spontaneous interactions, incubators, knowledge exchange and, you know, high amenities. And to your point, they’re taking away the traditional kind of vault lock box. You know, crushed velvet ropes, tellers, and kind of introducing more high digitization, high self-service. And I think they’re trading off a lot of the capital expenditures for more of the marketing aspect of it. And I think they’re really placing a premium on marketing and experience over that full service. I think my perspective is that that’s going to work really well in a densely populated market, but I don’t know if that’s going to be maybe great as your primary model. But at the end of the day, I think having a very, I guess, a very diverse portfolio of branches is going to really serve banks and community banks well over the trajectory of time.

CHRIS: And I want to highlight something you said. You know, sure, I agree that customers want a branch, 1) because we ask the question, you know, who doesn’t want a branch or a service station or what have you right next to their house. That’s just more convenient for them. So, they say yes, but you know, I always say like our customers want a branch because we make them want a branch. We’re failing at some level by servicing their needs to be able to handle conflict, to be able to handle, you know, a product introduction or onboarding, you know on the phone. And so, we forced them into a branch. Over time, I think that goes away, but you brought up an interesting point in that, you know, maybe the branch serves as a way to just educate our customers to get them looking at different product, to give them the reassurance when they need to talk about, you know, a personal financial item like a mortgage. Is that kind of how you see the bulk of branching going forward?

STEVE: Yeah, I think that’s a big part of it. I mean, I think over the trajectory of modernization, branch banking is moving away from transactional more towards advisory. I think customers are going to become more digitally savvy. And what we see is that customers are coming into the branches for a couple different reasons. They’re coming in because they want to open an account. They’re coming in because it is a complex transaction, and to your point, they’re not being able to either figure it out on their own through self-service, or they just feel as if they’re going to get better service, you know, in person. Or ultimately, they actually just want that human interaction. And so, what we see is the trajectory of the branch and the skills necessary within that branch are going to move more towards that advisory. It’s going to move more towards how do you enable your customers to use the digital properties and then also move a little bit more, I guess, upstream. And you move more towards things that are higher margin, wealth, advisory, even small business. Because I think that’s where, ultimately, that Rosetta Stone or the Holy Grail of banking of cradle to grave. It’s a heck of a lot easier to do that in person than over a keyboard.

CHRIS: All right. So, let me recap so far. Branch strategy looks like having a variety of different types of branches serving different markets, whether it’s rural or urban or, you know—what I really wanna get out of. It’s more educational, it’s less transactional, more experiential, as you said. And that sounds like it requires a higher-level banker that, you know, we’re looking for more of the universal banking type that can help with account opening or can it help solve problems? And it’s fewer branches, right? Can you agree there?

STEVE: Yeah, absolutely. And I think what’s interesting about fewer branches is, between 2019 and 2023, you know, the overall branch population declined by 6%, and that’s no surprise. And branches peaked around 2009 at just under 100,000. And you know, that’s an interesting data point, because that’s a coincidentally when kind of the iPhone came out. And so, as the iPhone came out, the democratization of technology came online, you know, to your point, digitization started to come up. And so, branches became a little bit less dependent because people were able to do more digital banking.

STEVE, continued: We’re able to do more banking online, and so the channels became more robust. But as those branches declined over 2019 to 2023, the majority of that were large money center banks above, you know, $50 billion. Interestingly enough, community banks less than $10 billion actually increase their branch presence by 1% over that time. Either because they’re filling the gap of the money center banks leaving or, you know, there were some that were purposeful. So, think of like Regions Bank kind of handing off some of their physical properties to credit unions in the Deep South to be able to kind of make sure that there was coverage. Yeah, I think it’s a less but better scenario, Chris.

CHRIS: And I promoted this theory that, you know, things have switched, enlarged from my banking experience that it used to be, “I’ll establish a branch and then build a customer base around that branch.” But now it seems like, and I wanna get your take on this, that you establish a digital presence first and then you put a branch around that area to support that digital presence. I may target a new city or a new, you know, suburban area. And if I have the traction, then put a branch in it. You think that’s a workable model going forward or do you think it’s more traditional back to the former? That, you know, I open up a branch and get customers around it. Is our role there for customer acquisition?

