Virginia Heyburn (00:01.819)
A big hello to all of you listening in today. Welcome back to another episode of FinTech Unleashed. My name is Virginia Habern. I'm the Director of Research, Insights, and Advocacy at EngageFI. And today's episode is a very timely conversation on efficiency that I think every financial institution really needs to hear. And to do this, I'm joined by my colleague, Joe Dugan. Joe is strategic advisor at EngageFI.
And together we're going to discuss this very important topic of channel optimization as a way to achieve greater operational efficiency. What is channel optimization? Why does it matter? How should a financial institution pursue it? That's exactly why Joe is here today to lend us his expert voice to unpack all of this. There is so much to talk about today, so let's get right to it.
Virginia Heyburn (00:54.555)
Joe Dugan, welcome to the Fintech Unleashed podcast.
Joe Dugan (00:58.242)
Thanks, Virginia. Great to be here.
Virginia Heyburn (01:00.241)
Wonderful to have you. So ahead of our conversation, tell us a little bit about your background and what you do for us here at Engage FI.
Joe Dugan (01:08.696)
Sure. Well, I spent over 25 years in the banking industry, working for just about every size bank from community banks to mega banks across the country and spent the last 20 years in the C-suite for a few community banks in Western New York. And I joined EngageFI about a year and a half ago. And I've since then been trying to help our clients understand how to be more efficient.
in their approach to the market while also generating revenue.
Virginia Heyburn (01:44.209)
Yeah, and that's a huge topic right now, Joe. You and I have talked about this so many times. There's a lot happening in the industry that's very challenging for banks and credit unions, which is making operational efficiency such an important strategic priority for them. And when we think about where we can take cost out of a financial institution, service delivery really comes to the top of the list in a lot of ways because it is the biggest cost for financial institutions, especially if you think about the branch.
So let's start at the very beginning of this conversation. What is channel optimization for any of our listeners who aren't quite clear on that and why does it matter?
Joe Dugan (02:25.23)
Yes, sure. Thank you. I think, you know, channel optimization, simplest form is looking at all your delivery channels and saying, how do we staff them collectively or holistically to be most efficient to serve our members' needs or our customers' needs, rather than looking at them each as an independent channel of delivery?
So it's really stepping back and thinking about the role of every channel. And perhaps most importantly in this process is recognizing that the branches continue to play an important role.
in an FI strategy and mean bring value to the customer and the member at the point of sale. So it's not just as easy as saying, well, let's close branches or let's downsize the branch footprint. It's about how do I optimize the branch and the experience in the branch in a way that meets the transactional activity.
as well as support it with the digital and call center and chat delivery channels that are surrounding the number and the customer these days.
Virginia Heyburn (03:42.395)
And as I hear you describe this, Joe, I'm thinking back across my 30 years in financial services technology, it seems in some ways obvious to me how our industry got to this problem of inefficiency when we think of channels. But maybe there's something that's less obvious, right? I mean, you have innovation that comes at different points in time. You're adding on channels. Maybe they don't talk to each other. Describe the inefficiency problem and how we got here.
Joe Dugan (04:11.222)
Yes, so that's really just it. You and I have the advantage of watching it for 30 years. So, you know, for me, when it really started was with the advent of the ATM.
At that point, transactions started to be pulled away from the branch. And actually at the same time, a lot of other things started to be centralized, like credit and operations as well. So the transactional kind of foundation of the branches was changing. And...
When online banking came along, a lot of people really said, well, that's the demise of the branch. The branch won't be here by the 21st century. Well, it's still here and it's thriving and even COVID couldn't put an end to it. So when you look at the customer and what drives their choices around their primary banking institution, it continues to be the second most important factor.
replaced first by digital, but it's not off the table. It's a very important decision factor for a customer or new member looking to bank with you. So how do we take this branch model that was built on transactions and operations that we stripped those activities out of and put value back in them in the way that members and customers are looking for?
One is about staffing it with education and vice-capable folks. And the other is recognizing that you can deal with more than just in-branch transactions if you route activity differently.
Virginia Heyburn (05:57.331)
And so what I'm hearing you say, think, is that optimization is not necessarily efficiency only, even though that's very important, but it's also a necessary technology step to being able to deliver a much better customer or member experience. Can you describe the advantage to the customer or the member?
