For two decades, bankers have talked about the "hub-and-spoke" model of branch delivery.

After so many years, it may be worth asking: When it comes to hub-and- spoke, are banks spinning their wheels?

The concept - in which fewer large, full-service offices would be surrounded by small, transaction-oriented locations - has become a kind of catch-all to convey the industry's desire to deliver banking services more efficiently.

Over time, for example, the notion of "spokes" has evolved to include increasingly popular supermarket branches, off-site ATMs, and telephone centers.

Bankers and industry experts still say the idea holds appeal, especially if the spokes are geared to serve the financial needs of a particular market segment.

But as Robert G. Stemper, a King Chapman & Broussard consultant in New York, wryly noted,"It seems to me that it's like what George Bernard Shaw said about Christianity: The only problem is it's never been tried."

Industry observers say that despite the swift growth in banking transactions handled by ATMs and over the telephone, the prominence of large, full-service branches hasn't diminished as much as many had expected.

Indeed, the growth and popularity of self-service banking hasn't stopped an increase in branches overall. Since 1991, the number of U.S. commercial bank branches has grown nearly 5%.

"Commercial banks can't get over the hump of making the kind of drastic change required to serve customers in a different way, with a different paradigm," said William M. Randle, senior vice president at Huntington Bancshares in Columbus, Ohio.

But bankers and industry experts say there's growing evidence that the transformation has begun. A year ago, the opening of Huntington's first Access office, in which advanced ATMs and interactive video machines largely replaced a human staff, was widely reported. Now, hardly a week goes by without another big bank unveiling its prototype version of the "branch of the future."

Take Sanwa Bank California. In October, the subsidiary of the giant Japanese institution opened a new branch in Daly City, just south of San Francisco.

The 1,800-square-foot office replaced an 8,000-square-foot office in the same shopping center. Customers must now pass through a vestibule with two modern ATMs before entering a more attractive sales and service area.

Gene Galloway, Sanwa's executive vice president for retail banking, noted that there is one albatross that can delay the reconfiguring and downsizing of branches.

"The initial problem ... is really the property issue. In a lot of cases, you have long-term leases, and you can't do anything until they expire," said Mr. Galloway. "As leases come up for renewal, we would like to actively downsize and have more high-tech, electronic-assisted service capabilities."

But Sanwa, unlike many other banks, has an edge as it plans to "rationalize" its branch network. Mr. Galloway said the bank has endorsed, but not yet funded, a plan to nearly double the size of its outlets over the next three to five years, from 110 offices to nearly 200. Thus the new spokes, which are to range in size from 100 square feet to 800 square feet, will be built from scratch.

"You look at filling in voids in your market in three-to-five mile radii around where you have full-service big branches," he said.

Sanwa's new spokes will also be pointed directly at serving the needs of a particular market segment. "Your products and services, and to some degree your staffing, reflects the needs and wants of the community you are in," said Mr. Galloway. "A short translation means not every unit does everything for everybody."

Consultants say that such segmentation is critical. "To do the hub-and- spoke well, you have to understand the transactional behavior of your customers," said David Tetenbaum, vice president at First Manhattan Consulting Group in New York. "It's more than just saying, I'm going to have one hub that provides everything and all my spokes are going to be transactors, because that may not be appropriate."

Some spokes may emphasize consumer lending, some mortgages, and others trust and private banking services.

David Partridge, director of Towers Perrin's financial institutions practice in San Francisco, said the transformation of bank delivery systems is nothing less than a question of survival for the industry. Banks' continuing advantage over nonbank competitors, he said, is their strong physical presence in local markets, namely branches. Banks must find a way to retain that local edge while delivering banking products more efficiently.

"What do you do that creates value for the customer and value for the bank in a local market outlet?" asked Mr. Partridge. "The answer is a lot of different things, depending on which segment you are talking about, and which need-states or life-events you are trying to respond to."

Mr. Partridge also noted that making the transformation - shedding real estate or revamping offices - is a formidable challenge. "It's a monster," he said. "It's a little bit like you were a big telephone company. And you have this enormous investment in telephone poles and wire. And along comes a whole lot of technology, whether it's the microwave dish, fiber optics, and all that stuff."

Huntington in Ohio, however, has found one answer to that problem. Several of its 11 high-tech Access branches that have opened in the last year operate in what were once traditional, full-service branches. The exteriors are almost unchanged, but inside are document processing ATMs and personal touch machines. A branch that might have employed 12 people now has two. And customers can enter the office 24 hours a day.

"The approach is to be convenient, accessible, simple, and modern without being a turnoff because it's too high-tech," said Mr. Randle. Customer acceptance of the new technology, he said, is about 90%.

But Mr. Randle concedes the changes aren't easy for bankers to make. "It is a very difficult transition from a structural point of view," he declared.

He said the industry is on the cusp of significant change, but he believes too many banks are focused on cutting costs, not on fundamentally rethinking their delivery strategy.

Roger O. Goldman, executive vice president at National Westminster Bancorp in Jersey City, agrees. "Go interview a banker and what do they talk about? Cost," he asserted.

Mr. Goldman said the bulk of the money consumers spend on financial services goes to nonbank competitors like mutual fund companies, brokerage houses, mortgage companies, and insurers. Banks' slashing of costs, he said, is not going to win back their share of the consumer's wallet.

"The endgame is a customer proposition that causes you to do what is the essence of business - get more customers and sell them more stuff," said Mr. Goldman.

To do that, Natwest has been renovating its branches to make them more attractive and "fun" for its customers.

With his retailer's flair, Mr. Goldman has been visibly transforming Natwest branches over the last two years. At a new branch - or store, as Mr. Goldman prefers - in lower Manhattan, two banks of television screens broadcast news or music videos. Natwest's old black logo is nowhere to be seen, and the location practically screams with bright red paint. ATM prompts don't offer the option of conducting another transaction. Instead, customers are asked if they want to "do something else."

More than 70 of Natwest's 300 branches had been revamped before renovations were halted when the bank's British parent announced plans to sell it.

Natwest's strategy is not built around the hub-and-spoke concept favored by Huntington and Sanwa. Rather, its models are successful retailers like Wal-Mart and Nordstrom.

"If you take your lessons from nonfinancial services it's, one, any strategy well executed will work because it's a highly fragmented business," said Mr. Goldman. "And, two, what (the best retailers) have in common is a focus on revenue, not cost."

"We're talking about appealing to customers on an emotional level," he declared. "And it works."

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