STEVE: Yeah, I think there’s a couple of different ways you can kind of look at it. I think that was a really interesting take. If you go outside of banking, you look at places like Warby Parker, Rent the Runway, even in banking or in financial services. You know, they all started as digital first and then eventually found out kind of where their customer base were and then ended up putting physical properties because they wanted to extend the trust. They wanted local engagement. They wanted branding, and as important or maybe more important, they wanted data collection, right? So, it’s a lot easier to actually get feedback from your customer base as they’re walking in and actually engaging with you hand to hand. So, I absolutely think there’s a play to start digitally, gather information and go physically.

STEVE, continued: And what, you know, I live in Charlotte, NC, and so if I go back ten years ago, 10, 15, 20 years ago, historically you would have Bank of America and Wells Fargo, or then at the time Wachovia. Now, you know, we’ve seen a proliferation of, you know, TD and U.S. Bank and Fifth-Third, and Truist, and a bunch of others coming online because they have the data around who has their Venture\ Card and who has their, you know, other products. And so, they’re saying, “Hey, I have a dense population of customers using my product in this area. Well, I’m gonna set up shop here, and that’s going to reinforce what’s already happening in this market.” So, I think you’re absolutely right. It doesn’t have to start with, “I’m going to drop a branch in and then build a presence.” It can be, “I have a product that I have a digital exposure, and now I’m going to reinforce it with my physical presence.”

CHRIS: And you just gave me something to really think about is, I think I’ve undervalued the ability to collect data, and I think your point is extremely valid in that I can collect all sorts of data on my customers, but there’s a certain subset of data that I just can’t collect unless I meet them face-to-face. Be able to ask questions that I may not want to build the technology around, but I do want to know the birth date of the kids or what have you. And I think that’s probably underutilized in my mental model of where branching goes. Good point. Yeah.

STEVE: Yeah, absolutely. I mean, there’s lots of different ways you can take that.

CHRIS: And, when you work—I know you guys work with some of the top name clients in banking, but when you work with a client, is there a common set of things that you kinda highlight or as you look at, you know, community bank branching right now? Are there things that community banks should be doing to improve profitability that, you know, you always find or often find with the customer?

STEVE: You know, interestingly enough, when you think about kind of the feedback or data, I think there’s a lot of opportunities, both on the revenue generation and the cost reduction side equation of branch profitability. But to get straight to your question, I think one of the most approachable actions that community banks can do to improve profitability would be around dynamic staffing through the measurement of customer volume and intent. And you know, there’s a lot of banks out there that don’t measure and manage to those metrics regularly, and there’s a lot of low-tech ways that you can capture that to make big impacts. For community banks, some of the largest noninterest expense or salary benefits and then the management of those physical properties, but thematically, I think there’s a lot of opportunities. You know, you can continue to go down the path of cost savings around migrating your transactions. Some of the banks we’re working with now put values of $3.00 for every interaction with the teller, and $0.75 with an ATM, and up to $0.05 for a digital interaction. Well, to do that, you have to have the capabilities.

STEVE, continued: Either you know through your digital properties or ATMs, or ITMs. You have to communicate that you have it. Enable your customers to use it and then incent them to use it. You can have front office technologies around fraud prevention around the holiday times. We see a huge uptick in fraudulent IDs. So, things like ID verification, check fraud capabilities, self-servicing. There’s some really, really innovative things around one-to-one self-servicing capabilities around cashier’s checks. Loan applications. Card reissuance. And then scheduling is huge. You know, there’s a significantly higher customer satisfaction and pull-through when customers actually proactively schedule. And then you touched on it earlier, up-model and staffing. The blend of universal banker and specialists. We talked about measuring volume and intent to optimize for needs that can be both low tech and high tech. Ultimately, finding your right to win in the market. All of those play into the cost saving side. And then on the revenue generation, you know, deepening relationships is really what I think branch banking is all about. Customer360 is kind of what everybody talks about it, and that’s just the start, but really no one really just wants to be cross-sold to, but if you can offer up solutions to problems, that’s what’s impactful.

