Toronto-Dominion Bank puts Canadian retail outlets at the center of its growth plans, a new strategy that will make the lender look more like its old self.
Over the past five years, banks have been besieged by "Finteh" or financial technology, fearing that the software coming from Silicon Valley will eat the industry. While this fascination grew, brick and mortar branches were considered archaic and expensive, and banks in Canada and the United States closed large branches, and also reduced square footage of the locations they were guarding.
But recently, TD noted that digital tools can only do much. Human beings are social animals, and for some key interactions, nothing overcomes face-to-face meetings.
"For customers, it's not branches or digital," says Terry Curry, director of TD for Canadian Retail Banking. "It's both."
For all digital channel migration, 80 percent of all customer purchases of a TD, or a new business, are still coming through its affiliates. In response, the bank re-invests in its branch network, making it a top priority.
TD is not the first domestic bank to emphasize the importance of the branches. The Canadian Imperial Bank of Trade, for one, presented a similar strategy in 2015.
But the change has more cultural significance for TD. After the acquisition of Canada Trust in 2000, the organization built a brand around the old-fashioned banking and made a name for itself through customer service and convenience – the mantra highlighted by former CEO Ed Clark and its retail banking boss, Tim Hockey. Branches were central to this strategy, and TD offered extended working hours and multiple locations across multiple communities across the country. To date, Canadian banking contributes 63% of the bank's total profits.
The strategy began to change when Bharat Masrani became CEO in 2014. During the first year of his tenure, TD made two restructuring charges amounting to $ 686 million. In both, the focus was on "branch optimization". The following year there was an executive turnover. Mr Hockey left for TD Ameridiade's management, and some of his retail deputies also finally left, including the former head of the branch of Tom Duck.
Ms Currie took over the consequences, previously using human resources, and later the strategy for digital banking. At that time, Finteh was still a rage. "When I arrived, in 2016, many of the questions I received from investors would be:" How do you reduce the costs of the physical channel so you can afford the digital investment? "" she said.
Due to this obsession, TD has invested heavily in technology, and today more than 80 percent of customer transactions, such as bill payments and money transfers, are taking place in self-service forums, such as mobile applications and online banking.
Despite this transformation, however, most purchases of buyers kept coming through the branches, making them critical for growth.
Building this TD emphasizes reinvestment in its branches, one that is multifaceted. For one, physical formats change – fewer counters, more advisors for wealth; less total square footage, but larger meeting rooms. A comprehensive vision is that branches can be used for branding and marketing, displaying large TD logos and signs, and now they are considered more as consulting centers than as transaction centers.
"When it comes to complex tips when it comes to saving your children's education when it comes to financing your first home when it comes to investing for retirement, people want that advice in person-to-person capacity and yes look at the face in the eye, "said Andy Pilkington, head of bank branches, in an interview in TD's newly opened branch at Bay Street in Toronto.
This is true for younger customers. Through focus groups, the bank has discovered that millions will explore and buy online, and will ask their friends and family for advice, "but when they do something they feel are complex, they want to sit face to face with our advisers" said Ms. Currie, who started in Canada Trust in 1993 at the Calgary Market Mall Mall.
The third pillar of the new TD strategy is built around talent, including branch employees. Last month, TD brought all 1100 managers from Canada to Toronto for the first time, where they attended a symposium highlighting the importance of the bank.
Within the branches, TD also changes how the advice is given and the way in which the efficiency of the employees is measured. Over the past five years, Canadian banks have put more emphasis on cross-selling, ie offering additional products to existing customers. It's all an effort to boost profits.
However, TD has recently changed its tune, investing in tools for artificial intelligence tools that perform deep dives through customer data profiles in order to assess risk appetites and investment profiles, and then offer advice based on the results of the algorithm. As for the performance, the bank now includes customer feedback in its employee results.
The goal, said Pilkington, is "to give more consistent advice across the entire network".