“Reports of my death have been greatly exaggerated.” That was Mark Twain talking, but the same might well be said of the traditional brick-and-mortar bank branch.
At a presentation at the recent BankWorld conference in Connecticut, Chris Gill, senior director at Diebold Consulting, said that teller transactions are predicted to decline 3 percent to 5 percent per year over the next several years, while online and mobile banking are projected to increase 20 percent to 25 percent per year. By 2017, the self-service oriented millennial generation, those between the ages of 18 and 34, is expected to have the greatest spending power of all age groups. And at least half a bank’s operating costs are tied up in the branch network.
Taken altogether, that might seem like a grim future awaiting the community bank on the corner. But bankers, consultants and architects are more optimistic. The branch will not fade into oblivion, but will adapt, they agreed.
As Gill put it, “Consumers still overwhelmingly prefer the branch for certain kinds of transactions.”
Plus, the branch is the keeper of the safe deposit box.
“People have been talking about the demise of the branch forever. And every time they talk about it, the statistics start to show more branches opening,” Hal Tovin, chief operating officer at Belmont Savings Bank, said. “What’s really happening is the nature of the branch is changing.”
Marc Margulies, a principal at Margulies Peruzzi Architects in Boston, said that banks have been experimenting with different models for about the past 12 years.
“You don’t want to walk into a big branch and see all sorts of empty teller stations,” he said. “So, the aesthetic and functional challenge we face is: How do you make a smaller branch with a smaller staff and fewer people in it not feel empty?”
The answer varies from bank to bank. Some banks have opted for smaller “spoke” branches, some display their electronic offerings on sleek “technology bars” that look more like something you’d see in an Apple Store, and other banks have cross-trained branch personnel so that tellers can assist customers walking through the door who need more than a simple transaction.
Meeting Different Needs
Tovin estimated that around 70 percent to 80 percent of Belmont Savings branch employees – including all new hires – are cross-trained.
“When people come into a branch today, it’s not just to transact. Usually they have a need, and that has to be handled by more than just a teller,” he said. “It doesn’t make sense to have people just sitting around who can only do transactions.”
Depending on the neighborhood, a Salem Five branch could be a financial services “superstore” or a small boutique branch, Martha Acworth, the bank’s chief marketing officer, told Banker & Tradesman. After all, a small branch in the mall or Kendall Square in Cambridge doesn’t need five teller lines.
And on the subject of showcasing their technological products, Tovin added, “In our new in-store branch, we have our wall of wonder, which has our touch-screen, envelope-free ATM in there. It also has a computer screen. Someone can log on and do their online banking there, but it also allows branch staff to demonstrate on the spot the technology that we have.”
“The branch will still be relevant if you evolve the model to serve what consumers do go to a branch for today,” Acworth said. “There’s something about opening an account that the majority of people still want to look someone in the eye and hand over their opening deposit.
“They want to start there, but then they want to be able to access that relationship through the channel of their choice at the time of their choice,” she added.
Those times often coincide with significant life events. When it comes time to take out a mortgage, refinance a home, or consider a home equity line to, say, help pay for a child’s college education, she said, that’s when customers usually want a face-to-face conversation.
“When someone’s taking out a loan, they want to make sure it’s done right, and they want to talk to the person who’s doing the loan. They want to not only take care of the application, but also have a conversation about their situation,” Tovin said.
The brick-and-mortar branch is also important for small businesses, Acworth added. “The branch is part of their stable of professional service advisors. That’s not a virtual relationship.”
“A good bank will help people with their needs and help them understand their total profile,” Tovin said. “People come in because they have different needs at different times.”