STEVE, continued: And, you know, insights are really, really interesting. And Chris, I know on one of your more recent LinkedIn posts, you talked about, you know, customers having about 5 or 5.2 demand deposit accounts. And imagine if your primary bank could see that and understand that the cash flow, where it was going, and offer up either a virtual or sleeved accounts that effectively, you know, provided the same purpose. And because of consolidating, could offer you know 25 basis point bump. Or if they were chasing yield, if you could offer a sweeps account into a HYSA. Or imagine if there were multiple buy-now pay-later installments, because that’s really popular with, you know, younger generations. But they don’t have a credit card with you.

STEVE, continued: What if you could offer a credit building program for a young girl or a thin-credit customers, you know, with the opportunity for them to graduate up? Targeting offers, using the martex signals and the scheduling capabilities. You know, knowing why they’re in the branch, being more specific, the dynamic signage. Not just digital signage, but dynamic. Know Verizon’s doing some really, really interesting things with dynamic signage. And then I mentioned earlier kind of going up market with higher margin business, whether that’s small business, wealth and investment, mass affluent. Those are all things that I think kind of hit on both sides of the balance sheet of both cost savings as well as revenue generation. But there’s several opportunities for banks to improve profitability on both sides of the equation.

CHRIS: Man, I’m gonna have to go back and rewind what you just said a couple times. You had some great nuggets in there. Overarching aim though, as it sounds like as a branch manager in particular or a branch regional president, that I should be looking more at what my target audience is, who the target audience I want is, and then be more proactive at my branches to design marketing programs, you know, outreach programs, staffing models to accommodate my goals. Do I have that right?

STEVE: Yeah, I couldn’t agree more. I mean, I really think that, if you’re a branch manager or division manager, I think there’s kind of three things that I would be thinking about it. Who do you bank? Where do you bank? But I also think it’s what’s your brand promise? And, you know, I think the brand promise is sometimes undervalued. You know, beyond your digital property, branches are one of the most impactful representations of your brand. And if you promote being tech forward, and a customer walks in and sees that traditional crushed red velvet queue, and tellers behind glass, you’re immediately breaking that promise. And if you’ve promoted customer intimacy, and you’re forcing them into 100% self-service or at some sterile environment, or, you know, you’re asking them to repeat their intent over and over again, you don’t have any trends on them or insights, it becomes 100% transactional. Again, you’ve broken that promise.

STEVE, continued: So, you effectively have become a utility. So, brand has all sorts of implications on things like physical layout, as well as kind of your staffing, and just the capabilities that you’re serving up. In one of your recent podcasts with Kevin Scott back in October, there was a great discussion around creating emotional connections with customers. And Kevin also referenced, you know, if you promise a caring service and you don’t actually provide that caring service, customers are not only dissatisfied, but they become resentful. And so now the risk here, just like all industries, is that customers can seek revenge for poor customer service. I mean, everybody’s got a platform. I mean I may or may not have Tweeted at an airline after a chat bot provided me sterile response to my inquiry on the airline losing my luggage. I mean, we all have a platform.

CHRIS: I remember that story. Yeah, if you haven’t listened to that with Kevin, great podcast. Steve, you mentioned scheduling. I think scheduling probably helps you keep that customer and smooth over to help your staff. Both help your staffing models but also help create that engagement with that customer in the branch when they feel they got a dedicated time, they should come in. Is scheduling something that every bank should have in their branch model?

