5 keys to improve bank branch performance management

It’s no longer enough to examine a branch’s balance sheet at the end of the month and call that performance measurement. In today’s evolving marketplace, the cost of not effectively measuring branch performance far exceeds the costs of actually doing it.

As community financial institutions work to cut expenses and become more efficient, it’s important to become savvier at both measuring branch performance and applying those findings. Not only does bank performance management benefit the financial institution itself, but healthy branch performance also benefits the communities and customers they serve – it’s a win-win.

When working to improve branch performance, a common challenge faced by small- to mid-size financial institutions is resources. At first consideration, you may think your bank lacks the technology investment, expertise and labor to commit to a successful performance-measurement program, or you may feel there’s a lack of corporate structure needed to scale a successful branch’s methods across the whole network of locations. With the right tools and processes in place, however, this doesn’t have to be the case.

If your community bank is to remain competitive, it’s imperative for your team to find solutions to the obstacles standing in your way. Start with these five keys to help effectively assess branch performance at your organization:

1. Track the right performance metrics

Whether you start from scratch to create a customized menu of metrics, or you work off a corporate-level list of benchmarks, every metric you track should speak to these three growth drivers:

• Acquisition of new accounts,
• cross-selling to existing customers, and
• customer retention.

Keep in mind that the weight of each of these drivers will not necessarily be equally split into thirds.

In addition to basic financial performance, a host of intangibles will affect a branch’s overall value in today’s market. This is why having concrete methods of measurement and creative ways of interpreting that data is key to better bank performance management. While factors outside the branch’s control (such as location or a depressed local economy) will play a role in branch performance, the most valuable measurements will track factors that are within the branch’s control – think customer satisfaction, for example.

2. Remember that not all branches are identical

Every community bank branch has its own unique strengths, challenges and circumstances, and these realities could mean metrics that work for Branch A aren’t a perfect fit for Branch B. Improving branch performance relies on acknowledging, identifying and working with the differences.

For instance, some branches may have stronger value as instruments of customer retention – think of mall branches that see a lot of foot traffic. Others will excel at acquiring new accounts, such as branches in a business center or residential area. It’s important to measure a branch’s performance not only against other branches and the industry, but against the areas of performance in which it has historically excelled.

3. Master your data management

One obstacle that’s easy to overcome in the journey towards improved branch performance is data management – with the right tools in place, that is.

Effective performance measurement depends on accurate and timely data. With the volume of data that banks deal with today, manually collecting and tabulating spreadsheets is truly an exercise in futility. What’s more, measurement methodologies can slow down the entire process when left completely in human hands, not to mention the higher risk of error.

For the most accurate branch performance analysis, analytic tools, such as Banker’s Dashboard, exist to help community banks more effectively process and analyze data. Not only does a measurement tool like this provide a bird’s eye view of the fiscal health of your community bank, but it also saves time through automated reports and loan pricing tools.

4. Study your top performers

Many banks struggle with sales productivity and performance. These figures can vary immensely between high and low performers, even within the same markets. Data alone does not lead to better bank performance. It’s not enough to just know how your branches are performing; you need to use this data to drive change and improvement across all your branches and employees.

For actionable branch performance analysis, start by identifying your top-performing branches and employees. Study them to uncover the drivers of their productivity. Is there a great leader at the branch that is driving the high performance? Consult with those leaders to learn how they drive positive outcomes. Is there a location that consistently outperforms other branches? Meet with managers or survey the team to uncover what makes them stand out from the pack. From there you can:

5. Drive new behaviors

For better bank performance management, you must understand what a high-performing branch should look like, then scale it across your network. Keeping in mind that each branch has different strengths and weaknesses,

Build a training program to raise the levels of low-performing employees and branches. Create an incentive program to drive the behaviors and metrics you are looking to improve.

When you have the data to truly understand branch and employee performance, driving new behaviors becomes much easier and more effective. Without the right data-gathering and -interpreting technologies in place, your bank will most likely struggle to get to this point. Harness the power of your bank’s data to better understand and improve bank branch performance.