Ten years ago, the smart money said that bank branches were going the way of the dinosaur.
But, just like millions of pre-history-loving moviegoers this summer, bank customers aren't ready to render the branch extinct, either.
U.S. banks spent hundreds of millions of dollars in the 1980s on automated teller machines and other self-service devices. Nevertheless, bank branches today are making something of a comeback.
Although technology has provided a smorgasbord of delivery alternatives for consumers, bankers say the branch system is still a critical part of the business.
"The branch is not going to go away, because there is a large segment of the marketplace that still desires a high-personal-touch environment," said Waino H. Pihl, a partner at Andersen Consulting Co. in Chicago. "There is, however, a fundamental shift in the way customers use banks."
The American Banker/Ernst & Young 1993 Survey of Technology in Banking supports that view. According to the survey, banks are refocusing attention on the branch and searching for ways to maximize brick-and-mortar investments. And they are depending heavily on automation to do it.
The survey of the top 300 banks showed that "dumb" terminals relying on a central mainframe or minicomputer for processing power are on the way out, replaced by networks of personal computers. The branch with no technology support at all is becoming a rarity: just 15% of banks' teller stations have no automation, and only 8% of platform desks are without a computer.
The survey paints a bright picture for the future of branch automation. By 1996, 86% of teller stations will have PCs and 94% of platform workers will use desktop computers.
The transition to PCs accompanies a shift in the branch's function. Branches are rapidly being transformed from transaction centers to souped-up sales and service hubs.
Once this transition has run its full course, customers will conduct routine transactions and services over the telephone and purchase the full gamut of bank products in the branch, or so goes the thinking.
This change is driven more by an attempt to meet the needs of time-conscious customers than an effort to improve operational efficiencies, bankers say.
"If the 1990s have taught banks anything, it's that consumers want to bank the way they want to and not the way the bank dictates," said Tim Meier, senior vice president and manager of information services at U.S. Bancorp, Portland, Ore.
Given this environment, bankers agree that automation is the wave of the future and the key to more efficient and profitable branch networks.
"Banks are putting a lot of money into platform and teller technology to improve productivity and get the most out of their brick-and-mortar investments," Mr. Meier said. "The emphasis these days is on continuing to make it easier for platform people to do their jobs and support the sales process."
The $20 billion-asset bank has taken pains to retool its branches. U.S. Bancorp has already installed intelligent workstations for its customer service representatives and is currently building a proprietary platform system that uses Microsoft Corp.'s Windows operating environment.
U.S. Bancorp is not alone. Albany, N.Y.-based Keycorp is also going the intelligent-automation route. The $30 billion-asset holding company replaced all of its dumb-terminal branch automation systems with a more modern, personal-computer-based arrangement. This project, which involved installing new software from Ampersand Corp., York, Pa., was completed in the early part of 1992.
"Given customer demand and the need to improve functionality, we've got 100% of PCs in the branches," said Jay Ward, executive vice president at Keycorp.
Mr. Ward added that the new system not only boosts efficiency, but it also provides a platform for further automation efforts. Those efforts include Vision 2001, in which Keycorp plans to install new loan processing software in its branches and operations centers. Components of this software that will run on the personal computers installed for the branch automation project will help branch workers complete loans faster and more accurately.
With automation budgets currently on the rise after several years of stagnation, bank technology vendors are also experimenting with new ways to invigorate branches.
"Our view is that there's still a very real use for the brick-and-mortar branch and that banks will expand the branch into virtual-branch networks," said Craig M. Grant, general manager of retail delivery systems at Unisys Corp., Blue Bell, Pa.
Unisys is at the drawing board trying to come up with systems for areas such as imaging, customer information technology, and videoconferencing.
Ampersand, a long-time provider video of PC-based branch automation, is now making inroads with systems implementing a graphical user interface, namely Windows.
Looking ahead, the physical bank will be more important than ever, and banks are tailoring the branches to better match the customer base each serves.
"Banks are designing branches to meet the individual needs of consumer groups and to relay the message that they know who the customers are and what they want," said Curtis Wayne, president of Wayne Architects, a Greenwich, Conn.-based firm that designs branches. Mr. Wayne's clients include Citicorp and Fleet Financial Group.
One of the best examples of this strategy is PNC Bank Corp.'s airport branch. The bank built a fully automated branch in Pittsburgh International Airport to meet the demands of busy travelers. A number of industry observers have dubbed it "the bank of the future."
PNC has stocked the outlet with several automated teller machines for simple transactions like making withdrawals, deposits, and cashing checks. There also are several videoconferencing kiosks where customers can apply for loans and purchase investment products.
"If an executive has 40 minutes or so between flights, he can use the facility to do anything: cash checks, apply for a loan, or purchase securities," said John Alden, director of marketing at the $51.1 billion-asset bank.
Another example is a highly automated Banc One Corp. branch in the Sawmill Shopping and Financial Center, Columbus, Ohio. Sort of a banking hypermarket, the branch offers 10 different business lines to customers, with a minimum of staff and space. Industry observers often cite the branch as one of the best examples of optimal branch automation and customer convenience.
"Platform automation lets us take care of bank services as close to the point of contact as possible, and that's exactly what the Sawmill branch is about," said John Russell, chief communications officer and a member of the team that helped design the branch for the $70 billion-asset bank.
As bankers see it, such efforts to reshape and invigorate the branch environment are consistent with the industry's needs.
"I envision that automation will help banks become more like retail stores in the future," said Mr. Meier of U.S. Bank. "But you have to get people into the store to get them to buy anything."