In recent years, customers have been shifting the way they interact with their banks. Research shows that 60% of customers shop online before opening an account (and sometimes are more knowledgeable about the available products than those in the branch!), and younger demographics are more driven by “excellent online banking” when opening a new account, as opposed to “proximity of branch to home or work” of the previous generations. As customers change, so must the networks that support them.
For First Citizens Bank (based in Raleigh, NC), branch consolidation and format changes are at the top of the priority list. “Historically we have been a North Carolina/Virginia bank, our legacy markets, and within those regions we’re a traditional full-service bank,” says Ken Perdue, VP Branch Optimization Manager at First Citizens Bank. “In the last decade, we’ve expanded into target markets where we act more like a business bank. This is a good time to bring in Novantas, to help us look at these 2 distinct footprints and better understand where to make those investments, and what the opportunities are.” Many banks are addressing these same issues today and trying to find ways to maximize the return from their current network. That said, many banks are still considering building targeted branches as they focus on capturing share in key markets (34% of banks reported changing formats as a top strategic issue), and understanding in which markets to focus that growth.
“Many banks are taking steps now to evolve their networks to thrive in an omni-channel world,” says Darryl Demos, Managing Director at Novantas Solutions. “In the past, banks relied on small teams to evaluate each branch decision and do all the work in house. Yet, with budgets constrained, these banks are shifting towards tools and packages that can accelerate the analytic process and have their teams focus more on decision making, rather than data collection.”
Today, First Citizens is using the Novantas StrataScape® platform — a tool providing key network analytics and data — to analyze and prioritize their branch network. Specifically, the bank focused on the tool’s Market Analytics support, evaluating investment opportunity across multiple lines of business. Ken described that the historical process involved “a lot of internal discussions.” Now, “with StrataScape at our disposal, we can actually compare opportunities on a relative basis across the footprint at the right geographic level,” says Ken.
There were three key innovations to the network analytics process that made this approach impactful for First Citizens:
- The key geography used was the Micro Market, an area smaller than an MSA but larger than a branch trade area. This allowed analysts to find pockets of opportunity within a market and not limited to the 3 or 4 miles around their branches.
- Next, each Micro Market was evaluated using a 4-Factor approach, combining external market metrics and internal performance data to evaluate each part of the network on a relative basis.
- Lastly, results from each line of business were combined to create a corporate view of opportunity (called the LOB Overlay), which helps to guide decisions not just for Retail, but also for Commercial and Wealth.
“Historically, banks tended to look at each branch in a vacuum, and decide what they need to do one branch at a time,” said Ken as we discussed ways to take action with the results from StrataScape. “Now we can look at the network holistically and understand what we want to do in the entire market. Most importantly, it provides a common language to communicate these priorities.”
Given the business banking focus outside of the legacy First Citizen markets, the model allows Ken and his team to distinguish opportunity for each line of business, such as the Micro Markets, that are good for business banking, but not necessarily consumer opportunity. “Now we can lay everything out on an even note and see opportunities against one another; see the best place to implement a certain strategy. With the multi-business line view we can also see where we should approach a market differently than a full banking play.” In the San Diego market, for example, First Citizens Bank only has a handful of branches. “San Diego is one of the target markets, so we’re looking to have a very thin network where we have the greatest potential possible for business banking.”
On the overall value of using StrataScape, Ken says, “we spent a lot of time on the ground collecting lots of different data. For us, the value came out of understanding how to get efficient. With Novantas coming in, we have been able to add science to our approach, and really establish a department with a data-driven, analytical approach.”
For additional insights and to learn more about improving your network planning process, access the on-demand webinar, “How to Close Branches and Keep Customers” with First Citizens Bank and Novantas, or visit our website at www.novantas.com.
ABOUT NOVANTAS, INC.
Novantas, Inc. is the leader in customer science and revenue management strategy for the financial industries. A FinTech 100 Company, its Advisory Services, Analytical Solutions, Data, Research and Marketing Services specialize in investigating and interpreting customer needs, attitudes, and behaviors to help banks refine pricing, marketing decisions, customer strategies, and sales and service activities, and to accelerate their immediate and ongoing economic performance. For more information, visit www.novantas.com.
ABOUT FIRST CITIZENS BANCSHARES
As of March 31, 2014, BancShares had total assets of $22.2 billion. BancShares is the financial holding company for First Citizens Bank. First Citizens Bank provides a broad range of financial services to individuals, businesses, professionals and the medical community through branch offices in 17 states and the District of Columbia, including online banking, mobile banking, ATMs and telephone banking. For more information, visit First Citizens’ website at firstcitizens.com.