Banks of the future will have ‘smart’ feel

With closures increasing, study says branches have to rethink their role

Imagine walking into a bank and being greeted by a welcome screen powered by facial recognition software and data analytics that identify you as someone who doesn’t own a car.

Armed with that information, the bank’s video wall gauges your interest in buying one. It superimposes your image in front of a new SUV, “opens” the door and gives you a view of the cockpit. You’re then asked if you’re ready to buy. If you say, “yes,” you’ll be offered a loan on the spot, based on the bank’s existing data on you. A nearby banker hustles over to answer any questions after getting an alert about your interest in a loan from a hand-held tablet.

Welcome to the “smart branch” of the future.

These possibilities are laid out in a study titled “A bank branch for the digital age,” from consultancy McKinsey & Co., which highlights that the behavior of bank customers is changing rapidly. Since the financial crisis nearly a decade ago, an average of three bank branches have closed every day in the U.S., totaling more than 10,000, the study noted.

“Banks have to rethink what the role of the branch is,” says Sheinal Jayantilal, a co-author of the McKinsey report.

Even with downsizing and shifting consumer habits, the rise of digital and online banking “does not spell the end of the branch,” the study found. The reason: roughly 80 percent of Americans still prefer a human touch for some or all of their banking needs. And physical locations are still important when it comes to banks selling loans, investments and advice.

Only 20 percent of customers are

“bank in my pocket” people who never step foot in a branch, McKinsey’s research found.

Here are some changes you might see in a new, reimagined bank branch:

❚ More machine-driven transactions: Expect fewer tellers behind windows. Most of the branch’s square footage will be filled with self-service stations. And not just ATM machines. Digital service terminals will help you get past statements, transfer cash between accounts and let you sign up for a new credit card. Secure and private video conference rooms will connect you to a mortgage specialist or financial adviser if none is available on site.

One upshot of more machine-driven banking is lower costs and shorter lines and waiting times for customers, McKinsey researchers say.

❚ “Roaming” bankers with datarich tablets: Out is the suit-clad banker behind a desk in a cubicle. Enter mobile bankers working at “standing desks” who proactively “roam” the branch floor with information-rich computer tablets that helps them service customers like an Apple Store employee does. With data about your banking history, the banker can recommend products, scan and upload documents, or produce a credit score report.

Privacy experts warn of the risks as- sociated with marrying so-called biometric data with financial-related information. “The collection and sharing of data like face recognition will lead to a society where we are under constant surveillance,” says Jennifer Lynch, senior staff attorney at the Electronic Frontier Foundation.

❚ Teller-less banks: People who live off the grid in rural areas without a nearby bank will have access to machines that function as a “branch in a box,” where no human tellers or bankers are present. These interactive teller machines can link you up remotely with a banker hundreds of miles away. The machine is the bank, all in roughly 200 square feet of space or as small as fully digital booths “fitting one customer with secure entry,” Jayantilal says. These banks without tellers would allow you to, say, wire money to your son traveling through Europe or request a loan or credit card from a banker via video.

Standard branches will have only three to four workers, and the biggest banks, or flagship branches in major cities, will have staffs of just eight or more.

❚ After-hours banking access: The digital bank will be 24/7, no different than an ATM on Main Street in your hometown. The difference is the branch will offer a full menu of banking options, no different than going to a diner and ordering a full meal in the wee hours.

ATM cards, thanks to advancements in technology and “secure authentication,” eventually may become obsolete as well, Konov adds.