The Future of Branches in a Digital Age

Jim Marous (00:11):

Welcome to a special executive leadership series edition of The Banking Transformed Podcast, recorded at the Financial Brand Forum in Las Vegas. This series is sponsored by our friends at Microsoft. I'm your host, Jim Marous.

Jim Marous (00:26):

During this series of episodes, we dive deep into the world of digital transformation in the financial services industry. We speak with seven top executives from some of the most progressive financial institutions, each of whom has embarked on a unique digital transformation journey to become more future ready and responsive to the changing needs of consumers.

Jim Marous (00:48):

We explore the strategies, challenges, and lessons learned by these forward-thinking organizations as they navigate the complex landscape of digital transformation.

Jim Marous (00:59):

Whether you're a financial services professional, a fintech entrepreneur, or simply interested in the future of banking, this executive leadership series provides you with valuable insights and inspiration as we explore the cutting edge of digital transformation in the banking industry.

Jim Marous (01:18):

Okay, everyone, I think the people will keep on streaming in as they figure out that we're not where everybody else is. It's kind of like one of those outskirt branches in your branch system. You go, "Well, we hope this can be successful. We don't know if anybody's going to show up," but I was worried I'd get here and we'd have four of us, including the two on stage.

Jim Marous (01:37):

I'm Jim Marous. If you don't know me, I'm the co-publisher of The Financial Brand, the owner and publisher of Digital Banking Report, and also the host of the Banking Transformed Podcast, which you're now the first group to ever be a part of a group presentation of our podcast.

Jim Marous (01:51):

I am really happy the way we're starting this series of seven podcasts in that we thought, let's talk about the topics that are part of digital transformation at every financial institution. Let's think about the questions that we have as we're in the banking industry say, "What are we solving for? And what's a big discussion point?"

Jim Marous (02:13):

And there's really no place better to start than to determine are branches dead, are branches alive? Do branches have to change?

Jim Marous (02:22):

It's interesting, I was telling Steve that two weeks ago I was in Palm Desert, California at something called BankSpaces. It was a brand-new event that was created to have a bunch of organizations get together and talk about the future of branches and I think we had about 600 people there.

Jim Marous (02:39):

And I would say there were 600 different models being built, and everybody's interacting with each other. Say, "What's your model? How are you doing what you're doing?" What's interesting about Steve, and I'll let him do his own introduction, so I don't mess it up a little bit.

Jim Marous (02:53):

But he works for TD Bank, who's been here from in banking for more than 20 years. TD Bank came down from Canada and acquired Commerce Bank in Maine. What is interesting about Commerce Bank, does anybody remember Commerce Bank before we get into it? Okay. Couple.

Jim Marous (03:12):

Commerce Bank was known for one thing, an amazing over-the-top customer experience in the branches. And through the years, one of the questions I always had was, how do you convert that mentality, that dynamic to a digital platform? So, Steve, do you want to introduce yourself a little bit? What your role is?

Steve Turley (03:32):

Thanks, Jim. I appreciate the opportunity to be here. My name is Steve Turley. So, I am a head of retail growth and transformation at TD Bank. And what that means is I have accountability around our consumer distribution channels including our store network.

Steve Turley (03:52):

So, over 1,100 stores our branch network up and down the east coast from Maine to Florida. So, it is openings, closings, repositioning, and really the transformation of that physical network and the integration of technology into our modernized network of the future.

Jim Marous (04:10):

Great. Let's see. We have a lot to talk about. I became more aware of Steve and the TD Bank situation that they reached out to us as Banking Transformed, its financial brand, talking about research they did on the customer's utilization of branches and what the customer's mindset was around branches.

Jim Marous (04:31):

Research covered a lot of different topics, but there were a lot of, from my perspective, surprises that research. So, aha moments, you go, "Really," I wasn't necessarily thinking that even if you had been in the space, and if any of you are looking at your branch transformation, you can't get anywhere without asking your customers what they want.

Jim Marous (04:51):

But you also have to put it into perspective, because you got to realize that if you told me, "Hey, you know what? We want to know if you mind if we close the branch as closest to you," not many people are going, "Hey, no problem, I'll go five miles."