STEVE: Yeah, I think it’s one of the more straightforward ways to really connect your channels. You know, if your channels and branches are not at least informed of each other—of your customers intent and better yet integrated—you’re soon going to be inadequate relative to your customer service. You know, if someone walks through the door and they’ve explicitly, you know, told you what they are trying to do, you know that really, really helps kind of make it an easier and better engagement. And so, I think it’s really important to have actually have that as an option. I’ve myself have used it with my primary bank. And you know, we don’t go into branches frequently, but when we do, it’s for things that matter. And I wanted to start digitally and end physically because it allowed me to serve everything up that I needed to from a paperwork perspective and make the processes as painless as possible. And then when I got in there, it was more of a verification and safety and soundness than going through the hour long, arduous task of kind of doing it from scratch. So, in my mind the scheduling and prestaging is something that makes kind of the branch experience a pleasurable experience and not one that people you know look to avoid.

CHRIS: And the technology’s fairly inexpensive. Like for a bang for a buck, it seems like a no-brainer that it’s fairly easy to execute on fairly cheap. And it gives not only the customer experience you talked about, but also I think you implied the data too. That I know why people are scheduling, how people are scheduling, when they’re scheduling, which also informs a better experience all around from planning. Do I have that one right?

STEVE: Yeah. I mean, a lot of banks now have CRM platforms that I think you can start to get the tooling and the integration with your OLBs, to be able to get that set up. I think the multiplier effect that you just touched on, which I think is super important is compounding with real or meaningful insight. So, not just the scheduling, but also things like, “I see you’ve lost card,” or “It looks like you’ve been working with an architect—might you’d be interested in a home loan?” You know, accessing that data now isn’t really readily available with most legacy technology. And a lot of banks are starting to invest in their data and their core technologies and serving that up to their front office and their teammates. But if you couple both the scheduling and the data and the insights, you layer on AI, now all of a sudden, you’re going to superpower the front office to actually have really impactful conversations with your customers. And it’s not going to be long before that’s going to become table stakes. You start to layer in things like the digital signage I mentioned earlier. You can get into geofencing, personalization, and one-to-one self-service options. You know, it won’t be long before you’re going to start to have a very personalized experience when you come through the branch, just like you do when you log on to Amazon.

CHRIS: All right, Steve. Tell me a little more about your dynamic signage. I don’t think I appreciate that point enough. Tell me more about what you what you see.

STEVE: Yeah, that’s a great point. So, if you think about now, right now, a lot of branches, they will, you know, once a year or once a quarter print out signage that talks about rates or products, or just overall marketing and branding. And that can be both costly to print, to distribute, to hang up, to actually maintain, especially if it gets torn or damaged or broken. And that’s kind of how it’s been for decades. You start to move into more digital signage, which that’s good because it’s easier and more dynamic in terms of actually putting content up. When you get into things that are more dynamic, that allows you to start doing things that are a little bit more interesting. So, that then means you can put video. That means that you can start to put the queue for people that have used their schedule. So, think about when you go to the airport, and you see the queue or the wait list for first class or for those that are waiting to get on board. Like you can do the same thing. And so, having the transparency of where you are in line at a heavily-trafficked branch is massively important. What also is really interesting is you can start to go even further out and say, “Okay, well, I know if I have 10 customers in, and they’ve all opted-in to information sharing that I know what their intent are, and I can start to put up information that’s one to many.”

STEVE, continued: If there’s three or four people in there, most of them are in there because they’re interested in small business. Well then, I can start to actually promote small business capabilities on the screen. There’s proximity. So, as people walk closer to the screen, it actually becomes bigger and so, as opposed to having three or four pieces of data, I can have one piece of data. And so, the dynamicism of the content, the real time information, the hyper personalization all start to become pretty interesting in terms of how people engage and interact. And this isn’t about putting up, you know, personal information or things that you know shouldn’t be shared with others. It’s about putting up relevant information, timely information, and engaging information that make that experience more robust.

CHRIS: And I can also vary it by different times of day. Like I know like sometimes the merchants come in and at certain morning hours. Or right after lunch where I get the lunchtime crowd is different versus the person that comes in, you know very first in the morning that has a problem that needs help, you know, getting online. I may want to vary my content based on hours of the day as well.

