By Christina Rexrode And Robin Sidel
Banks just can't figure out what to do with their branches.
Firms across the country are tossing out their tellers, adding
salespeople and remaking their drive-through lanes. The moves are
the latest cost-cutting experiments for the industry as customers
move in droves to online and mobile banking.
The efforts are proving tricky given that banks want customers
to come to branches for moneymaking financial products such as
loans or credit cards, but also have to serve the millions of
Americans who still regularly make deposits and withdraw cash at
the teller line.
When Capital One Financial Corp.'s new Boston office opens this
summer, it won't have any tellers at all.
The firm is expanding a "cafe" format in which visitors can get
gourmet coffee and free Wi-Fi but can't sit with a banker who will
open an account for them or drop off a loan application.
Instead, employees steer customers to its website and answer
questions about the bank's services. As it has in other locations,
the company also will likely host occasional alcohol-free "appy
hours" that promote the smartphone apps of local businesses.
Capital One sees the cafe format, which it is using at several
locations around the country, including some already operating in
Boston, as a way to promote the bank's brand without employing
large numbers of tellers, a spokeswoman said.
Bank of America Corp. soon will begin converting about 9,000
tellers to "relationship bankers" who can direct customers to
high-tech ATMs or show them how to deposit a check via smartphone.
J.P. Morgan Chase & Co., PNC Financial Services Group Inc. and
other banks are making similar moves.
U.S. banks operated 94,725 branches last year, the lowest number
since 2005, according to the Federal Deposit Insurance Corp.
Despite banks cutting costs sharply in recent years, as many as
one-third of those branches remain unprofitable, says consulting
firm Simon-Kucher & Partners.
New ATMs that dispense exact change or that connect customers to
a remote teller via video are meant to guide customers away from
the teller for simple transactions. For banks, it is cheaper when a
customer deposits a check at the ATM, and cheaper still when they
deposit by taking a picture of it with a smartphone.
But converting branches into sales centers will be no easy
task.
"Most banks don't have a clear vision of where to take the
branch," says Robert Meara, senior analyst in the banking group at
consulting firm Celent.
Only about 5% of customers applied for a new account or product
on their most recent visit to a bank branch, according to
market-research firm J.D. Power, and some estimates put the
proportion even lower.
"Nobody buys a home equity line of credit on impulse," said
Steven Reider, president of Bancography, which advises banks on
their branches.
In some cases, the changes risk turning off customers.
Grace Raymond was frustrated after she stopped by a Bank of
America in Ocala, Fla., to pay off her mortgage and encountered a
"lobby full of customers" and no one to help clarify whether she
needed to go to a financial adviser or a teller. After a long wait
for a financial adviser, Ms. Raymond learned that she could have
just gone to a teller, she said.
At a happy hour with friends later "I was so angry and annoyed
that I couldn't calm down," said Ms. Raymond, who is 79 years old.
"And normally I'm a pretty nice person."
At Bank of America's shareholder meeting in May, a shareholder
asked CEO Brian Moynihan about long lines at some branches due to
fewer tellers. Mr. Moynihan said the bank is trying to keep up with
changing customer behavior.
A handful of banks are closing drive-through lanes or trying
ways to make them more efficient.
Wells Fargo & Co. recently tested a new process in which
customers go online to receive a one-time pass code to speed up the
authentication process at the drive-through. The bank is analyzing
the results.
PNC has toyed with "order ahead" ideas, which might allow
customers to, for example, say ahead of time that they are going to
withdraw $100 from the ATM, then scan their phone or enter a pass
code once they get to the machine.
The bank says it is treading carefully.
"One thing we hear from customers: 'If you change the inside,
fine. But don't mess up the drive-through,'" said Todd Barnhart,
head of retail distribution at PNC.
Some firms are simply shuttering branches. Fifth Third Bancorp
last month announced that it will close or sell 100 branches, or 8%
of its offices. Like many of its peers, the Cincinnati-based bank
also is expanding its use of employees who can handle a variety of
functions.
At a Capital One cafe in New York recently, Jennifer Oliver used
the ATM located inside the building and then walked to the back for
a cup of coffee from the Peet's Coffee & Tea counter. The
physician assistant said she was pleased to get a 50% discount on
coffee by paying with her Capital One debit card, but said she was
unlikely to become a regular since she rarely carries cash and has
only visited a branch twice in the past eight years.
"I feel badly for all the bank tellers who don't have jobs
anymore," she said.
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