Joe Dugan (06:16.718)
Sure. So, you know, in many instances with the other delivery channels that are not face to face, we stood them up independently. They're independently staffed and the processes are built independently. So a customer calling into the call center, as an example, might get a very different experience than if they call went into the branch to open alone. The call center
designs a process to do just that open the loan they have a finite skill set around the call center and answering the phone so they frequently route that customer to another location when they found out a loan origination is what's required and then the people that are intaking that app usually are trained to do only that when they walk into a branch
Most frequently that branch employee can start from inception, taking the loan app, getting it approved, dispersing it, and it's all one seamless process. Additionally, the branch rep is trained across all products so they can identify other needs that that customer member may have that is not typically part of the centralized experience.
Virginia Heyburn (07:43.661)
And as we were preparing for this podcast, I've just been watching one of your engagements so very closely with one of our clients. And I'd love to talk about this. What I find so striking about it, Joe, is that it's really unique in the industry. I don't think I've seen anything like it before. You've been super active with one of our clients who shall remain nameless. You've been guiding them to an optimization strategy. They're starting to see some really positive results from that. And I...
think our listeners are gonna be really interested in this. Every institution we talk to is wanting to achieve efficiencies. They want to deliver better service to their customers and members. It's a unique case study on how to solve a problem that has been a big issue, a plague even for our industry for decades. So can you, in the context of this client, describe the business problem they were facing and what did you recommend they do?
Joe Dugan (08:39.342)
Well, the business problem they were facing was they weren't hitting their financial objectives. They had a narrow way south of one. They had an efficiency ratio upwards of 75 to 80%. And their revenue per FTE was far trailing their peers. And they came to us saying, how can we become more competitive, at least meet our peer median?
in our space. And in that process, to just get to the median level, they were about $6 million in a gap of expenses.
or make up on the revenue side. So we stepped back and looked at the whole organization and tried to understand how the members were using each channel, the branch, the call center, and the digital support areas that
supported a provide administration to the digital experience, whether it's virtual chats or a digital incomplete app as two examples. And we truly measured the activity in each one of those locations. What we learned quickly was that their branch network was overstaffed.
and we needed to right size that based on activity at the branch. But also, even in doing that, we wouldn't maximize the capacity in the branch. So when we started their branch staffing utilization was about 23, 24 % of their staff was fully utilized.
Joe Dugan (10:32.366)
We right-size them to get to about 45 % of their staff being fully utilized. Because you have to have typically three or four employees in a branch for safety and soundness, dual control, breaks, et cetera, regardless of the amount of activity. So we right-size them, and they were still at 45%.
What we then did was look at all the other channels and how they were being used and said, gee, you're paying for call overflow because your call center can handle all the inbound calls. What if you took those inbound calls and routed them back to the branch? So you can start to use that access capacity rather than paying a third party vendor or adding to your contact center staff.
What if we took the virtual calls from the ITM and routed them back into the branch? What if we took the loan apps going to the call center and when you
select, I want a loan in your auto attendant, pointed to the branch. So we literally went through a decentralization process after right sizing the branch based on activity to get to about 70 % utilization. We didn't want to push them all the way there because there are some variables in time to process, et cetera. We wanted to give them some,
some cushion to adjust as necessary. But the outcome was we actually reduced their annual expenses by $12 million. And we increased their revenue per FTE by 25 % just in changing the denominator of FTEs.
Joe Dugan (12:28.684)
But most importantly, we position them to be able to provide a seamless member experience, whether regardless of the channel they used by organizing around the member, both delivery, lines of business, product and marketing, all centrally managed.
by one area to maximize and coordinate that customer experience.
Virginia Heyburn (12:59.558)
And why is that so important? Joe, walk us through that. Why is member or customer centricity so important for a financial institution in today's competitive environment?
Joe Dugan (13:09.858)
Well, our banking history, we've tended to think about verticals of staff organized either around product or...
lanes of profitability. Are you generating net interest margin or are you generating non-interest income or are you collecting deposits but otherwise an expense was a frequent thinking around the branches, right? Particularly when these digital solutions started to present themselves through other fintechs or neo banks, they figured out how important
a seamless experiences to their process. It's in a virtual world, but you deal with one entity, whether it's virtual or not, and it's very seamless.
