November 18 - 20, 2019
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Here’s How Bank of America Is Reinventing High Street Banking with Tellerless ‘Robo-Branches’
The future branch is almost certainly to be dominated by technology. We should expect more omnichannel experiences to prevail, where customers are increasingly encouraged to bring along their smartphones and tablets as they sit down with Apple-Store-style “Banking Geniuses” to discuss financial products – all while hooked up to free Wi-Fi beaming around the building. Or, perhaps more branches will be equipped with their own tablets for customers to use. More kiosks, maybe, where people can do their online banking.
For sure, when it comes to future branch technology, domination is a sure thing. But what about complete usurpation? I’m talking about branches where there is not only nobody there to personally greet or advise customers who come through the door, but simply nobody there at all.
The next time you pop into a Bank of America branch, don’t be alarmed if that’s what you’re met with. The US’s second-biggest bank by assets has started to experiment with the concept of unmanned branches. No greeters. No tellers. Just machines.
The “Robo-branch” Is Here
The initiative is part of a drive to keep costs low, yet provide customers with technology that’s powerful and intuitive enough for them to do much of their simple, everyday banking tasks – such as cashing checks – on their own. Importantly, however, these customers are not left completely isolated. If they do need to do something slightly more complex, they can make a videoconference call to a BofA employee at a remote location to discuss their needs.
Three of these “robo-branches”, as they have been dubbed, opened up in 2017 – one in Minneapolis and two in Denver – with a further 25 slated to arrive by the end of 2017. According to Anne Pace, a spokesperson for Bank of America, customers who use these branches “can have a one-on-one conversation to get a mortgage, plan for retirement, open a small business or get a car loan. This is just a test. We haven’t rolled these out extensively. We are going to see how these go, see what we learn and make a decision from there.”
The Branch Isn’t Dead – It Is Evolving
According to figures from the American Bankers Association, the number of branches in the US has declined from a peak of 99,540 in 2009 to 91,861 at the end of 2016. Even so, the number of US bank employees has remained relatively stable – from 2,110,276 employees in 2012 to 2,043,480 at the end of last year.
For Bank of America, the number of locations is down from 5,900 six years ago to 4,597 today. Nonetheless, live banking isn’t dead in the water by any stretch of the imagination – roughly 1 million people walk into a BofA branch every single day, according to Pace. Charles Liu, Head of Branch Transformation at Bank of America, says that if the branch is to survive, it has to be reimagined. “I don’t believe analysts who say the branch is dead; that’s just lame. But we’re at the forefront of trying to change the model. We have to evolve.”
(Image source: bankinnovation.net)
So far, there are no layoffs accompanying the introduction of BofA’s robo-branches. However, they are part of an ongoing money-saving initiative. As more consumers are turning to their mobile devices for their banking activities, banks are finding themselves left with a lot more branch real estate than they perhaps need.
Bank of America’s traditional branches average about 5,000 square feet – the new robo-branches are just a quarter of that size, meaning that they save on real estate as well as personnel. “We are simply following our clients,” Pace said. “Mobile banking users increased to 21.6 million, and 19 percent of deposit transactions are done through mobile. That’s equivalent to 880 financial centers. We need to be there whether it’s through the mobile phone or inside a financial center.”
No One-Size-Bank-Fits-All Anymore
Despite the decline in footfall for everyday banking activities, it’s still not an option for banks to do away with traditional bricks-and-mortar branches completely. The best channel for picking up new customers remains the branch, and consumers still prefer to visit a branch in person when they have more complex financial concerns to discuss.
The move from Bank of America to completely remove transactional staff from its experimental robo-branches may therefore be a wise one. The question that’s raised, however, is that, in the digital age, when videoconferencing on platforms such as Skype and Facetime is so commonplace, does the robo-branch concept make sense when customers could just as easily (and more conveniently) make such calls from the comfort of their own homes?
For the time being, security and privacy concerns surrounding internet-based dialogue between bank and customer form an obstacle to this becoming a widespread reality – though it’s probably where we’re headed. Eventually, consumers will be demanding the ability to conduct secure video conversations with bankers using their own devices – branch-based videoconferencing, therefore, will perhaps prove to be a temporary solution, and mark the first major step from a mainstream bank towards this ultimate outcome.
The last word goes to Anne Pace.
“There is no one-size-bank-fits-all anymore. We have different centers based on different communities. We are taking some of that savings from mobile banking and reinvesting it into new centers, renovating others and hiring more specialists to provide advice and guidance to clients.”
Make sure to also download the Future Branches agenda to check out all of the great activities, speakers, & sessions planned for this year.