Branch transformation is more than a cosmetic “facelift.” True branch transformation reaches far beyond a bank or credit union’s design. Institutions need to evolve how they serve their clients, or risk being left behind. This certainly is not new; retail banking spaces have been evolving and transforming since the introduction of the ATM and the pneumatic deposit tube.
What is Branch Transformation?
Branch transformation is the strategic evolution of the physical branch into a modern, efficient, and customer-centric environment. It involves:
- Redesigning physical spaces to optimize customer flow and reduce square footage without compromising the in-branch experience.
- Empowering staff with tools and training to shift from transactional roles to trusted advisors.
- Integrating technology like ITMs and self-service kiosks to streamline operations and give your frontline staff opportunities for more in-depth conversations.
- Leveraging data and analytics to personalize experiences and drive smarter decisions.
How Are We Seeing Banks & Credit Unions Evolve?
It’s difficult to ignore the frequent reports of branch closures across the U.S. in recent years. While the numbers may be accurate, what the reports don’t mention are the new branch openings. Even amid mass branch closures brought on by the COVID-19 pandemic (3,324 in 2020 alone), U.S. banks still opened 1,040 new branches in one year, according to S&P Global Market Intelligence data.
The function of the physical branch is changing from simply transactional to providing more complex, personalized, advisory services. With so many standard banking tools available via app or website, the branch is where customers and members will go specifically for expert guidance and a personal touch. It’s critical that banks and credit unions integrate their physical presence with new technologies, optimize their spaces, and empower their staff to deliver a wider range of services.
The evolution of the physical branch is not without its challenges:
- There will always be customers and members who prefer digital-only banking and may never set foot in a branch.
- Improvements in remote banking capabilities will continue to affect in-person branch traffic.
- Rising staffing and facility costs may affect brick-and-mortar branch closures within smaller FI networks.
- Direct banking platforms like Venmo or Zelle pose competition to traditional banks and credit unions, especially among younger consumers.
In order to remain a necessity for consumers, bank and credit union branches must evolve into hubs of financial expertise and education that build loyalty through excellent customer service.
Getting Started: A Roadmap for Leaders
Every one of our clients’ transformation journeys is unique. A rural branch network may prioritize community engagement, while an urban one might focus on high-tech efficiency.
The clients with the highest success stay focused on their institution’s strategic goals, customer demographics, and competitive landscape.
As retail institutions, banks and credit unions must prioritize the customer experience first and foremost, along with optimizing their footprint and streamlining costs. Here are our suggestions to help guide your own transformation:
1. Have a Retail Mindset
If you’re not thinking like a retailer, you’re missing the boat.
Element believes that to truly transform, institutions must start thinking like retailers. That means shifting from a purely operational focus to one centered on experience, engagement, and emotional connection.
When you think about a retail space, every square foot is optimized to attract, engage, and drive to a purchase. We’re using the same principles and applying them to modern branch design and planning:
- First impressions matter: From signage to even music, lighting to layout, the environment should feel welcoming and intentional.
- Chorography is intentional: Just like in a store, the flow of the branch should guide customers toward discovery, interaction, and value.
- Staff are brand ambassadors: Employees are trusted advisors who embody your institution’s values and expertise.
- Data drives decisions: Retailers use analytics to understand foot traffic, dwell time, and conversion. Banks can do the same to optimize staffing, layout, and service offerings.
By adopting a retail mindset, our clients’ branches have become more than transactional locations; they’ve become a place that builds loyalty, deepens relationships, and differentiates their brand in a crowded market.
2. Empower Your Employees
Employees who feel valued and trusted by their employer become brand ambassadors. With fewer customers visiting branches for routine transactions, tellers are transitioning into a more advisory role, equipped to answer complex financial questions.
Technology aside, the branch of the future will thrive on great customer relationships. According to Deloitte, roughly four out of five customers prefer visiting a brick-and-mortar branch to open accounts or apply for a loan; on the other hand, customers blame poor customer service as the number one reason they change banks or credit unions.
In addition to practical skills, customer service best practices should be a primary unit of employee training. Take this one step further: If your FI has a distinct type of clientele (e.g. lawyers, small business owners, sole contractors, etc.), staff should be trained to address their specific financial needs.
Employees with specialized skill sets may require higher compensation, but more empowered, knowledgeable tellers and satisfied customers will likely net significant returns.