Jim Marous (05:02):

It's what they're going to actually take action on, and then find out how much they use the branch, what they use it for. It's all changed. I was talking in the workshop you had yesterday on innovation going, I went into a branch about three weeks ago, and it wasn't even my bank.

Jim Marous (05:17):

I don't know why I was going to the branch, but it all of a sudden it hit me that this branch had a big fault. And I started the banks 47 years ago, and in the branches as a management trainee. And we used to handle a ton of cash.

Jim Marous (05:32):

I worked in what they called combat branches, which were very high activity branches where a lot of people came, especially on the 15th to 30th of the month. There were people updating passports. They were people cashing social security checks, unemployment checks, welfare checks but it was crazy.

Jim Marous (05:49):

On the 15th and 30th of every month, we would get multiple cash deliveries. I think now going, “Geez, with all the retail outlets, with the restaurants, everybody else taking digital payments, do they even need a vault?” They're not holding safe deposit boxes anymore in most cases, or smaller footprints.

Jim Marous (06:07):

So, with your research you did, what were some of the surprises that you saw having been in the space for as long as you have that you said, "I didn't expect this to still be this way or not be this way."

Steve Turley (06:19):

Definitely. And I am still waiting for that first customer to come up and shake my hand for closing their branch, but one day. For us, the research that we did around consumers coming in and visiting branches, we found that 84% of folks had come in over the past year to visit a branch and around a third had actually been there five or more times.

Steve Turley (06:49):

And really when we drilled into it, even 40% of folks indicated that location, which over time has maybe dissipated a bit in terms of that, that kind of primary branch choice still remains that leading factor in how they go in and select a branch, which is something that maybe you might not get from perhaps the financial coverage or what you're reading in some of the trade publications.

Jim Marous (07:20):

84%, I mean, that to me seems extraordinarily high. What did the customers come in for? Because I doubt, again, I'm naive to this, to a degree that is transactional, that's more engagement based and as part of another transaction, what did you find?

Steve Turley (07:39):

When you think about it, if you go a few years back to the pandemic, into COVID, we had a dip in folks coming into the store, into the branch, almost all of those folks came back. Upwards of 90% of our customers who were using the store prior came back into the store.

Steve Turley (08:04):

But they came back in a different way. They came back, if you were coming in every day, maybe you're coming in once a week. If you're coming in once a week, maybe you're coming in once a month.

Steve Turley (08:14):

But in doing that, the importance of those individual interactions went up because now, I don't have 30 or 15 or 12 store interactions over the course of the year. I might have one or two or three, and so, I got to nail those interactions, if I'm a colleague in the store.

Steve Turley (08:36):

People are really coming in for those advice-based conversations, those planning conversations, retirement conversations, or something broke, something messed up and I need you to fix it. And so, those interactions just become that much more important. They also become longer.

Steve Turley (08:55):

So, where you might have come in and just done a quick hit previously, now you've got your colleague in the store. It's got to sit down and take the time to walk a customer through an issue and get it resolved.

Jim Marous (09:09):

So, it's interesting because when I go in the branch, it's for what you mentioned. I have a challenge. Most recently, my challenge was, there was a withdrawal taken out of one of my accounts for my Acorns automatic savings plan. And it took out an account that I didn't realize I was taking money out of, and I ran out of money, and they told me it was NSF.

Jim Marous (09:27):

Now I can get into the whole dynamics on being pretty pissed off that they didn't notify me ahead of time seeing that it was a regular activity. And I immediately transferred money within the branch or within the organization from another account and I had them reverse the charge the first day.

Jim Marous (09:43):

The next day I had another NSF fee that came because of the whole activity of processing withdrawals before deposits. So, again, I came back to the branch and they're always looking forward to me coming in and they know exactly what I mean, I'm going to present a problem that doesn't necessarily an answer that they can draw.

Jim Marous (10:02):

How do we empower employees to know how to now answer not transactional questions, but truly challenges? How do we teach an employee now in a branch about the different platforms that customer is using?

Jim Marous (10:16):

Be it an iPad or being the difference between a droid and Apple, which aren't always working the same way with regard to transactions, but do employees now more than ever have to understand the platforms, the technology, as much as the banking part of the equation?

