Two years ago, Luke S. Helms became the first executive to singlehandedly oversee BankAmerica's vast branch network. The job had long been divided among several executives.

The former chairman and chief executive of Seafirst, the California giant's Washington affiliate, is responsible for consumer lending, business banking, and developing electronic delivery channels.

These days, Mr. Helms, a vice chairman, is devoting a lot of time to rethinking retail delivery as electronic channels become an increasingly important way to provide greater convenience for customers and lower cost for banks. The San Francisco-based bank's automated teller machines accept as many deposits as its live tellers. More recently, it has made a major commitment to expanding into supermarket branches.

But in a recent interview, Mr. Helms said the $223 billion-asset banking company is still searching for the right combination of delivery channels, and is unsure of the pace of change.

Q.: What are your priorities right now?

HELMS: We are always working on cost, trying to have a very efficient delivery system yet still offer our customers choices. We are putting in alternative delivery systems (such as) grocery stores and home banking by phone and PC.

You literally have to be the low-cost producer in this business. It's an expensive business that we're in. We have to make choices of where to invest money.

One of the highest priorities we have in our group is understanding distribution. It's the ability to have a very large customer data base and analyze which customers use which delivery systems - which type of customer wants to use the branches, which ones want grocery stores, which want home banking.

Q.: If customers are using different channels, do the old formulas for determining profitability stillapply?

HELMS: I think we are going to learn a lot on how you deliver certain products to certain customers in a profitable manner. Of course, that's the overall objective - to deliver products to happy customers in a profitable way.

In some places, maybe grocery stores, customers will want to do transactions. Maybe in other places they'll want to buy things - that could be over the telephone or their home computer. Or they could sit down in a branch talking to a personal banker. The key is to understand that - what is growing and what is not growing - and match up all of those delivery system options to the customers who want them, instead of offering all options to all customers, which is very expensive.

Q.: Do you have any plans at this point to do anything along the lines of what Citibank, First Chicago, and Chase have done in recent months to encourage people to use alternative delivery channels?

HELMS: No, we're not going to come out with any great announcement. I think one of the dangers is to get too far ahead of your customers. You don't want to force them into things. But you do need to know how they want to bank. And that's what we're really studying.

Q.: Does the fact that 50% to 60% of banks customers' are unprofitable mean that they have to migrate to alternative delivery to be profitable?

HELMS: I think that's probably too simplistic. In many cases, it's because we as an industry have built delivery systems as if every customer was going to buy every product every day. That doesn't happen, so we have to get smarter.

Q.: What's involved in studying these issues?

HELMS: It's too simplistic to assume that elderly people like branches and young people want ATMs. Or that rich people want something and middle- income people want something else. We're finding that it's a blend of all of that in each delivery channel. It's more important, probably, to be able to forecast which delivery channels are growing, where you expect to do transactions, and where you expect to do sales.

Q.: BankAmerica is making a commitment to grocery store branches. What are the implications for the traditional brick-and-mortar branches?

HELMS: The branches definitely have a role. I think there will be less daily transactions done in branches because you have ATM cards, smart cards, POS - different ways to make payments.

What was an advantage not all that long ago - to drive up to a branch and make a deposit and get some money back - may not be all that advantageous when a customer can go into a grocery store, do it over the phone, or carry a piece of plastic.

I think the branches will become more consultative. We'll have more people walking in asking, How do I send my children to school? How do I buy a house? How do I finance my small business? The need to talk to somebody is there.

Q.: Will there be fewer branches than there are now?


Q.: Is there any sense of the scope?

HELMS: No. I think the customers will have a very big influence on this. Once they feel comfortable getting the information they need from places other than a branch, then they will begin to do that.

Q.: Are there any technical hurdles that still have to be overcome with new systems?

HELMS: To manage the customer base is going to require a very good data base that lots of people understand. You do have to have platforms - it's all available - that allow more people from various locations to know a customer relationship.

(But) I don't think there is any technology out there that we need to be successful in this.

Q.: Is there any bank out there that you admire or you would like to emulate?

HELMS: There are lots of banks doing this in various stages. But no, I don't think anyone is there yet. It's too new, and I've not noticed anyone closing all of their branches.

The basic thing is to match up the distribution system with the correct customer base. That sounds easy, but it's really not. So I don't think anyone is there yet, but lots of banks are working on it.

Q.: What about this transition to alternative delivery?

HELMS: It's not going to happen all in one day. I think maybe the people following the industry think it's going to happen, in my opinion, sooner than it is.

Q.: Tom Hanley, the analyst, said that Lew Coleman, a BankAmerica vice chairman, told analysts that the bank would close down half of its branches in the next five years. Is that an accurate statement?

HELMS: I don't know. I would say that in many cases, you are closing parts of the branch, not the whole thing. And in many cases you do close the branch because you relocated it to a grocery store.

And we are just starting in California to move into the Lucky Stores. If the customers would prefer to do their banking in a grocery store, or over home computer, or over the telephone, it's their choice. It's too soon right now to make those predictions.

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