3. Continuously Improve Your Experience
With the ubiquity of mobile apps and omnichannel customer service, consumers have come to expect accessible, on-demand, personalized interactions with their favorite brands. Likewise, the act of shopping has become an omnichannel retail experience. It stands to reason that retail banking should be no exception.
Social media has played a significant role in breaking down barriers between brands and their customers. As a result, the transactional retail relationship has evolved into something much more personal, with customers expecting their favorite brands to anticipate their needs. Brands are responding in kind, delivering tailored experiences with the help of feedback surveys and CRM software.
In the branch, intuitive layouts, dedicated service “pods,” and unique promotional marketing initiatives can address visitor needs before they even become aware of them. Staying one step ahead of expectations can turn a routine banking errand into a memorable retail experience.
4. Create More Efficient Systems
By utilizing real-time digital tools like mobile apps, self-serve kiosks, and optimized websites, banks and credit unions can reduce wait times in-branch and free up employees to deliver more personalized services.
A side effect of retail digital connectivity is that consumers expect a seamless experience between an app or website interface and a brick-and-mortar store. It’s essential that banks and credit unions don’t fall into the silo trap: maintaining virtual and physical spaces that are drastically different from one another (and worse yet, don’t communicate with each other).
Choose tech tools that promote self-service and can integrate easily with your FI’s existing infrastructure, including (but not limited to):
- Mobile apps
- ATM cash recyclers
- Automated solutions for small business cash pickup
- Interactive teller machines with two-way video
- Self-service coin counters
5. Give Employees the Data They Need
In retail, the most successful brands deliver a seamless experience across every channel (online and in-store). Consumers expect that when they walk into a store or call customer support, the person assisting them knows who they are, what they’ve purchased, and how to help.
We believe the branch experience should be no different.
Whether a customer or member is standing with the teller or chatting with a virtual representative, your employees should have real-time access to the full picture (transaction history, product usage, preferences, even recent interactions). Without the right data, your team can’t deliver the kind of personalized, proactive service that builds a trusting relationship.
If you want your employees to become trusted advisors, you have to equip them like one. That means:
- Unified customer profiles across digital and physical channels.
- Smart tools that surface relevant insights in the moment.
- Training and support to turn data into meaningful conversations.
6. Train Employees with Situational Examples
In order to deliver an excellent customer experience, bank and credit union employees need to feel confident in the service that we expect them to provide.
Set your employees up for success in their new space with the right training, feedback channels, and a shared sense of ownership.
Even if they’re not primary stakeholders, employees should feel empowered to weigh in on any major changes to their branch or, at the very least, fully briefed on the transformation.
7. Self Service is a Tool, Not a Solution
The option to help ourselves is incredibly attractive to us as consumers, and self-service banking is often more efficient than waiting in line at a branch. However, branch transformations that forgo the in-person experience entirely risk losing customers’ trust. Customers are much more likely to seek face-to-face service for large transactions, loan applications, or other major banking needs.
Off-site banking kiosks with tiny footprints should still have real-time video banking capabilities, so customers can receive expert counsel from a human who can direct them to a physical branch if necessary.
8. Start with a Prototype Model: Design Once, Scale Strategically
Branch transformation is about creating a repeatable, scalable model that can guide your entire network. That’s where a prototype branch design comes in.
At Element, our prototypes are more than a concept; they’re a fully realized blueprint for your ideal branch experience. It includes everything from layout and technology integration to branded elements and customer flow.
By investing in a prototype, clients create a strategic foundation that ensures every future renovation or new build aligns with their brand, goals, and customers’/members’ needs.
Here’s why it matters:
- Consistency at Scale: A prototype ensures every branch delivers a unified, brand-aligned experience.
- Faster Rollouts: With a clear design and decision-making framework in place, you can accelerate timelines and reduce project friction.
- Smarter Investments: Test new layouts, technologies, and service models in a controlled environment before committing to a full network rollout.
- Future-Proof Flexibility: A well-designed prototype can adapt to different branch sizes, regional needs, and evolving customer expectations.
Plan Your Next Steps
As the tangible front line for customer engagement, branches are vital to your bank or credit union’s brand image and reputation. Any transformation, whether physical or digital, should serve to grow and reinforce that image in the customers’ eyes. Besides modernizing your space, your branch update should enable better customer service, greater efficiency, and personalized expert guidance.
According to Deloitte, customers cite proximity as the biggest reason they choose a bank or credit union, so let’s make your branch worth a visit. Contact the Element team today to start your consultation.