Steve Turley (10:32):

And I'm glad you brought this up, Jim, because you can't be an expert in something that you don't use. And so, it is critical as we've thought about it, we've prioritized training our colleagues, but getting our colleagues familiar with the systems that our customers use with our mobile app and not just in terms of doing kind of a web-based training, but you are the user, and you are navigating this for your own banking and your own financial situation.

Steve Turley (11:06):

There's always going to be kind of those one and done things that a colleague is going to come in and just be able to do for a customer. But the real power is, "Alright, this is a recurring issue. Let me go in and let me show you how to do it because I know how to do this and I'm going to not only resolve this for you now, but I'm going to teach you how to do it, so it doesn't come up later."

Steve Turley (11:29):

I think the other piece of this is information and real time information. So, Jim, if you come into the store, I see, oh, boy, alright. Jim's been trying to do something on the digital channels, and he hasn't been able to get it done, or Jim just called into the contact center, and he had a frustrating experience. So, I can be ready for that, and I can understand the issue that you're having and be ready to solve it.

Jim Marous (11:54):

So, that's interesting. We talked about this yesterday, the importance of distribution and dispersion of insights that a lot of organizations still hold a lot of the insights within the IT department. They have them democratize the data model.

Jim Marous (12:08):

But isn't there a great power when you can democratize the data to give the insights to the human con, the people that are the only people that have to face-to-face with the consumer and answer their question for them, where they may have already tried three of the channels and felt like they failed or weren't being listened to.

Jim Marous (12:28):

How important is it that TD to democratize the data down to what I'm going to call the most basic transactional level, the face-to-face person?

Steve Turley (12:37):

Yeah, absolutely. And that's where we've prioritized through CRM, through Salesforce, getting the insights and the information really consistently across channels but out to that end user. So, they're sitting there with a customer, they've got all the information sitting right there at their fingertips.

Steve Turley (12:55):

They're able to understand how you've interacted with all of our channels and just understanding that by the time somebody comes into the store having tried other areas, that this is a critical point in the relationship. So, we're giving them all the tools that they need to be able to resolve issues.

Jim Marous (13:15):

So, this is important because we are talking usually about the customer experience. And in talking to you and prepping for this conversation, it is very clear you've probably put as much, if not more emphasis now on the employee experience, certainly within the branch, but with every contact center but we’re talking about branches today.

Jim Marous (13:33):

So, you're trying as much as possible to make these employees feel secure. And in an environment where we're continually drilling down the fact that generative AI, data technology, digital banking, we're moving people, we're trying our hardest to move people out of the branch if possible.

Jim Marous (13:50):

How do you not only empower the employee with the data, but how do you also make them comfortable in their roles without fearing their future? Because if I was looking at, there's two areas back office and the teller that have to sit there and go, "Okay, how many more days do I have here before somebody gives me the notice?" How do you do that at TD?

Steve Turley (14:13):

No, it is a great question. And I think back to the initial point, our interactions maybe going down, but the ones that we have are more important, they're longer. We still need the folks in the stores. They just need to be trained to the right degree and to be able to handle the types of interactions that are coming in, whether those are specialized advisors in the stores, whether those are folks who can handle service all the way across sales.

Steve Turley (14:47):

So, really, the way we go about it is, we've done a lot of work, and particularly with our younger colleagues, and I can speak as being the dad of multiple Gen Zs, we use a lot of video to go out and talk with our employees. I think about my kids oftentimes when I'm trying to talk to them, their heads are in videos, but that's how many of our younger employees consume information these days. So, we do a lot of short, punch videos and a similar approach to how we go out to our customers.

Steve Turley (15:24):

You mentioned generative AI, one of the things that we've launched first in the contact center but coming soon to our stores is the ability to mine our library of policies and procedures and bring it back using the power of gen AI into conversational language that our employee can bring back in an accurate but conversational way out to the customer.

Steve Turley (15:55):

Finally, maybe, we are working in terms of deploying real world scenarios and leveraging the power of augmented reality. So, if you're doing a web-based training about how to deal with an upset customer, you may not be able to really fully get that experience in the same way that you would get in sort of a VR, AR scenario. So, starting to build that into our training protocol.

