Vantage Point


Tough Delivery Choices

In today’s digital age, redirecting delivery is an unavoidable opportunity

By Sam Kilmer

Customers rightly have high expectations of community banks. They want responsiveness across all types of delivery and have no problem changing banks to get it. New expectations are impacting not only how banks interact with customers, but also how banks establish trust.

In a recent study of mid-size banks, “The Cornerstone Performance Report: Benchmarks and Best Practices,” community bank branch activity showed a marked decline. The median number of transactions per teller per month dropped 24 percent since 2010, while their transactions processed per branch per month fell 14 percent. While there will continue to be niche players that focus on branch transactions, the number of branches and physical locations overall keep shrinking. Meanwhile, mobile continues to grow significantly and take on some of that traffic.

According to a Federal Reserve Board survey last spring, 33 percent of all mobile phone owners reported having used mobile banking in the past 12 months, up from 28 percent in the prior year. In addition, 38 percent of mobile bankers deposited checks using their mobile phones and 66 percent of mobile users paid bills through an online system.

Branches and mobile aren’t the only dramatic shifts. Contact centers are growing in complexity, volume and staff, and are performing a wide mix of functions, including inbound calls, emails and chat, mobile/online banking support, outbound sales, and loan and deposit account origination. These developments call for a new strategy in the traditional method of branding, awareness and acquisition.

According to a Cornerstone Advisors Inc. research report, “Delivery Redirect: Start Now or Perish Later!,” these factors all point to a pressing need for community banks to make tougher choices on delivery resources, employees and capabilities in preparation for a new approach. These resources include a bank’s preferred delivery mix (physical and digital) and internal resources the bank needs to redirect, support and leverage its future approach.

The biggest cultural issue for so many banks is that digital channels are associated with service while the branch is associated with revenue. This mentality needs to change given that the majority of new account originations will happen outside of the branch by 2020.

Community banks must start the process of casting off channels that no longer make sense. It is impractical for banks to offer all functionality through all channels to all customers. It is equally impractical to try to please all customers. Rather, leaders need to think about what is the right channel for their customers and align their resource allocation accordingly.

While hard to imagine for many, as banks change their delivery model, contact centers will be the preferred entry point for service. In 2020, contact centers will actually be employee “hubs” and will act as extensions of physical and digital locations to help drive increased product usage, revenue and customer satisfaction. These hubs will include digital tellers supporting transactions across a variety of channels; universal representatives that cross-sell services, open new accounts and advise on loans and other services; and social media and self-service support.

Ultimately, success is not about transactions, but interactions. Tough choices allow community bank leaders to divest in some areas to invest in the other areas that poise their banks for both better service and growth. Banks need to plan and execute what we call a Delivery Redirect strategy today.

Sam Kilmer ( is a senior director at Cornerstone Advisors Inc., a consulting firm in Scottsdale, Ariz.