Huntington Bancshares has opened its first "virtual branch."
The 24-hour facility, in Huntington's home city of Columbus, Ohio, is the latest in a series of attempts by the superregional company to reconfigure its delivery of retail services.
The virtual branch, the first outlet under the name Huntington Banks Access, is designed to perform almost any retail banking function in a space roughly half the size of a conventional branch. Initially it will be staffed with two employees, but future locations will have only one staff member serving as a "concierge."
The opening of the initial branch follows a pilot begun last March, when the bank installed two fully automated, interactive banking terminals at a branch in Columbus. Using two-way, full-motion video, the so-called Personal Touch machines replicated the functions of live tellers when necessary.
"Customer acceptance has been very good," said Pete Geier, senior vice president of Huntington. "I think we learned a bit about the ergonomics of the machines to make them more acceptable, but generally the customer acceptance and the usage patterns met or exceeded our initial expectations."
The new virtual branch has three of the interactive video devices, which were developed with AT&T Global Information Solutions. The bank employees at the other end of the line work in Huntington Direct, the bank's telephone-oriented banking service.
Also in the virtual branch are two advanced-function ATMs, which allow for check cashing down to the dollar and deposit-taking aided by imaging technology.
Mr. Geier said there were also plans to install imaging capabilities on the Personal Touch units.
Huntington, with $16.5 billion of assets and 351 offices, will benefit by reducing staffing costs and by moving to branches that require only 2,500 square feet or less, said Dave Archibald, senior vice president with the bank.
"Our target design for future Access offices is probably in the 1,200- to 1,400-square foot range," Mr. Archibald said.
The virtual branch is central to the bank's hub-and-spoke expansion strategy of building a flexible network around local needs. Each customer would be no more than five miles from one of the full-service hubs.
The spokes would include automated branches as well as small-business centers, drive-throughs, and supermarket facilities, "depending on customer demographics," Mr. Geier said.
"Over the next 18 months to three years we'll be basically reconfiguring the distribution points of the offices around the hub-and-spoke strategy," Mr. Geier said.
Development of the virtual branch grew out of Huntington's research and was reinforced by industry studies like the retail delivery systems report prepared last year by First Manhattan Consulting Group for the Bank Administration Institute.
"The material conclusion from that study is very revealing in that all major segments of customers are migrating away from the traditional office," said Mr. Geier.
James McCormick, president of First Manhattan Consulting, said he views Huntington's efforts as "one part of a broader initiative required to transform the consumer banking business. For about 30% of the population, virtual banking is a win-win. They perceive greater convenience and quality, while the bank can serve them at lower cost."
An entire wall in the virtual branch is a satellite-fed television screen that shows news, weather, and bank product information. The branch is at Nationwide Plaza, in a high-traffic centrally located office building complex.
