Smaller, yet service-oriented. Compatible with digital banking. Profitable.
That is the vision increasingly being painted of the bank branch of the future. And before dismissing it as a delusion of the glass-is-half-full crowd, consider that notably tech-savvy companies like JPMorgan Chase, Bank of America and UMB Financial are among those making the case that branches are still essential to setting a bank apart from its rivals.
JPMorgan's branches have been crucial in building long-term relationships with more lucrative customers, even in today's high-tech world, said Erin Hill, the company's head of consumer branch banking and wealth management. Its younger, "more digitally active" employees spend time helping customers with more complex questions, using mobile phones and tablets to provide service and develop a rapport, she explained.
"If we were trying to shift to an all-digital channel I don't think we'd have nearly the success we've had," Hill said.
The future-of-the-branch debate took a new twist this month after Wells Fargo agreed to pay $190 million to settle charges that thousands of employees created unauthorized bank and credit card accounts for customers from 2011 to 2014 in order to meet sales goals and collect bonuses for themselves. It has sparked a discussion about whether banks, worried about the crushing overhead from quieter branches, are putting too much pressure on employees to generate revenue.
"The declining transaction volumes render sales more difficult," said Steven Reider, founder and president of the marketing and branch-planning adviser Bancography. "Can we keep rationing sales goals inexorably upward when branch traffic is declining? The answer is no."
Yet equating transaction decline with branch decline misses the fundamental point that branches no longer exist to cash checks, Reider said. More consumers receive direct deposits now, they pay bills electronically and withdraw cash from ATMs. Business receive less cash now or perhaps offload it through cash back at the point of sale.
Branches are starting to shrink in square footage and number of staff, and the average salary for branch employees will increase so they can keep who employees who can deliver more sophisticated services, Reider said.
JPMorgan's Hill painted a similar picture, and said it's not necessarily a dire reality.
"The truth is: if you look at the activity from customers coming in for basic transactions at the teller line, those are not necessarily the people growing their balances and leading to the growth of the overall business," Hill said. "We try to help our bankers understand the lessening of foot traffic does not at all affect their ability to deepen relationships with customers."
Moreover, the point is not to see the branch and digital as antithetical, she and others said.
"We cannot be naive to the fact that our customers want to be able to engage with us when and where they want in a very easy manner, hence the continued investment in the other channels," Hill said of mobile, digital and other innovation efforts and initiatives. "You can't have a successful branch network without those."
It's still a people business at heart, and the branch is the place to provide a higher level of service that breeds customer loyalty, said Joe Salesky, chief executive of CRMNEXT, a customer-engagement software provider for financial services. "There's no ability to differentiate the self-service. … What's it going to take to be a bank of service, to help the bank transform?"
His answer? Bring the physical and digital worlds together in customer interactions, Salesky said. Like Apple Stores, where bank associates would help customers side by side instead of face to face, using mobile devices as tools for service. It would be more comfortable yet still personal. Customers could book appointments with branch representatives in advance or walk in off the street for hands-on digital banking demos.
Bank of America is already doing that. Its 3,800 "digital ambassadors," easily identifiable by the lanyards they wear to customers who enter their branches, are trained to help customers better understand and navigate the mobile app or website for themselves — a sort of service for self-service.
Inspired by Apple's Genius Bar and Best Buy's Geek Squad, the year-old initiative at B of A also lets customers book appointments to digital ambassador bars. Similarly, in March 2014 UMB in Kansas City, Mo., put tech support specialists in its branches to help customers understand how to make mobile deposits and use online bill pay and other digital services.
"In-branch traffic is going down across the country," Christine Pierson, head of UMB's financial consumer division, said at the time. "[We're] interested in ways to get customers to be engaged with the bank."
That kind of side-by-side learning would give banks more opportunity to cross-sell. There is also an understanding gap between customers and the products banks are selling — which amount to far more than the number of products Apple has to sell, and with which many customers are largely unfamiliar.
Hill emphasized the importance of empathy, acknowledging the personal conversations, sometimes emotional and sometimes uncomfortable, that occur between bankers and clients when the latter are purchasing a home, saving for retirement, funding a child's education or financing a business.
She pointed to JPMorgan's branch in the retail area of the new World Trade Center complex in New York. At 2,700 square feet, it's about 35% smaller than the company's typical branch. But there are 11 ATMs throughout the large shopping area that can perform about 60% of basic bank transactions, giving customers a self-service option so JPMorgan can reallocate its branch space for one-on-one meetings.
Inside the branch, there are just two teller windows, four offices for customers to discuss their more complex needs with bankers, and a private-banking team. JPMorgan has no plans to incorporate its own Genius Bars or remodel branch floors into a coffee house environment, Hill said, but its philosophy has nuances of Apple's old "Think Different" mantra.
"We're continuing to think differently as to what would make something easier for our customer" through focus groups, its innovation lab and feedback from 250,000 employees, she said. "It's not just that we're going to keep doing what we're doing. We're going to continue to think differently."