The banking industry, as they set up these individual verticals, ends up putting the customer through a very convoluted process to get to the end solution, because they frequently have to interact with four or five.
or six people or areas to get their solution. So if we want to be able to compete, we need to recognize first that you have to have a seamless experience. That's what defines the quality that the customer is looking for to bank with you. Secondly, you have to figure out how to do that most cost effectively. And if the branch network is important to your vision, mission, value, you really need to
Joe Dugan (14:55.5)
start there. Back to that example, that the case study that I was working on, the branches were a critical part of their mission vision value. It wasn't like they were going to go to some kind of virtual solution or, you know, a very modest kind of footprint. They were invested in
their branch network as many community banks are. They're on Main Street. That's who they want to be and who they're identified to be. So how do you take that and deliver it most cost effectively? And when we looked at the credit union, the cost of that model,
was over $18 million between the people and the facilities. So in that scenario, by reducing the cost of the model by 2 thirds, we've positioned them to continue to offer the value of the branches and also deliver a more seamless experience.
Virginia Heyburn (16:05.102)
And this is relevant for banks, maybe even more so because banks are needing to comply with CRA. They can't just close branches at will. They need to make them far more efficient. And this case study clearly offers a path toward that efficiency play.
Joe Dugan (16:24.27)
Yeah, absolutely. That's a very good point, Virginia. You know, the credit union I was working with could have chosen to close branches without the same level of difficulty that a bank goes through in choosing to close branches because of the CRA requirement and very frequently.
these branches that are underutilized are in low to moderate income census tracts. So it's very difficult to close them. You have to figure out how do I repurpose them? How do I capture that capacity of staff in the branches so I can continue to offer this seamless experience in a profitable fashion?
Virginia Heyburn (17:12.082)
And Joe, we've obviously have been in the industry for a while. We've talked about this for a long time, that institutions have to find a better operating model. The cost is too high. But importantly, what you were touching on that we need customer and member centricity because customers and members are fed up with everything being so difficult and cumbersome, duplicative. And of course, fintechs are doing things in brand new ways and they're getting a lot of attention and market share.
So I'm wondering, as you've worked with this case study institution, are there next steps? there plans to take this good work that you've done, these recommendations that you've made, they are now executing? What's next for them?
Joe Dugan (17:56.248)
Well, what's next for them is to understand how to maximize their market opportunity in those branches. One of the other things that we did in the process was not only try to understand the activity level in a branch, transaction volumes, et cetera, but the market opportunity around the branch. And we benchmarked.
each branch around those demographics and then staffed those branches based on the market opportunity, both in number of employees, but also the nature and skill set of those employees.
And the two things that we did was move subject matter experts back into those branches that match the market demographics of those subject matter experts. So if it was a dense CNI population around a branch, we put that commercial lender in that location. But we surrounded them with business development officers who could go out and help them mine that business as well.
And really they would have previously been community sales managers or branch managers, but we've freed them of the service burden so they can be out assisting the subject matter expert in sourcing new business if they were in a high market opportunity branch.
If they were in a valued branch location that had little market opportunity, we would staff that strictly around service capability. Included in that service capability would be being able to provide service to members and customers outside of the branch that was redirected to those service branches.
Joe Dugan (19:52.406)
So the hopeful what's next for them is in reducing the cost, we've given them opportunity to be competitive. Now they have a platform through which to go out and generate additional revenue through better penetration of high market opportunities and cross sell quality by having it serve serviced at the branch.
Virginia Heyburn (20:17.71)
It also sounds Joe that after all these years of financial institutions looking for revenue in their service delivery investments, there's finally a way for them to sink their teeth into that because in the past, how often have we heard, where's the ROI in this? a new channel, mobile, where's the ROI? Investments in the branch, where's the ROI? It sounds like here there's a real opportunity to achieve that.
Joe Dugan (20:42.828)
Yes, and it's about again understanding what's the cost of those channels to provide a solution and how do we direct staff and coordinate staff across all those channels to maximize the ROI of the company, the FI, not of an individual vertical within the FI.
