this file photo, customer Chung Yong-min does
banking through a screen monitor connected to a
video conference with bank employee Oh Ji-young,
located in another office, at a Smart Banking
Center in Seoul, South Korea.
YORK — In an age when checks can be deposited by
smartphone and almost everyone retrieves cash from
ATMs, the corner bank can seem a relic, with its paper
deposit slips, marble countertops and human tellers
behind glass partitions.
some banking executives say the brick-and-mortar
branch is still the best way to serve existing
customers and snag new ones. They're trying to rebuild
the nation's neighborhood banks into hip, airy spaces
where customers sign up for loans without touching a
piece of paper, sign in to ATMs with a tap of their
smartphones and talk to off-site tellers by video.
is only part of the reason for the makeovers. Mounting
costs from legal fees and new regulations — vestiges
of the financial crisis — have given the banks good
reason to become more efficient. The new branches will
help them replace expensive human workers with cheaper
machines, a development that could eventually make the
bank teller an endangered species.
redesigns aim to let customers complete simple
transactions, such as deposits, for themselves. That
frees bank employees for tasks that make money, such
as persuading someone who wanders in to put money into
a mutual fund or refinance a mortgage.
have been talking about 'branch of the future' for
more than a decade," says Bob Meara, a senior
banking analyst at research and consulting firm Celent.
"And almost nobody has been doing anything until
the past couple years."
large and small are on board. In a Celent survey in
June, 55 percent of banks said they were planning
"significant changes" to their branches, up
from 24 percent two years earlier.
investor conference in February, JPMorgan Chase
executives touted their new branches as places where
ATMs distribute exact change, machines count cash so
tellers don't have to and open floor plans evoke the
atmosphere of an Apple store or boutique hotel,
features that other banks are also embracing.
there are perils in overhauling an institution as
familiar as the bank branch. It can be expensive. And
if changes are too extreme, customers get annoyed.
be honest," says Mike Weinbach, JPMorgan's head
of national sales for consumer banking, "we don't
know if we have it right."
don't think anyone knows exactly what the future of
banking's going to look like," he added. He
declined to say how much JPMorgan is spending on its
far only one JPMorgan branch, in San Francisco's
Chinatown, has received all the new features. The
company plans to put the redesigns mostly in new
sites, rather than retrofit existing branches. The
goal is to help ease customers into the change. Still,
about 200 branches, out of more than 5,600 in total,
have some elements of the "branch of the
is not the first time the bank branch has undergone a
transformation. Through most of the 20th century,
banks built giant branches with features both lush and
imposing: thick doors, chandeliers, lion statues,
had to be big because they stored every loan agreement
on paper and often housed executive offices as well.
They had to seem impregnable to convey that they were
safe from robbers. And they had to be decorous to
suggest the bank was strong financially.
a Victorian parlor on the inside," says Steven
Reider, president of Bancography, which advises banks
and credit unions on their branches, "and a
Grecian temple on the outside."
wasn't until the 1970s, when banks started offering
ATMs and storing records electronically, Reider says,
that branches became smaller and savvier.
death of the bank branch has been predicted for years
as banking habits have changed. Customers are visiting
branches less often. The average number of teller
transactions has fallen to 15.6 in 2011 from 19.1 per
hour in 2005, according to research cited by Celent.
banks, it's cheaper to serve customers online or
through an ATM than in a branch. A service request,
such as accepting a deposit, costs a bank about $7.50
when it's done in a branch, 85 cents at an ATM and 10
cents online, estimates Tiffani Montez, an analyst at
the research firm Forrester.
U.K.-based Barclays, Germany-based Commerzbank and
others have told investors that new technology in
their branches will help them trim jobs. The
redesigned branches also tend to be smaller, another
factor in cost-cutting.
total number of branches for U.S. banks and savings
institutions has fallen the past three years,
returning almost to where it was before the financial
crisis, according to the Federal Deposit Insurance
Corp. In the 15 years from 1995 through 2009, the
number of branches declined in only one year, 1995.
the nation's biggest retail banks, only JPMorgan has
more branches than it did at the end of 2008. Bank of
America, Citigroup and Wells Fargo have all shrunk
Financial Services Group, SunTrust Banks and KeyCorp
are among the large regional banks that have been
shuttering branches as well.
to investors in March, PNC president Bill Demchak laid
out the tightrope that banks must walk in marketing
themselves through their branches and electronically.
mother goes into the branch and she is a great
customer. She wants to go in the branch three times a
week, and God bless her, we will let her do it,"
he said. "My son will never go in a branch,
right? He's got every mobile app there is and he's
horrified by going into a branch. We need both of
those customers, and we need to figure out how we
market to both of those customers without alienating
interview with The Associated Press in December, Wells
Fargo CEO John Stumpf acknowledged customers' changing
habits but said that branches are too psychologically
important to die.
they have a problem they can't solve, they'll go
there," he said. "If Uncle Leo dies and
leaves them 2 million bucks, they're going to take it
there. They're not going to send it to the ethernet
new branches tend to have a few features in common,
most meant to cut labor costs: "Instant
issue" machines that manufacture debit cards
right away so customers don't have to wait for them to
come in the mail, free Wi-Fi, and ATMs that offer
extra functions, including the ability to withdraw
coins and $5 and $1 bills. Wells Fargo is adding an
ATM feature that lets customers track their average
monthly withdrawals and tells them how close they are
to limits they set for themselves. At new JPMorgan
branches, customers will eventually be able to log
into ATMs with a tap of their phone, no debit card
South Korea, Standard Chartered is expanding
"smart banking" branches that employ a staff
of three, compared with an average of about eight in
traditional branches. Banks in Europe are trying
similar strategies under monikers like "self
branch" and "express banking."
Thursday, Bank of America announced that it will start
to overhaul its ATMs with a "human touch."
The most notable change in the new machines is that
they'll be equipped with video screens connected to
off-site tellers, which will let customers talk to
tellers even at times when the branch is closed. The
video screens will look blurry unless they're viewed
straight on and headsets will be provided, which the
bank said should help allay any concerns about
of America has cut its branches to fewer than 5,500,
from more than 6,100 four years ago.
still come in to discuss loans or open savings
accounts, says Katy Knox, who is in charge of retail
banking and distribution at Bank of America. But they
don't need the branch as much as they used to for
evolving our banking centers around their
preferences," she says.
for all the talk about the "next generation"
in bank technology, analysts question just how
futuristic the new branches really are.
understand that there is a very real need to respond
to cost concerns and to embrace technology," says
Bancography's Reider. "But I don't think there's
going to be a whole lot of customers who come in and
say, 'Wow, an iPad.'"