Bankers can look to the evolution of the gas station for clues about the future of the branch.

At the gas station of old, a friendly attendant pumped fuel for you and threw in extras like washing your windshield and checking the oil. Most gas stations also had a full-service repair shop where a trusted mechanic knew you on a first-name basis.

Over time, cost pressures drove almost all gas pumps to self-service. Also, station mechanics have been done in by dealer service operations and specialized auto malls.

Is this sad? Not really. In fact, consumers seem so intoxicated by the raw speed of a card-based pay-at-the-pump gas purchase that they hardly miss old Gomer down at the service station.

If the gas station is any model, bankers can expect some radical changes to their full-service branch operations.

The line between banking and retailing will continue to blur.

Supermarket branches are just the beginning of a dramatic retail transformation in the banking industry.

Branches will continue to get smaller and more diverse, and will open up anywhere that convenience, one-stop shopping, and extended hours can be provided.

There will be some wild retailing concepts that flop, but banks will look more like Wal-Mart and McDonald's each year.

Examples already are arising. Wells Fargo & Co. recently implemented the reverse of supermarket banking when it leased branch space to Thrifty Drugs.

Self-service channels will become increasingly popular for routine financial transactions.

ATM, debit card, and telephone banking transactions are growing at double-digit rates. Consumers today are very comfortable using automation for routine transactions.

For the next few years, the big winner in channel usage will not be the PC or the kiosk, but the telephone. Instead of focusing primarily on cyberspace, banks should worry more about the user-friendliness of their telephone banking systems, the location and convenience of their ATMs, and the marketing and customer support of their debit-card product. The consumer is hungry for these channels now.

Contrary to the hype, self-service channels will be used almost entirely for routine transactions. Automating 50 balance inquiries through a voice response system and 50 cash withdrawals through an ATM each year makes sense for the consumer.

However, customers still prefer real people for nonroutine transactions (e.g. change of account ownership or CD term, increase to credit line).

"Transaction" branches and live call centers will handle the nonroutine transactions.

Industry evolution will likely result in two different breeds of branches: "transaction" branches and "advice" branches.

There is a common expectation that the banking industry's 60,000-plus branches will move completely away from transactions and eventually deliver financial advice exclusively.

This is unlikely to happen any time soon. A retail bank branch may open 200 to 300 new accounts in the same month that it conducts 20,000 to 30,000 teller transactions. With these kinds of numbers, does anyone believe that most people are walking into a branch today for advice?

There will always be a place for the small, fast and convenient transaction branch. Think of the transaction branch as a financial "Superpumper" with rows of drive-through ATMs, one or two drive-up tellers, and a single financial valet for the occasional account opening or customer service request.

The live call center also will become a primary channel for nonroutine transactions. Bankers need to take a hard look at their call center technology and the skills of the employees answering the phone. Call Fidelity Investments or USAA to hear what a customer service experience should be like.

Financial advice will be delivered through specialized locations and outbound professionals.

The branch will still be a viable place for delivering financial advice.

The "advice" branch is analogous to the auto service mall. Instead of brakes, mufflers and oil changes, you will have banking, investments, mortgage, and insurance.

To attract customers, advice branches will have to create an entertaining retail experience like Barnes & Noble has done with books and Home Depot has done with hardware.

However, the "advice" branch will not have to exist on every corner. Charles Schwab uses only 250 branches nationwide to service $200 billion of assets under management. Financial advice also can be delivered entirely by outbound agents at the home or office.

With all these competitive options, it is doubtful that consumers will drive to an interactive video kiosk to get financial advice.

Nor will more than a small segment of consumers seek financial advice entirely through their PCs, (though this may change when high-speed interactive video can be pumped into the home.)

Instead of focusing on self-service technology, the winners in the financial advice game will focus on the competency of their people and the speed of their processes.

The branch will do little to differentiate banks competitively in this arena, except for the unique competitor who can truly integrate banking, insurance, and investment products. The delivery of these diverse products in most banks today resembles a Turkish bazaar. It will have to improve significantly for those expecting to add value as relationship managers.

Final thoughts: A common-sense approach to channel mix.

We are entering an exciting period of bank delivery where all bets are off. With new retailing concepts, technology developments and strategic alliances, no single formula will work for every bank. Instead, each bank will have to find the right blend of creativity and common sense that works for its strategy.

Most importantly, banks need to let each delivery channel play to its strength:

*Use self-service technology for routine transactions and emphasize the technology preferred by customers, not technologists.

*Do not try to make financial planners out of tellers and entry-level customer-service employees - let them be the lightning-fast perfectionists for nonroutine transactions.

*Do not rely on software and interactive kiosks to deliver financial advice to your customers. Instead, worry about the quality of your advisers and the technology tools they have to do their jobs.

Retail delivery will be more convenient, competitive and eclectic in the years ahead. Bankers should ponder just how the branch will fit in next time they swipe their plastic at the gas station.

Mr. Williams is managing director at M One Inc., a consulting firm based in Phoenix.

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