Jim Marous (16:23):

So, you mentioned Gen Z, we all are trying to engage more with the Gen Z generation, and most of us probably have a preconceived notion that the last thing a Gen Z consumer wants is to come into a branch. They may not even know where their branch is.

Jim Marous (16:37):

I have a 26-year-old, he went to his bank one time to open the account. He never got checks. In fact, when he was put on payroll to the school he went to, he did not know where to find the account number.

Jim Marous (16:51):

He said, "How do I do this?" I said, "Look on your checks." He goes, "I didn't get any checks." I said, okay, I'm out of my league already on this one." And he found it was on his mobile banking app, but I did not know where to find that.

Jim Marous (17:01):

But he is totally … if you ask him what his primary financial institution is, and put in context, it's Venmo. He has a Venmo account. He has a debit card at Venmo. So, he makes almost all payments with Venmo. When it's not Venmo, it's Discover Card or Southwest Card, because he wants to get points.

Jim Marous (17:17):

But your said rate found that 20% of Gen Zs want to have a branch available for advice and counseling. How does that mix, how do you prepare for this dynamic where we can't look at everybody simply by the demographic group they are?

Jim Marous (17:36):

In much the same way that I'm not, while the demographics would say, I'd come into my branch all the time. I have never been in my personal banking branch. It's a bank that doesn't serve my area.

Jim Marous (17:48):

On the other hand, I go into my business banking branch for complaints, primarily and they're always reaching out to me. How do we set up in our minds and our branches to be prepared for Gen Z without over committing that?

Steve Turley (18:05):

It's a good question. I think, when I think about Gen Z and some of the issues and the challenges that they're battling, there's just almost too much information coming at them. They have so many ways to assimilate information, but it really comes back to what can you trust?

Steve Turley (18:29):

And I often think, we're not really in the banking business, we're in the trust business. And it is about building that relationship.

Steve Turley (18:37):

To your point, there is still a significant number of Gen Zs that we're seeing that want to come into a branch, want to sit down and have that advice related conversation because they get so much information coming in. They want to know, what can I zero in on? What can I trust for my future?

Jim Marous (18:55):

So, as I mentioned, TD took over Commerce Bank. Commerce Bank was known for that amazing level of interaction and engagement with the consumer. People loved the bank because of the branch. The question becomes, how do you make digital more human like the branch experience?

Jim Marous (19:15):

How do you do the opposite of what we're talking with, for the most part here about the branch itself. How do you bring that element of kindness, compassion, empathy, convenience, simplicity to the digital experience?

Steve Turley (19:29):

So, it's a great question. And the idea of wowing our customers, going above and beyond surprising and delighting our customers is still a big piece for us at TD. We have really looked through our investments in personalization, bring that same connected experience that we deliver in our stores out across our channels, whether that’s contact center, whether that’s digital.

Steve Turley (20:00):

Bringing that same sort of, “We know you, we know our customer, we know what's important for you. We know that next best action, and we're going to deliver it in the same way consistently in our digital channels as we do in our stores.”

Steve Turley (20:18):

You earlier mentioned the dog biscuits which has always been a big thing and is still a big thing for us in the store. We've actually recently debut, you may have seen some coverage of this what we're calling an automated treat machine for our dogs who want to interact in other channels.

Steve Turley (20:42):

So, your dog will come up to this ATM in Philadelphia, put his pause on the mat and a few dog biscuits will pop out. So, strong response to this, we're going to be deploying it across the network.

Jim Marous (20:57):

I got to bring my dog there because my wife's teaching it things. I'm going like, "What do you mean? You're playing cards and you have him pet … which one's a king?" And then many of us have these pet machines that you got to play a dog on Rubik cube to get the dog biscuit.

Jim Marous (21:15):

When you talk about the design of branch, when you talk about the delivery network, what are you moving toward? Or is it multiple designs? Is one design? Do you keep on testing what you're going on?

Steve Turley (21:26):

Because we just got notification, we talked about it in our prep call that we have a primary financial institution, top six or seven primary financial institutions that's putting a billion dollars into their branch network.