Virginia Heyburn (21:06.268)
silos be gone, right?
Joe Dugan (21:08.544)
Exactly.
Virginia Heyburn (21:10.012)
So final thoughts, Joe, it sounds to me like every institution really should be thinking about channel optimization for a number of reasons. One, efficiency. Two, a much better way to reach and delight customers and members. What can institutions do today? What steps can they take now to get their journey with channel optimization underway?
Joe Dugan (21:32.962)
Well, that's a great question. I think there are a few things branch FIs could be doing today. If they haven't already, you have to move to a universal banking model.
Many FIs haven't have, but many haven't. It's very surprising. You can't be efficient if you can only process a transaction and another person can only open an account. You can get efficient if that one person can do both of those things. So step one is laying out a path to go forward around universal banking.
Step two is again taking a step back and looking at your staffing across all delivery channels and the cost of all of that staffing. And then,
Step three, think, which really probably should have been step one, is get clarification around what your branch means in your strategy, in your go-to-market strategy. There are a lot of conversation around closing branches and downsizing brick and mortar.
And that can be a good strategy if it fits your member's profile and the value that you're bringing to the member or customer. But when Chase is opening hundreds of branches, I think they understand that there's a value proposition, value connection to their branches and their customers.
Joe Dugan (23:16.458)
So where are you on that spectrum of branch value is probably the place to start. Then, assuming you have value, go back to that universal banking and think about all your channels as one collective staffing opportunity.
Virginia Heyburn (23:39.214)
And in step four, call Joe Dugan. Joe, thank you so much for joining me on today's episode.
Joe Dugan (23:46.222)
Thank you, Virginia. I enjoyed it.
Virginia Heyburn (23:48.818)
I also want to thank all of you, our listeners, for choosing EngageFI as your source of information for banking technology services. Please be sure to look out for the next episode of FinTech Unleashed by following EngageFI on LinkedIn. We are already hard at work on the next topic. Until next time, have a great rest of your day.
Virginia Heyburn (24:11.365)
And that's a cut.
A big hello to all of you listening in today. Welcome back to another episode of FinTech Unleashed. My name is Virginia Habern. I'm the Director of Research, Insights, and Advocacy at EngageFI. And today's episode is a very timely conversation on efficiency that I think every financial institution really needs to hear. And to do this, I'm joined by my colleague, Joe Dugan. Joe is strategic advisor at EngageFI.
And together we're going to discuss this very important topic of channel optimization as a way to achieve greater operational efficiency. What is channel optimization? Why does it matter? How should a financial institution pursue it? That's exactly why Joe is here today to lend us his expert voice to unpack all of this. There is so much to talk about today, so let's get right to it.
Virginia Heyburn (00:54.555)
Joe Dugan, welcome to the Fintech Unleashed podcast.
Joe Dugan (00:58.242)
Thanks, Virginia. Great to be here.
Virginia Heyburn (01:00.241)
Wonderful to have you. So ahead of our conversation, tell us a little bit about your background and what you do for us here at Engage FI.
Joe Dugan (01:08.696)
Sure. Well, I spent over 25 years in the banking industry, working for just about every size bank from community banks to mega banks across the country and spent the last 20 years in the C-suite for a few community banks in Western New York. And I joined EngageFI about a year and a half ago. And I've since then been trying to help our clients understand how to be more efficient.
in their approach to the market while also generating revenue.
Virginia Heyburn (01:44.209)
Yeah, and that's a huge topic right now, Joe. You and I have talked about this so many times. There's a lot happening in the industry that's very challenging for banks and credit unions, which is making operational efficiency such an important strategic priority for them. And when we think about where we can take cost out of a financial institution, service delivery really comes to the top of the list in a lot of ways because it is the biggest cost for financial institutions, especially if you think about the branch.
So let's start at the very beginning of this conversation. What is channel optimization for any of our listeners who aren't quite clear on that and why does it matter?
Joe Dugan (02:25.23)
Yes, sure. Thank you. I think, you know, channel optimization, simplest form is looking at all your delivery channels and saying, how do we staff them collectively or holistically to be most efficient to serve our members' needs or our customers' needs, rather than looking at them each as an independent channel of delivery?
