US banks doing everything to keep branches alive
new york — Free Wi-Fi, discounted cappuccinos, artwork, and a dancing robot are among the features banks across the United States are touting to convince customers that even in an era of smartphones it is still worth it to visit a bank branch.
Banks are in a bind — branches are costly and keep losing traffic as phone apps take over day-to-day banking, but they need themw because that is where customers still get advice, resolve tricky account issues or deal with cash and checks.
To square that circle banks have been trying to drum up more branch business with location upgrades and eye-catching features.
JPMorgan Chase & Co branches, for example, feature local art, Bank of America highlights new technologies at its “technology bars” and at HSBC Holdings’ Fifth Avenue flagship New York branch a humanoid robot Pepper greets visitors with a wave and a wiggle.
However, wooing more customers with self-service kiosks, touchscreens, consulting zones and modern decor is just the start, consultants and designers say. The challenge is how to turn that into more sales and brand loyalty.
“Innovative designs have proven to be successful in driving additional traffic,” said Brandon Larson, a managing director at financial consultancy Novantas. “The thing people struggle with is, how do they convert that traffic into new deep relationships with the institution?”
In other words, can a cappuccino sell a mortgage?
Reuters interviews with eight patrons at Capital One Financial’s hybrid flagship bank-cafe in New York suggested it may be hard. Six said they were there to charge phones or enjoy an iced coffee, not to carry out any transactions or become bank customers.
“To me, the cafe is more of a public co-working space,” said Chai Lee, 45, who regularly relaxes there. “I really come in for the free Wi-fi.”
Lee, a Chase customer, said he had no plans to switch banks, and that his main consideration when opening an account was getting the best interest rate. And Pepper, for instance, can offer the weather forecast and help direct customers, but it is not set up to open a new bank account or answer complicated financial questions.
Yet bankers say the eye-catching features are more than just marketing stunts. Jeremy Balkin, HSBC’s head of innovation for the US market said the Fifth Avenue branch opened 20 per cent more accounts in July, the first full month of Pepper’s assignment there, compared to a year earlier.
“Clearly Pepper has been a seismic historic intervention,” Balkin said. “We don’t see it as marketing. Pepper is part of our family in the branch.” Capital One considers its cafe model so successful that it is adding new locations in Washington DC and San Diego to the existing network of 33 cafes run in cooperation with coffee chain Peet’s Coffee.
Lia Dean, Capital One’s head of bank marketing and retail, told Reuters that half of those frequenting its cafes were not customers, which was good because more people get familiar with the brand. Dean would not discuss the effects on profits or new account openings, but said: “We would not be expanding them if we weren’t pleased.”
If done right, branch redesigns can boost sales and reduce costs by 60 to 70 per cent thanks in part to lower staffing and space needs, according to a July study by McKinsey management consulting firm. But doing it right means spending heavily on back-end technology to bring information now scattered across various businesses in one place and investing in training so a single employee can help a customer with a range of questions.
Bank executives say integrating technology across apps, web portals, ATMs and physical locations is a complex, time-consuming operation, but they are moving in that direction. —