Banking hardly makes an obvious candidate for a glowing case study. But new ideas at an Indiana bank have led to measurably better results
In 2004, 1st Source Bank, a regional bank based in South Bend, Ind., hoped to increase the number of branches in its system 50% in a short period of time. The potential expansion prompted the bank to examine how it might change the customer experience before it invested in building new branches. At that time, the 1st Source branch experience was driven by industry-standard operations rather than by customer needs. The processes and facilities on which they were based were complicated and tended to be impersonal.
1st Source's chief executive, Christopher J. Murphy III, championed the idea of designing a paradigm for a new branch banking facility. This gave the development team permission to explore radically new service concepts. The CEO successfully communicated to the rest of the organization how important it was to commit the time and resources needed to ensure success, and key personnel were drawn from various parts of the bank to be part of the team.
A key insight that emerged from our initial research was that 1st Source could leverage its brand as a local bank in ways that national banks could not. We also found that tellers felt constrained by their role and were frustrated by not being able to act more broadly and effectively on conversations they were having with customers. In return, customers connect to people who work in banks, not to banks as institutions, and they want to be treated with respect and concern. While bankers intuitively understood this need, the bank's service model and facilities did not support it.
The team agreed that a solution should support bankers in building relationships with their customers and should bridge the gap between routine banking and episodic activities, such as getting a loan.
Tear Down Those Walls
We brought a wide range of bank stakeholders, including the management team, as well as front-line personnel, into a workshop setting for joint ideation. Tellers were the first to see the difference that getting out from behind the teller wall would present, and they quickly role-played how they might use technology to interact with customers in an open space. The top executive team was surprised at how the tellers could envision themselves working in such a different way. Side-by-side banking, which allows customers and bankers to stand next to each other and look at a shared screen, emerged as a key component of the new service model.
Removing the teller walls presented a number of challenges. To understand and tease these out further, we built a full-scale, foam-core mock-up of core elements of the entire proposed configuration to explore what the new service offer might be like. We brought in bankers, as well as customers, in a simulation of the new process. This confirmed that side-by-side banking could work, but it also highlighted such issues as security and privacy that would need to be addressed as the concept was refined for piloting.
Instead of building an entire infrastructure to pilot the new banking process, 1st Source introduced the new service model in a part of one branch, using an adaptation of existing software and fixtures. That experiment was followed by a new branch design that fully employed the new service model.
The four branches that have been converted to the new concept have performed significantly better on key metrics than the older 1st Source branches. New accounts, deposit growth, and loan sales are all more than 30% higher than for similar branches lacking the new service model and facility elements.