STEVE: Absolutely. And what’s great is, think about it this way too, pre-hours and post-hours. Flip it over to associate mode. So, now you can think about using the same signage and talk about what are the certain things that you want to promote or what are the certain kind training or information that you want your staff to be mindful of.

CHRIS: Yeah. Love that idea. Love that idea. If I have portfolio branches right now, in any given market and I’m thinking about, you know, closing some and consolidating and you know investing in some of the core ones. How might you suggest I kinda look at you know what branches to close? It all about people? Is it location? Is it traffic? Is it potential? Any thoughts there?

STEVE: Yeah, that’s a great question. So, we talked a little bit earlier about some of the levers earlier for revenue and cost and profitability. As an advisor and not an operator, I just need to be careful about the advice on branch closure, especially in light of data around overall increase of branch deserts. But, you know, one piece of data that I’d love to share is that over the past rate cycle, you know, we found a really strong correlation between branch density and deposit beta. So, banks with more physical locations actually have a lower cost of funds. So, in a high-rate environment, that actually supports more branches since you have a discount on your deposit cost, and it would offset the CapEx. It’s kind of why branch transformation is so hot right now. But that said, back to your actual question. I think there’s absolutely an opportunity to optimize the footprint and shift away from a hub and spoke or venn diagram to a more purposeful, multi-store format.

STEVE, continued: And so, a few years ago, I met with some leadership in retail strategy for a large US bank, just on this topic. And we explored how telecom retail was evolving. And while yes, there is a physical phone involved in that equation, by and large, they’re selling you a service just like a bank. There’s no really physical product that they’re moving other than the phone. And so, here we explored a national distribution strategy to drive local market growth, and this was driven by several key factors. What is the role and objective of the format of the store? What customer segments are you targeting? What is your operating model, your product, and things like the handoff between digital and physicals, we’ve talked about. Are they using an influencer strategy? But essentially there was a basic 2×2 for that discussion, which was what was rep-assisted versus digital self-service? And what was transactional versus experimental?

STEVE, continued: And what this allowed for was a bunch of different ways to kind of engage. One was attract and convince people to come to stores. One was full service. One was simple serve. And one was experimental and disruptive. And how that played out were all the different formats we discussed earlier, whether it’s full service, pop up, et cetera. And the physical footprint for these telecoms, you know, in a given market shifted based on their distribution approach. And we saw an increase in market share, increase in presence, and decrease in cost. We also discussed things like compensation models that accounted for kind of a more of a marketplace format versus an individual store. So, if I’m a community bank, I think that’s a pretty robust breakdown that I went through for kind of a large US bank. You’d have to right size that. You won’t necessarily have all store formats and have all data points. You’d have to kind of dial that back a little bit, but I think the principles are effectively still the same around one-size formats and hub and spoke models no longer meet the demands of a diverse population. And the last thing I’ll kind of mention on this is there’s really a really rich set of third-party data to consider when both opening and closing branches. There’s government data with census and SBA data.

STEVE, continued: There’s geographic informational services like Google Maps. API is around foot traffic and consumer behaviors. There’s market research with Nielsen’s around segmentation. You have banking specific data with S&P Global Markets. You have FDIC, which has really good information on summary of deposits, credit bureau information with Experian and Equifax. And one that I think is really gaining some traction that I see a lot of banks investing in is around social and consumer behaviors. So, a lot of social media analytics. I think if you kind of pick and choose the two or three data sources that help inform you, layer that on top of your segmentation and your branch strategy, all of a sudden you have a number of different vectors that will allow you to be a little bit more prescriptive with where and how you’re actually deploying your physical locations.

CHRIS: And as I think about my physical locations, when I first got into banking, like you wanted a branch like two miles away from the next branch. And then that started to become five miles, and then 10 miles. Is there any rule of thumb in terms of physical distance that you would say bankers should think about? Or just all about, you know, service area and you know what you’re trying to get accomplished?