So it's really stepping back and thinking about the role of every channel. And perhaps most importantly in this process is recognizing that the branches continue to play an important role.
in an FI strategy and mean bring value to the customer and the member at the point of sale. So it's not just as easy as saying, well, let's close branches or let's downsize the branch footprint. It's about how do I optimize the branch and the experience in the branch in a way that meets the transactional activity.
as well as support it with the digital and call center and chat delivery channels that are surrounding the number and the customer these days.
Virginia Heyburn (03:42.395)
And as I hear you describe this, Joe, I'm thinking back across my 30 years in financial services technology, it seems in some ways obvious to me how our industry got to this problem of inefficiency when we think of channels. But maybe there's something that's less obvious, right? I mean, you have innovation that comes at different points in time. You're adding on channels. Maybe they don't talk to each other. Describe the inefficiency problem and how we got here.
Joe Dugan (04:11.222)
Yes, so that's really just it. You and I have the advantage of watching it for 30 years. So, you know, for me, when it really started was with the advent of the ATM.
At that point, transactions started to be pulled away from the branch. And actually at the same time, a lot of other things started to be centralized, like credit and operations as well. So the transactional kind of foundation of the branches was changing. And...
When online banking came along, a lot of people really said, well, that's the demise of the branch. The branch won't be here by the 21st century. Well, it's still here and it's thriving and even COVID couldn't put an end to it. So when you look at the customer and what drives their choices around their primary banking institution, it continues to be the second most important factor.
replaced first by digital, but it's not off the table. It's a very important decision factor for a customer or new member looking to bank with you. So how do we take this branch model that was built on transactions and operations that we stripped those activities out of and put value back in them in the way that members and customers are looking for?
One is about staffing it with education and vice-capable folks. And the other is recognizing that you can deal with more than just in-branch transactions if you route activity differently.
Virginia Heyburn (05:57.331)
And so what I'm hearing you say, think, is that optimization is not necessarily efficiency only, even though that's very important, but it's also a necessary technology step to being able to deliver a much better customer or member experience. Can you describe the advantage to the customer or the member?
Joe Dugan (06:16.718)
Sure. So, you know, in many instances with the other delivery channels that are not face to face, we stood them up independently. They're independently staffed and the processes are built independently. So a customer calling into the call center, as an example, might get a very different experience than if they call went into the branch to open alone. The call center
designs a process to do just that open the loan they have a finite skill set around the call center and answering the phone so they frequently route that customer to another location when they found out a loan origination is what's required and then the people that are intaking that app usually are trained to do only that when they walk into a branch
Most frequently that branch employee can start from inception, taking the loan app, getting it approved, dispersing it, and it's all one seamless process. Additionally, the branch rep is trained across all products so they can identify other needs that that customer member may have that is not typically part of the centralized experience.
Virginia Heyburn (07:43.661)
And as we were preparing for this podcast, I've just been watching one of your engagements so very closely with one of our clients. And I'd love to talk about this. What I find so striking about it, Joe, is that it's really unique in the industry. I don't think I've seen anything like it before. You've been super active with one of our clients who shall remain nameless. You've been guiding them to an optimization strategy. They're starting to see some really positive results from that. And I...
think our listeners are gonna be really interested in this. Every institution we talk to is wanting to achieve efficiencies. They want to deliver better service to their customers and members. It's a unique case study on how to solve a problem that has been a big issue, a plague even for our industry for decades. So can you, in the context of this client, describe the business problem they were facing and what did you recommend they do?
Joe Dugan (08:39.342)
Well, the business problem they were facing was they weren't hitting their financial objectives. They had a narrow way south of one. They had an efficiency ratio upwards of 75 to 80%. And their revenue per FTE was far trailing their peers. And they came to us saying, how can we become more competitive, at least meet our peer median?
in our space. And in that process, to just get to the median level, they were about $6 million in a gap of expenses.
or make up on the revenue side. So we stepped back and looked at the whole organization and tried to understand how the members were using each channel, the branch, the call center, and the digital support areas that
supported a provide administration to the digital experience, whether it's virtual chats or a digital incomplete app as two examples. And we truly measured the activity in each one of those locations. What we learned quickly was that their branch network was overstaffed.
and we needed to right size that based on activity at the branch. But also, even in doing that, we wouldn't maximize the capacity in the branch. So when we started their branch staffing utilization was about 23, 24 % of their staff was fully utilized.
