Bank Branches: Back to the Past?

Does the “Branch of the Future” look like the “Branch of the Past”?

Chase is in the middle of renovating WaMu’s branches to look like the traditional Chase configuration. The Wall Street Journal published a nice diagram of the old vs. the new. And in this case, the “new” is very traditional – gone is the concierge desk, self service dispensers, open plan that creates greater customer interaction. It’s a straight shot in the door to the teller line, with “platform” offices along the side.

I understand that Chase needs to have one way to run their branches, and it is clear from their financial performance that they have a successful business model. And I agree with Charles Scharf, Chase’s retail head, comment about Chase’s branches that “They might be boring, but they’re practical”.

Practical in terms of process flow, but not necessarily practical in terms of creating customer involvement and excitement.

It is no news that transaction activity in branches is declining. We all know that, but if you ever need a reminder, just visit branch built in the 1980′s and see how many teller stations are walled off. So if customers don’t need to go to the bank to do transactions, what is the function of a bank branch?

One hypothesis is that we don’t need as many. Fewer transactions, fewer branches. But experience in other countries, especially Europe, where hardly any transactions are done by check or in the branch, offers a counterintuitive suggestion: we need more, but different.

Many successful European banks started with the assumption that they could shutter branches and reduce cost as transaction activity declined. But when they did that, sales declined. In the end, they opened more, smaller, branches designed to encourage customer interaction.

So my thought is this: if we make our branches boring, how will we create the interaction and excitement that will be necessary to make customers want to visit them and engage them in sales discussions? Umpqua Bank is doing a great job of creating branches as destinations, especially in downtown Portland. Commerce Bank (now TD) created interest and excitement with their WOW program.

Occasio, it seemed to me, was an attempt to look to the future of banking, not the past and, as I’ve noted before (see Boo Hoo WAMU and Occasio is History) it may not have worked (in part because WaMu ran out of money to support it) but it is an experiment that I’m sorry to see totally dismantled.