STEVE: Yeah, that’s a tough question based on both the, I think, where you’re at geographically. I think it’s gonna differ whether you’re in urban, suburban, or rural. I think branch deserts in those areas are two, five and 10 miles from a radius perspective. And then also back to what I mentioned earlier around, if you’re gonna just do your traditional store versus more of these, I won’t say bespoke, but these more unique store formats that allow you to be a little bit different from just kind of plopping them down geographically at a different distance apart. I think, you mentioned earlier about using data to be informed, starting with either digital presence or with a product presence that that informs. I think that that becomes one of your richest datasets, more over than just the, you know, the physical distance between sites.

CHRIS: Well, as we wrap up, Steve, any parting thoughts? Are there any brands that you, any banks that you think that should be kind of our North Star or should be a potential mentor that we should pay more close attention at? Anybody that you really like out there that does branching right?

STEVE: Yeah, you know, one of the most interesting regional banks I’ve kind of seen over the past 10 plus years, that’s been on the forefront of branch design is one in the Pacific Northwest. Umpqua Bank. I’ve been following them for a long time, and I find them just super interesting and unique. And you know, related to branches, they have about 300 plus in eight states with a branch strategy that moves banking to the background, and it reimagines branches as a place of discovery, community, and function through kind of digital integration. And so, they have a very diverse set of their branches because they’ve done a number of acquisitions. But they have a mixed format of branches. But think of the characteristics of both traditional, cafe, lounge, community, and digital. So, if you think about some bank that’s very digitally forward, that has a cafe waiting area, that still will have some traditional tellers and private bankers, but with a yoga studio.

STEVE, continued: And you know, they are not afraid to go try new things and test and fail. And one of the more like really, really, I don’t know, avant-garde things they did a number of years ago—about 13 years ago—their then CEO, Ray Davis, put this silver phone out, and I don’t know if it was in all branches or if select branches, that if you picked it up it would go straight to the CEO’s office. Now I think 90 plus percent of those were just to see if it was real. But what’s great about that is I think what they try to do is really kind of take their culture and make it a part of who they were. You know, they really kind of tip their internal ingenuity and brought it physically out to their customers. So, if you’re looking for somebody that is, you know, on the community to regional bank size, that’s really pushing the envelope in terms of where to take branch banking, I think Umpqua is a really interesting case study.

CHRIS: Yeah, I would concur with that. And I’ll just add an aspect that I really love. What they do is the community involvement, how they turn some of the branches into community centers, host events there. You know, make that open for anybody to rent. If someone needs a conference room or a place to hold a reception. You know, they turn their branches, and they design the branches, in some cases to accommodate that. I think that’s a great way to integrate to community, something that we all want to do in community banking.

STEVE: Absolutely.

CHRIS: Any other parting thoughts? Any other tips that you want to leave our listeners? This has been great.

STEVE: Yeah. I mean, I think for me, I think that branch banking is something that shouldn’t be slept on. I think we’ve gone through an era post-pandemic where everybody thought that we were rotating to a, you know, digital remote world, and everything was just going to be done through that channel. And I think that people have undervalued human touch and the emotional side of banking. And I think branches are a way that brings the connectivity and the intimacy of banking into the communities. And I think community banks in particular have an opportunity to double down on that. I think through purpose and through the right advances in technology, can kind of supercharge that and really carve out a unique place in their community. So, branch banking, I think, has a long way to go, and I think an opportunity to really differentiate you from your competitor.

CHRIS: Steve, I appreciate the time. I appreciate what you do for the industry and what Accenture does. We’re always big fans of your all’s research. So, we’ll be looking forward to 2025 and seeing what you guys produce. And thank you for helping us evolve our thinking around branching. It’s always, I think, going to be a topic that’s going to be on the forefront of bankers’ minds. It’s expensive. But the question is how is it worth it and how can it be even more so? So, appreciate your thoughts on that. Thank you very much.

STEVE: Absolutely. Thanks for having us, Chris. And look forward to the next discussion.

CHRIS: Yeah, thanks.