Retail Banking Trends – The Universal Banker

Many aspects of the branch banking environment are experiencing rapid changes. Spurred by decreased net interest margins and income during the financial crisis, financial institutions (FIs) attempted to shift the skill set of branch employees from a predominately customer service role, to a more consultative sales role.

FIs are able to expand banking relationships and increase profitability by shifting role responsibilities. Simultaneously, technological advances in banking have drastically reduced branch foot traffic and transactions. The emergence of mobile deposit, smart ATMs, and person-to-person payments (P2P) have made it possible for a large segment of customers to limit in-branch visits.

FIs have responded to these changes by implementing the “universal banker” model. The universal banker spectrum varies from cross-training individual employees in the branch setting to no distinction between teller and platform employees. Typically, universal bankers are present to offer technical assistance, run minimal transactions, and assist with account openings, loan applications, and any other customer service needs that arise. However, making this change can be challenging as increased training and costs are carefully weighed against the potential increased efficiencies. Here, we’ll breakdown the investments and considerations banks and credit unions would have to make to successfully implement a universal banker model

Investment One: Employee Training vs. New Hires

Cost of Cross-Training Your Employees

Regardless of where on the universal banker model a financial institution falls, implementation will always include increased cost, but that cost can be reduced by cross-training existing tellers to expand their job functions. Some of the employees will jump at the opportunity to learn and expand their responsibilities. However, some may be resistant to change and the change may lead to attrition. Another pro to cross-training is that hiring new employees is generally more costly, as the onboarding process is slower and utilizes more resources.

Cost of Hiring New Employees

New hires under the universal banker model typically demand a higher salary than a traditional model. According to Adrenaline, a firm specializing in branch redesign and rebranding, universal bankers are typically paid about 35 percent more than a traditional teller. This is because these individuals generally hold college degrees, offer a versatile skill set, and are tech savvy in order to help customers through transactions, as well as handle customer service issues. However, FIs can offset increased salaries with savings from increased efficiencies and a more capable staff.

According to NewGround, the universal banker model saves banks the equivalent of two full-time employees per branch compared with the traditional model. Supporters of the universal banker model also argue that the increased salaries and expanded roles of universal bankers creates an environment promoting employee satisfaction. Employees who are paid more, and given varied responsibilities tend to be more engaged and productive, which leads to greater efficiency. However, there are additional costs associated with the implementation of the model beyond increased training and staffing.

Investment Two: Technology

The most significant cost associated with universal banker model implementation is technology. The varying degrees of the model will greatly impact the cost of technology.

At its most basic level of cross-training employees to perform all branch tasks, almost no additional technological cost will be incurred. However, many FIs who have adopted the model have invested in teller cash recycling (TCR) machines, which could be viewed as a necessity in a branch remodel that eliminates the teller line. Smart ATMs, in-branch video tellers, and properly functioning mobile/online platforms are some additional important technological considerations for a seamless transition. Most FIs are likely considering them, or have already implemented many due to customer demand for cutting-edge technology tools. You can’t have one without the other. With reduced staffing that is more focused on sales, technology must be in place to ensure customers’ transactional needs are still met.

While the concept of the universal banker model seems simple, successful implementation requires careful consideration and strategic planning. Ensuring the model fits a FI’s internal culture, as well as the needs of customers in unique markets, are additional factors to deliberate prior to implementation.

Proper financial planning and budgeting, coupled with a full analysis and understanding of the potential costs and benefits of the model are essential to a smooth transition for both customers and associates. The universal banker is an obvious solution to maximize staffing in the branch and keep up with the changing needs of the consumer and technology.