Steve Turley (21:38):

Now, it's not new branches, it's in reconfiguration, rethinking. It may have been the distribution data. They didn't get very specific as to how they're spending that money. What are you looking for today? How has your branch changed over the last five years?

Steve Turley (21:55):

As I think about at TD our branches are probably on average 30, 40 years old. And I think we even have a young network relative to some of the major players. So, if you think about where we were 30, 40 years ago, we didn't have that same digital option, ATM was still in the early days.

Steve Turley (22:26):

So, if you were doing a banking interaction, you were coming into the store. Now, over time, over decades, you'd done paint powder, you probably replaced the carpet that people have been walking on for three decades. But the layout of most of our branches remains the same. It remains the same as what it was when every transaction had to be done there.

Steve Turley (22:56):

And really where we're going now is more around that conversation, sitting down and having that longer interaction around planning. And so, where we're going is really around setting up more private space, putting more offices in place, putting specialized salespeople, wealth, small business, what have you into the store, and clearly branding that.

Steve Turley (23:24):

Setting up more casual kind of space where folks can sit down and have a quick conversation like you and I are having right here. And really it is about setting us up for the types of interactions that we're going to have now and going forward, as opposed to the interactions that maybe we had a few decades ago.

Jim Marous (23:45):

Are you doing it within the same footprints?

Steve Turley (23:47):

Yeah. So, we are. So, we're renovating actually hundreds of our stores. We started last year, hit over 50 of them. We've got another 100 or so on tap this year. But we are working within our own footprints and really looking at spaces where we want to double down, and we see some of the opportunities to go a little deeper and have some deeper conversations with our customers.

Jim Marous (24:16):

And it's interesting, I keep on thinking and coming back to the fact that every one of these changes you’re making the foundation is giving more access to the tools needed to the people you're hiring and have hired so that they can still be the customer's friend. You've mentioned the fact you've reconverted some branches, you've also built some branches, but you've also closed some branches.

Jim Marous (24:40):

How do you handle the closing of branches? How do you do it differently, maybe today than you did when you were at Bank of America where we just, and for lack of better term, simply shut the lights off in a day and moved all the transactions to another branch? How's the communication go? How does the engagement go? How does the whole process work where it's not as disruptive?

Jim Marous (25:01):

Because looking back, we got killed as branch employees when our branch was going to get closed, and we didn't necessarily play the friend of the company that was hiring us and was even finding a new place for us to go. We were never empowered with the why. What do you do nowadays?

Steve Turley (25:18):

So, star closures are something that we take very seriously. And with all the gravity just given the potential impact to the community, to our colleagues, to our customers and really, it is more about to some of the themes that we've hit on.

Steve Turley (25:40):

You think about gravity model. If I'm going to travel to a place once a day versus once a month, I'm willing to do a longer drive or a longer walk in an urban area to something that I'm only coming in once a month.

Steve Turley (25:57):

And so, it is really more about that consolidation where I maybe have four branches going into three or three stores going into two. And having an opportunity to really double down on the locations that are still left.

Steve Turley (26:16):

Certainly, communication is a big piece of this. And we do work very closely with risk and compliance and all of our community partners to understand impacts to the community, but it is something that we do take very serious.

Jim Marous (26:32):

How do you work with your employees? How do you make it where they're actually going to be an advocate for your decision, as opposed to doing those secret, undermining things from a personal basis. They're not trying to kill the company they work for, but the reality is it's real to know.

Steve Turley (26:47):

No, certainly those are absolutely difficult conversations. We always make available the opportunities for other jobs whether in the store network and in other parts of the company.

Jim Marous (27:07):

So, I'm going to have a little question-answer for you out there. How many of you, some of you have heard this question already because I used it yesterday, I'll use it again later on today. How many of you have closed a major, your primary financial relationship in the last five years? Raise your hands.

Jim Marous (27:21):

Now, this is not abnormal because I have a room full of bankers. So, why would you close your own relationship, but we have a few.

Jim Marous (27:28):

How many of you, by a show of hands over the last two years, have opened a relationship at a digital organization, at another credit company, at some organization other than your primary financial institution, such as a SoFi, a Robinhood, an Acorns, a Chime? How many of you have opened something in the last two years? Raise your hands. Okay.

