Published November 03, 2013
VELIZY – Installation art, interactive walls and a robot doorman; the flagship branches of the world's top banks have come a long way from the iron grilles and potted plants of old.
To compete against online-only rivals and to attract a new generation of customers to branches, banks are installing sleek interiors and hi-tech gadgetry.
ATMs that read fingerprints, touch-screen desks to flick through your finances and videoconference units for expert advice are all on display at payments-technology firm Wincor Nixdorf's showroom in the Paris suburb of Velizy.
"Banks are investing a lot in their retail branches," said Steve Bousabata, head of Wincor's French banking services arm. "They want customers to come back."
The reason is clear: after years of relying on branches to drive retail revenue, European banks expect such networks to supply only 62 percent of sales by 2020 from today's average of 81 percent, according to Equinox Consulting.
Banks, especially those still nursing losses from the financial crisis, are under pressure to cut costs and are balancing the need to pare back branch networks by sprucing up select outlets.
But branches are still the first point of contact for many customers and are still the primary location for product sales like mortgages, new accounts and insurance, underlining the importance of upgrading them for a more tech-savvy generation.
The difficulty is knowing exactly what belongs in the branch of the future and what is better left behind.
"Are all the things we see in branches today going to be seen in branches tomorrow? I very much doubt that," said Mike Baxter, head of management consultancy Bain's Americas Financial Services practice.
"There's an awful lot of experimentation of stuff that turns out to be unsuccessful and uneconomic."
Flashy "bank of the future" branches mixing gadgetry with design similar to Apple's minimalist stores have been opened by BNP Paribas in Paris, Barclays in London and Deutsche Bank
They include lounge areas, giant interactive screens and other trimmings such as handbags for sale and pieces of art.
Gauging their success is tricky. BNP was willing to give data on its refurbished flagship branch near the Paris Opera - which three years ago was fitted with a wall covered in plants, iPads for customer use and a touch-screen desk - saying that footfall was up 40 percent and new clients up 25 percent.
Italy's Unicredit also said that footfall and new business were up at its newly revamped flagship branch in the Bulgarian capital of Sofia, which offers "welcoming scents" and a touch-screen wall. Visits are up by an average of 60 percent while loans and deposits have doubled, a spokeswoman said.
On the other hand, BNP has done away with some ideas that failed to click with consumers: it has scrapped the iPads and touch-screen desk in favor of an interactive wall.
Deutsche Bank and Barclays declined to give data on single branches.
More broadly, some 88 percent of bank executives view their flagship branches in main street areas as being "successful" in promoting brand awareness, according to a survey by Equinox.
Beyond Europe, the experiments are even bolder.
In South Korea, where mobile banking has flourished faster than in the West, Hana Bank <086790.KS> allows mobile users to transfer money to one another by physically "bumping" smartphones. Shinhan Bank <055550.KS> has also introduced unmanned "smart" branch kiosks that communicate with handsets.
Commonwealth Bank of Australia is using a mobile app to drive mortgage sales by offering clients data on houses for sale, while BBVA's U.S. unit Compass is testing drive-through ATMs with videoconferencing.
Customers of the Washington D.C. branch of Carolina Premier Bank will soon find themselves face-to-face with a robot, which will greet visitors from November 15.
Although some of these advances may prove too gimmicky or not functional enough to catch on, long-distance banking via videoconference is seen as a way to reduce branch staffing without hurting service, though customers still prefer a physical point of contact somewhere along the line.
"Mortgage specialists sitting at headquarters, connecting via videoconference to the relationship manager; that works," said Bain's head of global retail banking, Dirk Vater.
"But bank-to-consumer, with people sitting on the sofa using Skype and Facetime, has not been adopted yet. It will eventually ... But not yet."
Increased ATM functionality as used by Citibank Asia and more secure biometric readers are also promising, he added.
The ultimate question of whether to scrap the branch entirely is one that is not being considered, consultants said.
The preference is for a "hub-and-spoke" model that pools resources in urban areas and reduces smaller, rural branches.
While this may lead to more ambitious flagship outlets, it can create gaps for new competitors to fill: France's Nickel, which offers a low-cost current account, is creating a branch network with the country's 27,000 tobacconists.
"Even in developed markets, the death of branches is somewhat exaggerated," Ernst & Young wrote in a 2012 report.
"We will see further evolution of the branch experience from something that looks like a local government office ...(to) a hybrid between coffee shop and technology store."
($1 = 0.7312 euros)
(Additional reporting by Steve Slater in London, Tsvetelia Tsolova in Sofia, Jackie Range in Sydney and Douwe Miedema in Washington; Editing by Carmel Crimmins and Giles Elgood)