In our final article on Micro Branch Strategy, we’re going to revisit the concept of Hub & Spoke. This time, we’ll discuss how the Micro Branch can play an important role in executing this concept.
For visual purposes, we’re going to use a generic Market Area for Anytown, USA. These strategies can not only work for any given metro market, but can also be applied across a more rural, multi-county geography.
First, let’s revisit the concept of Hub & Spoke.
On the surface, the Hub & Spoke retail branch model implies you have your bigger branch as a central anchor (hub) to smaller, scattered satellite branches (spoke) across a given geography. Implying that Hub & Spoke is only about branch size, however, is missing the point.
When thought of strategically, the right Hub & Spoke model is about efficiencies while considering:
- Serving Your Clients – Having locations where your clients live and work provides the convenience they require of you, even if some are digital first. Beyond location convenience, you can further serve your clients by understanding demographies of given neighborhoods. More specifically, know their propensities for products and services so that you can offer what your clients need and make adjustments across different spokes.
- Network Effect – To reiterate from our previous posts, saturated markets and/or trade areas may allow the addition of more spokes. This would complete your Network Effect strategy and, in effect, elevate all other locations along the way.
- Budget Considerations – Factor in these elements and the cost considerations of a Micro Branch compared to a freestanding branch. You’ll find that you get a lot of lift out of a Micro Branch. It is a much more effective notion especially if you’re unable to afford a traditional branch at a specific site.
All of this is where having a Micro Branch as your wild card really comes into play.
When looking at the Hub & Spoke model across your branch network, your Hub is the flagship; the crowning achievement. It is the branch with the best design. It offers the most services, has best employees, and is either located in the optimal neighborhood or in the neighborhood with the best bragging rights (many traditional retailers put their flagship stores in Times Square (New York City), Union Square (San Francisco) or Magnificent Mile (Chicago)).
Your spokes are the soldier locations spread across the field. When the data doesn’t support a full branch in the outposts of your empire, the Micro Branch is ready to swoop in and fill the void.
The last point we’ll make here to close out this article and the series is this: the Hub & Spoke model actually has two sides.
- Side #1 is your entire branch network, anchored by your Hub Flagship branch and bespoked across your geography. If you are a Community Bank or Credit Union, this is your strategy. You operate a fleet of branches typically in one larger geographic market.
- Side #2 is is more cluster based, allowing for multiple instances of a Hub & Spoke model. You will have multiple Hubs and their aligned spokes across different geographies. If you are a larger FI, one that spans across different metropolitan areas or state lines, deploying this type of Hub & Spoke model may make sense. For example, you may have a Hub and several spokes in Dallas, and another wave of Hub/Spoke branches in Houston.
To learn more about how Micro Branches can help you complete a well-rounded Hub & Spoke strategy, Contact Us today to learn about our Data Driven Consulting division and how the right branch strategy can help you double in size.