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Extended Hours – Is It a Competitive Must?

At SourceMedia’s Branch Banking show, Darryl Demos led a 3-hour workshop, Reality Check: The Cost and Benefits of Extended Hours. “Before the workshop I was a skeptic. But, after the workshop, I see extended hours as absolutely essential,” said the VP of Retail Distribution from a midsize bank.

WHY GO TO EXTENDED HOURS?

There is a simple answer to this question: because banks need to DO business when their customers want to do business. At our pre-conference workshop at Branch Banking, participating banks presented data on customer research, which were easily confirmed by many of 60+ bankers in attendance. If you break down when customers want to do business, you find that, for the vast majority, the preferred times to do business are on Saturday morning, Friday evening, Saturday afternoon, and Monday morning, as illustrated in the sample survey results below.

Customer Preferred Banking Hours – Survey Sample

     18%      Saturday    9 a.m. to 12 p.m.
     16%      Friday         5 p.m. to 7 p.m.
     12%      Saturday    1 p.m. to 3 p.m.
     11%      Monday      9 a.m. to 12 p.m.
      9%       Friday        9 a.m. to 12 p.m.
      8%       Friday        1 p.m. to 3 p.m.
    

This means that across Saturday and Friday alone, you cover 64% of all the demand interests of the week; 17 hours out of a typical 54-hour open period (Mon. – Thurs., 9 am to 5 pm; Fri. 9 am to 7 pm, and Sat., 9 am to 12 pm). Said another way, 31% of your open hours account for roughly 64% of your business.

When surveying customers about what they like and don’t like about a bank, some comment on store hours is invariably mentioned. “Too short, not open when I want, too many holidays,” were the areas of most dissatisfaction expressed by customers of MB Financial out of Chicago, according to Brien Leahy, SVP, Retail Branch Banking.

If you are customer focused at all, you cannot ignore these surveys of customer preferences and issues with banking.

DO SURVEYS FOLLOW REALITY? DO YOU DO MORE BUSINESS IN EXTENDED HOURS?

All the evidence says yes. Cathy Nash, SVP, Branch Banking LOB, from SunTrust Banks, Inc., gave some powerful comparable data across actual vs. control offices. In the actual offices, sales were up by well over 15% or more across most major product lines.

And U.S. Bank provided some compelling data. “By only extending branches another 12 hours in selected markets, we were able to see statistically significant increases in volumes when compared to non-extended hour locations,” said Chris Peper, VP Staffing and Analysis Manager - Retail Staffing and Incentives, U.S. Bank.

WHY SHOULD EXTENDING HOURS COST YOU ANYTHING? THE MYTH ABOUT THE COST OF EXTENDED HOURS

It’s the classic business school problem. To extend hours, banks must ramp up costs for additional FTE in the front and back offices; contracts and vendor relationships need to change, and so on. However, the real costs of the system are hidden. What do we mean? Consider the following three facts:

1. Most banks can add a Saturday shift simply by making scheduling shifts from other days of the week. To add time on Saturdays, you can shorten the workday of 3 to 4 people in the branch and get them into the branch in the am on Saturdays for no additional cost. The problem will come when Saturday begins to dwarf other days in volumes and customers begin to experience lines out the door.
2. Operational inefficiencies hide the real cost of extended hours. Before you move to extended hours, clean up your operations, as you may find significant excess capacity that can be redeployed. See the Responsive Bank case study to show how this was done for one bank
3. Lastly, and most importantly, IT’S NOT THE EXTENDED HOURS THAT ARE COSTING YOU – IT’S THE REGULAR HOURS YOU ARE OPEN WHEN FEW CUSTOMERS WANT TO DO BUSINESS!

Extended hours are not the problem in the system; it’s the traditional hours that add relatively less value to the system. This point is so important because soon, in the business cycle, there will be additional pressure to manage costs. If bankers forget that the extended hours are where they are most busy – then they may choose to roll back the wrong time slots. Will we see a day where bankers close on Tuesdays or Wednesday morning’s in some markets to justify opening when the client want them? I think absolutely yes.

HOW DO YOU GET STARTED?

Based on our work with clients, we see a simple 4-step program that will enable every banker to get a better handle on extended hours:

1. A simple market survey. Using clip boards and temps, ask customers about their preferred times to do banking. Offer them a shift schedule like the one in this article organized Sun-sat. One month of intercepts across your branches will likely yield a valid sample size that can be relied up.
2. Complete an operations analysis, eliminating waste and identifying opportunities to shift workload. Examples include:
   a. Reduce dual control wherever possible
   b. Change times for ATM and or night bag processing work to spread throughout day
   c. Increase supervisory override levels so that tellers can process more work without having to slow down for approvals
3. Assuming responses are similar to those of other banks; create a mock staffing and scheduling model to evaluate what new shifts would need to look like to cover more hours, factoring in volume shifts. Do quarterly analyses, for 5 quarters in advance, as volumes will shift in that time frame.
4. Finalize cost benefit analysis, assuming that overtime a rise in customer transactions and sales are going to follow the preference patterns expressed by your customers over time.

It seems clear – there is no going back on extended hours; if you don’t open when clients want to do business, then they will go elsewhere. By focusing on what customers want, and employing operational and scheduling efficiencies, you can go forward in a much more organized, predictable and cost effective way.

Darryl Demos is CEO of Demos Solutions. Darryl is a sought-after advisor to financial institutions in the U.S. and Europe. As a productivity expert and successful entrepreneur, Darryl helps financial institutions maintain balance across critical areas — sales, customer service, internal controls and efficiency — in today's changing marketplace.

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