Jim Marous (27:47):

Everyone, look around me, keep your hands up. Because I don't know how many organizations realize and are keeping track of flow of funds that even when we do the best possible job, we are losing relationships bit by bit by bit.

Jim Marous (28:02):

We're losing relationships because we don't provide that digital accessibility maybe the same level. Maybe we make it very hard to open accounts. So, from that perspective, and we talked about how this, “I knew how the answer's going to work out and it worked out according to plan.”

Jim Marous (28:17):

How do you compete with the organizations that people are going to, maybe because of speed, maybe because of lack of friction. Maybe it's simply because there's an offering out there in a digital platform that's different where you have to round out the corners to make it so people stay with you at a time when there's so much competition.

Jim Marous (28:38):

From an organizational standpoint, how are you structuring trying to keep those relationships and build from what you have today? Because without the branch, we have not really mastered the cross-sell aspect of what's going on.

Jim Marous (28:53):

I'm going to call it cross-sell even though I tend to say it's better about helping consumers have a better financial platform, financial wellness platform. But how do you do the things that we really do much better than the branch? And how do you make it so you don't lose accounts to the other organizations.

Steve Turley (29:13):

And this I think really cuts to the heart of the discussion we're having here about the importance of the branch and the resonance of the branch. Because this is a customer by customer, relationship by relationship, there's no short-

Jim Marous (29:29):

Branch by branch.

Steve Turley (29:30):

Branch by branch to all of this. And there's just no shortcut to sitting down with the customer, making the call, setting up a time to come in. We've heard as we've gone out to our store teams, when our store teams go out and make that call and say proactively, "Hey, you have a CD coming up. Why don't we come in and sit down and talk about."

Steve Turley (29:58):

We get great response from our customers, both from an experience standpoint as well as a business standpoint, but there's just no shortcut to it. It is the power of that relationship that our store team, your branch teams are cultivating with your customers every day that allows them to come in and compete for that business.

Jim Marous (30:21):

How do you measure return on branch? Because the old way of measuring the return on branch was transactional, was very, very, very transactional oriented. Now, it's got to be done differently. How are you justifying keeping a branch open or closing it? Because it's not always, I wouldn't think foot traffic, is it?

Steve Turley (30:41):

Sure. I think you have to be very thoughtful about how your customers use your channels and use your branch network and really understand the value of that relationship. The value of, let's say that back book where folks are using that network, maybe not necessarily where they open an account 20 years ago and haven't come into the branch since.

Steve Turley (31:06):

But also, what is that business generating? What is that branch generating in terms of flow of business ongoing? And then of course, I mean, it really still is about covering communities. We hear constantly from our customers about the value that they see when they go by, and they see a TD store. This shows the commitment to the community.

Steve Turley (31:31):

It shows that we're here. It shows that we're here to say, even folks who don't really use the store. What if I had problem-

Jim Marous (31:39):

See the billboard?

Steve Turley (31:43):

I could come in. I could be there.

Jim Marous (31:45):

So, looking in the future, at TD Bank alone, you see more branches, less branches or reconfigured branches. You could get off the hook and say all but on a context overall, what do you see as happening at TD Bank? And then what do you see as the industry as a whole? What do you see?

Jim Marous (32:05):

Because we seem to be slowly going to direction, but then all of a sudden, we see an aberration, what I'll call an aberration where it doesn't change as much, and we have this net growth. Where are you at TD?

Steve Turley (32:18):

If you think about the industry, you know, we've probably seen 3 or 4% decline in branches per year, if you go back over the last five, six years. TD we've been below that certainly on a growth basis, but we've also been opening in that time period.

Steve Turley (32:41):

And we feel like we have significant opportunity to continue to fill in some of the markets, particularly in the southeast, where our networks are a bit thinner and there's some exciting growth opportunities. But I would say, we've kind of slowly tailed down over the course of years. I don't know that that's going to change anytime soon from a net basis.