Joe Dugan (10:32.366)
We right-size them to get to about 45 % of their staff being fully utilized. Because you have to have typically three or four employees in a branch for safety and soundness, dual control, breaks, et cetera, regardless of the amount of activity. So we right-size them, and they were still at 45%.
What we then did was look at all the other channels and how they were being used and said, gee, you're paying for call overflow because your call center can handle all the inbound calls. What if you took those inbound calls and routed them back to the branch? So you can start to use that access capacity rather than paying a third party vendor or adding to your contact center staff.
What if we took the virtual calls from the ITM and routed them back into the branch? What if we took the loan apps going to the call center and when you
select, I want a loan in your auto attendant, pointed to the branch. So we literally went through a decentralization process after right sizing the branch based on activity to get to about 70 % utilization. We didn't want to push them all the way there because there are some variables in time to process, et cetera. We wanted to give them some,
some cushion to adjust as necessary. But the outcome was we actually reduced their annual expenses by $12 million. And we increased their revenue per FTE by 25 % just in changing the denominator of FTEs.
Joe Dugan (12:28.684)
But most importantly, we position them to be able to provide a seamless member experience, whether regardless of the channel they used by organizing around the member, both delivery, lines of business, product and marketing, all centrally managed.
by one area to maximize and coordinate that customer experience.
Virginia Heyburn (12:59.558)
And why is that so important? Joe, walk us through that. Why is member or customer centricity so important for a financial institution in today's competitive environment?
Joe Dugan (13:09.858)
Well, our banking history, we've tended to think about verticals of staff organized either around product or...
lanes of profitability. Are you generating net interest margin or are you generating non-interest income or are you collecting deposits but otherwise an expense was a frequent thinking around the branches, right? Particularly when these digital solutions started to present themselves through other fintechs or neo banks, they figured out how important
a seamless experiences to their process. It's in a virtual world, but you deal with one entity, whether it's virtual or not, and it's very seamless.
The banking industry, as they set up these individual verticals, ends up putting the customer through a very convoluted process to get to the end solution, because they frequently have to interact with four or five.
or six people or areas to get their solution. So if we want to be able to compete, we need to recognize first that you have to have a seamless experience. That's what defines the quality that the customer is looking for to bank with you. Secondly, you have to figure out how to do that most cost effectively. And if the branch network is important to your vision, mission, value, you really need to
Joe Dugan (14:55.5)
start there. Back to that example, that the case study that I was working on, the branches were a critical part of their mission vision value. It wasn't like they were going to go to some kind of virtual solution or, you know, a very modest kind of footprint. They were invested in
their branch network as many community banks are. They're on Main Street. That's who they want to be and who they're identified to be. So how do you take that and deliver it most cost effectively? And when we looked at the credit union, the cost of that model,
was over $18 million between the people and the facilities. So in that scenario, by reducing the cost of the model by 2 thirds, we've positioned them to continue to offer the value of the branches and also deliver a more seamless experience.
Virginia Heyburn (16:05.102)
And this is relevant for banks, maybe even more so because banks are needing to comply with CRA. They can't just close branches at will. They need to make them far more efficient. And this case study clearly offers a path toward that efficiency play.
Joe Dugan (16:24.27)
Yeah, absolutely. That's a very good point, Virginia. You know, the credit union I was working with could have chosen to close branches without the same level of difficulty that a bank goes through in choosing to close branches because of the CRA requirement and very frequently.
these branches that are underutilized are in low to moderate income census tracts. So it's very difficult to close them. You have to figure out how do I repurpose them? How do I capture that capacity of staff in the branches so I can continue to offer this seamless experience in a profitable fashion?
