Jonathan Velline makes an impassioned case for maintaining a local presence in customers' neighborhoods.
"If you think about the lives of our customers, they're not shut-ins. They get out to work, to shop, to play," said Velline, head of store and ATM strategy at the $1.69 trillion-asset Wells Fargo, during a recent visit to American Banker. "We're part of a customer's traffic pattern. We're not just going to be a bank that's at the other end of a call center. We're going to be in the community, we're going to be volunteering in that community, investing in that community, and we hire from that community."
Wells Fargo has 6,200 branches, or as its employees unfailingly call them, "stores." That number has held steady for the past three years. As recently as two weeks ago, you might have said the fourth-largest U.S. bank was bucking a trend, as its chief competitors, Bank of America and JPMorgan Chase, have been shrinking their branch networks. But this week, the FDIC's latest numbers show that per-capita, the number of bank branches in the U.S. has been growing. And Bank of America, JPMorgan Chase and U.S. Bancorp have been quietly setting up new branches in some metropolitan areas.
Even so, Wells Fargo's commitment to its branches stands out in an industry whose customers are shifting more of their banking activity to mobile devices and PCs, and where banks take an increasingly ruthless look at branch performance numbers.
At the same time, the bank is building interesting technology connections among its branches, mobile and online banking apps, ATMs and call centers, to route information from one to another. In so doing, the bank is becoming one of the first to provide customers with an ongoing, seamless dialogue across channels. Westpac New Zealand, for instance, has built an "omnichannel" that provides the same experience, look and feel across smartphones, tablets, PCs, smart watches and smart TVs.
"A small, but growing number of banks are looking beyond simply migrating transactions to the digital channel and thinking about engagement," said Bob Meara, senior analyst at Celent.
Why the Branch Still Matters
"Our stores are so central to the communities they serve... that we can't imagine not having that," Velline said. "Why would we take that away when it's such a strong part of the value we're delivering?"
It's not that the bank is nostalgic, assures Brett Pitts, Wells Fargo's head of product in the bank's virtual channels group.
"We're very numbers-driven. We're constantly looking at traffic and business results to make sure we're making rational business decisions," he said. "Rational business decisions still dictate having a strong physical presence; it's still a significant competitive advantage for us."
Pundits such as David Birch of Consult Hyperion and Brett King, founder of Moven, tend to look at bank branches as relics on the verge of obsolescence.
"I can see the point that there may be opportunities for different niches within the market and it is entirely plausible that there may be some demographics in some communities that can be profitably served through a branch network," Birch said. "And I also accept that there may be less tangible reasons for maintaining branches in order to demonstrate physicality and pass on key marketing messages. However, given the sophistication of digital channels and customers' obvious preference for the mobile phone as a primary financial services channel, I suspect that economics will dictate a trajectory around fewer branches, fewer standalone branches and more shared service points."
Pitts and Velline say their branch-friendly stance is backed by numbers. In any given six-month period, 75% of Wells Fargo customers visit a branch. "They're getting some value from it or they wouldn't visit. We feel we need to follow the customer," Velline said.
Even millennials can be found among the branch-goers, they say.
"As an industry, we're fixated right now on millennials," Pitts said. "I think we overgeneralize what millennials want and how different millennials are from other types of customers. I think we over-ascribe things to age that may be about life stage. The majority of millennials are still forming their financial relationship with us in the stores."
Apple and (reportedly) Amazon are setting up new physical stores, Pitts pointed out. "They are opening up physical locations because they also see, despite where they started, despite who they think their customers are, that there is value in a physical presence," he said.
The digital bridges Wells Fargo is building between channels kick in at the customer's first visit to a branch.
During what's typically a 40-minute meeting (30 minutes discussing the customer's financial needs and 10 setting up an account), the banker will set the customer up on a mobile app and make a mobile deposit if appropriate. The banker might also walk the customer over to an ATM to show how to make a deposit there.