Steve Turley (33:05):

But where we are going to continue to invest is really in the stores that are there, still continuing to reconfigure, to renovate to set up those private spaces for conversations and really double down on several hundred of our store locations.

Jim Marous (33:25):

It's interesting, I'll keep on getting back to the fact that it doesn't necessarily mean a loss of employees or loss of branches. I look at the airports, we've digitized so much of the welcome experience we make consumers now do their own passes everything else.

Jim Marous (33:42):

But the reality is you don't see fewer people behind the counter. And I think that we've reallocated the thought process, reallocated the experience. We're doing more along the line of greeting. We have some airlines that actually greet people as they enter the plane, that's an additive thing. But it’s trying to look at the entire experience.

Jim Marous (34:00):

But those are different channels. They're using different channels. The branch network that you're working with has different channels as well. You mentioned a little bit, but how do you make it so that the experience is going to be the same at the branch as it is on the customer call center, going to be the same as is they get on a mobile app, going to be the same if I'm using an online app.

Jim Marous (34:21):

How do you make it so that those experience get aligned so closely so the consumer doesn't feel like I'm talking to five different organizations?

Steve Turley (34:31):

It is important, I think, as an institution to decide what your non-negotiables are. What are your non-negotiable behaviors? And those are the things that are going to be consistent. For us, we wanted to standardize our store experience from Maine to Florida.

Steve Turley (34:49):

But for anybody, really, it is, what is that going to look like in the branch? What is that going to look like in the contact center? And take a set of a handful of those key principles and make sure that all of your employees, front office, back office, everybody is aligned to these are the things that we're not going to compromise on.

Jim Marous (35:10):

Finally, we have people from all size of organizations, all asset sizes, all financial conditions being different. We have organizations with one branch. We have organizations with several hundred. What one piece of advice, being in this industry and doing this for as long as you have, what one piece of advice would you give to everybody in the room saying, "Whatever you do, make sure you do this today?"

Steve Turley (35:32):

Absolutely. I think you got to think about tailoring where you're going from a branch network perspective to the values of your organization and really commit to that. I think there's a lot of ways to come at this. I know the direction that we're going for TD Bank, and it is based on what we hear from our customers, what our customers tell us, and what our values are.

Steve Turley (35:59):

Understand that for your organization, get out with your customers. Have them tell you, have them tell you how to make your decisions because you're not going to get any better feedback than that.

Jim Marous (36:10):

And of your employees. We're going to try something here because this is an unusual situation. We're doing a podcast with the people on the other side of the camera. Are there any questions that we can ask Steve or myself about what you're going through right now in your branch transformation process? Yes.

Male (36:26):

I just had a quick question regarding when you're talking about money moving out of the bank, whether it's through customers or even employees. I think we've always had situations in our country where either inflation's up or we're going through a recession.

Male (36:40):

We're clearly in a state where consumers are still spending, but they're also looking to have their money work for them. So, the conversation I'm having is they're loyal to the bank, but they're more loyal to their cash. And how that's being, I guess, increased with us.

Male (36:57):

So, how do we combat that when it's a world of digital access where in like two clicks you can find out if I move my 10,000 here, I'll make even more money than leave it in my current.

Jim Marous (37:07):

Are you talking about the advisory side of that, or cash as a transactional vehicle?

Male (37:11):

Transactional.

Jim Marous (37:13):

So, really the role of cash in the future. So, the question was going forward, what's the role of cash in the future? And that's interesting because that's probably regional and organization. I was at a branch in middle of Georgia on a Saturday going to a wedding, and we saw a line out the door.

Jim Marous (37:30):

I said, "Is this a brand-new branch you've given away something?" He goes, "No, this is all military people that truly work on a daily basis with cash being the primary transaction vehicle." How do you work with that within your store network?

Steve Turley (37:43):

I mean, cash is certainly something that we try to be thoughtful around our cash management strategies. I think, to the question, you really need to leverage that relationship as much as you can. There's a certain competitiveness in terms of your rates, your products that is always going to play out for a set of customers.

Steve Turley (38:12):

But where we've had success is, let's say the store employee, the licensed employee really working together to help that customer understand what are the options for my cash, be it in FDIC accounts, be it in investment accounts and come together around a solution there.

