Analysts, Bankers Still See Critical Role To Be Played By The Branch Channel
LAS VEGAS-Branches are evolving as consumers' desires and expectations change, and despite reports to the contrary, remain important to consumers and the financial institutions looking to capture them.
That was the message at the recent BAI Retail Delivery convention here from a panel of bank industry representatives. Richard Carey, EVP of Retail Banking for Portland, Ore.-based Umpqua Bank declared, "As a community banker, I'm not slowing down...I'm building 10 more branches this year. Starbucks isn't slowing down, either."
Umpqua Bank serves the Pacific Northwest and is expanding its footprint in California. It currently has 176 branches and is often held up as a model for successful banking.
"As long as we have the right people in place, there still is a role for branches," Carey added.
The size and use of branches probably will change significantly, the panel agreed. David Kerstein, president of Austin, Texas-based Peak Performance Consulting and moderator of the discussion, said transaction activity is shifting out of branches as consumers write fewer checks and electronic deposits-in the form of direct payroll deposit and remote capture-increase. "The United Kingdom will phase out checks in 10 years," he noted.
Jeffrey Talpas, EVP of Retail Network for BBVA Compass, Birmingham, Ala., said, "There is no doubt we will continue to grow. The key point is what type of branches we are going to deploy. They won't all be full-service branches because we will have far less transactions in our branches."
Talpas said he expects Compass to have "different types of branches for different types of market needs.
Jay Freeman, EVP of Regional Banking for Wells Fargo Bank and chairman of BAI, said there is a temptation in the banking industry to think of branches purely from a cost perspective. "But they still play a vital role for interactions with customers. When a customer has a particularly difficult problem, one that keeps him up at night, the branch is where they come to see us."
Wells Fargo has grown to 70 million customers and touches one in three U.S. households. With its acquisition of Wachovia Bank, it now has 6,445 branches.
Freeman said the next step in branching for Wells is the development of a pod of four self-service kiosks for customers to use.
Making Branch 'Cool'
Kerstein predicted the branch of the future will be smaller, managed differently and will have a greater emphasis on micro-market knowledge and sales calling to improve market penetration. He said these branches will have "universal staff" with fewer specialists.
One example of the changes already showing up in branching models is Umpqua's use of the branch as a community center. Carey said management looked at the markets the bank reaches and came up with a concept of smaller branches: 1,350 square feet to 1,800 square feet. These branches have a board for community displays, feature live music on occasion, and the bank has its own brand of coffee-which it pours for free.
"We have grown significantly because we know who our customers are and we empower every member of our staff," he declared. "I don't see us going away. If we keep our structure in place and a community partner, we should continue to grow."