New financial services industry research on the challenges the industry faces in executing relationship-based strategies at the front line has underlined the importance of developing higher order relationship-building skills in employees who have traditionally been at entry-level or even part time.
The research, conducted by financial services professional organisation, BAI Research, and partners Oracle Corporation and De La Rue Cash Systems, surveyed 500 respondents representing banks, savings institutions and credit unions of all sizes and conducted in-depth phone interviews with 38 executives from the nation's top 50 banks. It focuses on the link between front-line performance - as assessed by bank management - and intangible assets such as human resources.
"As branch networks continue to expand and perform an increasingly important role in driving overall profitability for financial services companies, the need to attract, hire and retain front-line employees who can interact with and service customers in a way that fosters long-term, profitable relationships increases," said Thomas P. Johnson Jr., BAI's president and CEO. "The challenge lies in developing higher order relationship-building skills in employees who have traditionally been at entry-level, and increasingly on a part-time basis."
"Banks and other financial services companies strive to deliver a relationship-oriented approach with an emphasis on service quality, and they have made enormous investments in relationship-based strategies in recent years in the hopes that they would produce better customer interactions," added Paul McAdam, managing director of research for BAI.
But financial services executives say that their companies are falling short of achieving their goals at the front line. The research report, entitled 'The Front-Line Factor', indicates that a significant gap exists between relationship-building strategies and front-line execution.
The most common obstacles identified by respondents were:
- Staff lacks required sales skills,
- Staff does not receive adequate sales training and coaching,
- Front-line staff focus is on internal activities (such as counting, balancing and paperwork) versus serving the customer,
- Front-line employee turnover remains high,
- Teller transaction activity is too time consuming, and
- Too much pressure is placed on front-line personnel to cross-sell.
"The challenge for financial services human resources executives is finding branch employees who excel at accurate cash handling and who exhibit an inclination toward inspired customer service - yet are willing to work for entry-level wages for the industry," explained John W. Smith, senior vice president of marketing and strategic development for De La Rue Cash Systems. Increasingly, Smith says, financial services companies are hiring retail sales professionals to fill these branch roles.
Branches shape revenue
The relationship with customers begins at the point of an account opening, and most new accounts are opened in branches. Benchmarking conducted by BAI reveals that the average retail banking customer conducts two or three branch-based transactions a month.
"Branches are arguably the most important retail delivery channel," concluded McAdam. "Financial services companies measure customer relationships through the branch because sales and service there directly shape revenue potential."
Financial services executives felt that leadership at the front line was one of the most critical ingredients for success and goes a long way toward distinguishing successful branches from unsuccessful ones.