Jim Marous (38:37):

Any other question? We have a couple minutes. Yes. Back there.

Male (38:41):

What's your strategy or plan, or how do you deal with experimentation in the retail branch for new forms of service or features?

Jim Marous (38:50):

What was that key word there? What is the retail branch? Sorry.

Male (38:53):

Experimentation, not-

Jim Marous (38:56):

Oh, question was, for the people on the camera audience, what is your consideration on experimentation of the retail branch?

Steve Turley (39:07):

Great question. What we've done at TD is we've actually set up a live innovation lab. So, we took a store where we had 6,000 square feet. It was really cavernous kind of cut it in half. One side remains maybe a more modern looking store, the other side is a live lab.

Steve Turley (39:30):

And we're able to sort of close it off, open it up but what we're able to do is pull customers aside where we have a new product, let's say something that we want to test. We're testing the augmented reality headsets that I mentioned earlier in the space coming up.

Steve Turley (39:53):

But not everybody's going to have a live lab. I think the idea though is the more you can get some of this in front of your customers, in front of your colleagues, they're going to be able to tell you, "Alright, this resonates, this doesn't resonate."

Steve Turley (40:11):

And doing it, kind of in that live flow is better than maybe being in some warehouse or back office somewhere.

Jim Marous (40:19):

Any other questions? We have time for one more. Yes.

Female (40:29):

What's your process of narrowing down those non-negotiable values that your customer really appreciate? It's really hard in community bank to be able to hone in when you try to be everyone. I'm curious why you really lean into those.

Steve Turley (40:45):

So, it's a great question and one without an easy answer. But what we've tried to do is really bring in a lot of customer feedback. We've tried to really understand, take it from the vision of where we're trying to go.

Steve Turley (41:03):

So, if we're aligned around providing advice to customers and providing personalized insights to customers, what are the things that we need to do in order to provide that kind of branch experience?

Steve Turley (41:18):

Maybe we need to go out and ensure we have a lobby leader present at all times so we can move folks to the right place in the store. But I think it's really starting with that end goal and thinking about how does that translate into the actual experience from a customer as they walk through the door.

Jim Marous (41:41):

I thank you for all your participation and through our first live podcast ever, the one thing I'm going to leave you with is a reality check. When you ask, or when you check to see how people like to open accounts, realize that just because it looks like everybody wants to use the branch check to see how broken your digital process is.

Jim Marous (42:05):

Because more times than not, what we're seeing in our research, it's the customer starts in the digital engagement platform and either gets forced to or feels like that's their only option is to go to a branch because they don't want to stay in, spend 15 minutes on their mobile device.

Jim Marous (42:20):

In addition, if you think you've got it all figured out, realize that the employees have a vested interest in killing that digital transactions if it never started. And it worked really hard to say, "Steve, so glad you got here today. I know you said you started on the digital platform. I like to start from scratch only because I don't want to miss anything on your behalf, and I want to spend some time with you."

[Music Playing]

Jim Marous (42:43):

The customer's going to feel great, the employee's done what they wanted, which is completely make the digital component of that disappear all because we haven't done the easy work, the tough work, the basic work, which is open the front door to people that want to start from the digital platform and open an account in three minutes.

Jim Marous (43:03):

I mentioned to yesterday's group that we've done research, only about 17% of organizations truly have a front to back digital experience where they don't have to come to the branch, fewer than that actually have it in three to five minutes. It's less than 20%, which means 80% of the organizations in your marketplace have something that is broken.

Jim Marous (43:22):

If you're the first one in the marketplace to fix it, you will increase your account openings by anywhere from 30 to 50% overnight. And if you do it the right way without getting your own way, it's going to only take about three months to build that process.

Jim Marous (43:36):

If you open your minds to new ways, I leave you that only because it's my key set item. If you listen to podcast, call or reading my articles, this is the one thing I get frustrated by that we make it so difficult to do banking. Steve, thank you for your time. I appreciate it quite a bit.

Steve Turley (43:50):

Appreciate it.

Jim Marous (43:51):

We hope you enjoyed these candid conversations sponsored by Microsoft. Microsoft enables digital transformation for the era of intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

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