Virginia Heyburn (17:12.082)
And Joe, we've obviously have been in the industry for a while. We've talked about this for a long time, that institutions have to find a better operating model. The cost is too high. But importantly, what you were touching on that we need customer and member centricity because customers and members are fed up with everything being so difficult and cumbersome, duplicative. And of course, fintechs are doing things in brand new ways and they're getting a lot of attention and market share.
So I'm wondering, as you've worked with this case study institution, are there next steps? there plans to take this good work that you've done, these recommendations that you've made, they are now executing? What's next for them?
Joe Dugan (17:56.248)
Well, what's next for them is to understand how to maximize their market opportunity in those branches. One of the other things that we did in the process was not only try to understand the activity level in a branch, transaction volumes, et cetera, but the market opportunity around the branch. And we benchmarked.
each branch around those demographics and then staffed those branches based on the market opportunity, both in number of employees, but also the nature and skill set of those employees.
And the two things that we did was move subject matter experts back into those branches that match the market demographics of those subject matter experts. So if it was a dense CNI population around a branch, we put that commercial lender in that location. But we surrounded them with business development officers who could go out and help them mine that business as well.
And really they would have previously been community sales managers or branch managers, but we've freed them of the service burden so they can be out assisting the subject matter expert in sourcing new business if they were in a high market opportunity branch.
If they were in a valued branch location that had little market opportunity, we would staff that strictly around service capability. Included in that service capability would be being able to provide service to members and customers outside of the branch that was redirected to those service branches.
Joe Dugan (19:52.406)
So the hopeful what's next for them is in reducing the cost, we've given them opportunity to be competitive. Now they have a platform through which to go out and generate additional revenue through better penetration of high market opportunities and cross sell quality by having it serve serviced at the branch.
Virginia Heyburn (20:17.71)
It also sounds Joe that after all these years of financial institutions looking for revenue in their service delivery investments, there's finally a way for them to sink their teeth into that because in the past, how often have we heard, where's the ROI in this? a new channel, mobile, where's the ROI? Investments in the branch, where's the ROI? It sounds like here there's a real opportunity to achieve that.
Joe Dugan (20:42.828)
Yes, and it's about again understanding what's the cost of those channels to provide a solution and how do we direct staff and coordinate staff across all those channels to maximize the ROI of the company, the FI, not of an individual vertical within the FI.
Virginia Heyburn (21:06.268)
silos be gone, right?
Joe Dugan (21:08.544)
Exactly.
Virginia Heyburn (21:10.012)
So final thoughts, Joe, it sounds to me like every institution really should be thinking about channel optimization for a number of reasons. One, efficiency. Two, a much better way to reach and delight customers and members. What can institutions do today? What steps can they take now to get their journey with channel optimization underway?
Joe Dugan (21:32.962)
Well, that's a great question. I think there are a few things branch FIs could be doing today. If they haven't already, you have to move to a universal banking model.
Many FIs haven't have, but many haven't. It's very surprising. You can't be efficient if you can only process a transaction and another person can only open an account. You can get efficient if that one person can do both of those things. So step one is laying out a path to go forward around universal banking.
Step two is again taking a step back and looking at your staffing across all delivery channels and the cost of all of that staffing. And then,
Step three, think, which really probably should have been step one, is get clarification around what your branch means in your strategy, in your go-to-market strategy. There are a lot of conversation around closing branches and downsizing brick and mortar.
And that can be a good strategy if it fits your member's profile and the value that you're bringing to the member or customer. But when Chase is opening hundreds of branches, I think they understand that there's a value proposition, value connection to their branches and their customers.
Joe Dugan (23:16.458)
So where are you on that spectrum of branch value is probably the place to start. Then, assuming you have value, go back to that universal banking and think about all your channels as one collective staffing opportunity.
Virginia Heyburn (23:39.214)
And in step four, call Joe Dugan. Joe, thank you so much for joining me on today's episode.
Joe Dugan (23:46.222)
Thank you, Virginia. I enjoyed it.
Virginia Heyburn (23:48.818)
I also want to thank all of you, our listeners, for choosing EngageFI as your source of information for banking technology services. Please be sure to look out for the next episode of FinTech Unleashed by following EngageFI on LinkedIn. We are already hard at work on the next topic. Until next time, have a great rest of your day.
Virginia Heyburn (24:11.365)
And that's a cut.
