Major re-imagination at a key bank branch of Wells Fargo

Customers walking into the newest branch of Wells Fargo next week would not be greeted by the usual teller windows. There won’t be any safe-deposit boxes either. Bankers assigned in offices would be a thing of the past as well.

Instead, the bank employees would be noticed working with handy computer tablets, and the branch would have folding walls so that customers can have access to the ATM machines in night.

Welcome to an incredible shrinkage of office space and mode of operations. “We still consider the offline branch as the centerpiece of our customer engagement, but the store structure and operations have been assigned a newer flow.,” stated Jonathan Veline, the strategy supervisor of 6,200 retail ‘stores’ in Wells Fargo.

As a part of the re-imagination, the bank is all set to commence operations in the Washington ‘minibranch’ from this Monday. This is the first effort on part of the bank to reduce its floor space to about half than the traditional, without compromising on serving the requirements of customers.

The reduction of floor space is the latest effort on part of the bank to significantly reduce its expenditure on system infrastructure. Banks are trying hard to adjust with slow economic growth and new profit crunching rules at the market. As more and more customers incline towards internet and mobile banking, banks are being compelled to close stores altogether or building smaller space saving solutions to cut down on personnel and property costs.

“Struggling with the profit challenges, banks are pulling this lever to cope with the situation,” explained David George, a St. Louis based financial analyst working with R.W. Baird & Co.

Traditional bank branches are in the range of about 4,000 square feet, and the average cost of setting up a fully functional branch is about $3 million. Older branches may occupy as much as 10,000 square feet.

These ‘minibranches’ would take about 2000 square feet drastically lowering the operational costs by about 40-50%.

Wells Fargo, which reported a net profit of $18.9 billion last year on revenue of $ 86.1 billion, is not the only bank in the block trying maximum squeezing of operational costs. Bank of America has been closing branches in hundreds. They are installing ATM machines from where the customer can remotely work with the bank via video chat. Banks who are opening new branches, like J.P. Morgan Chase, (opening about 150 branches every year) are focusing on space saving work spaces and practices.

“The average size of the branches scheduled to go operational by 2014 is significantly less than the size we were building two years ago,” according to Ryan McInerney, head at consumer banking section in J. P Morgan. He recently confirmed that about 70% of the new branches are less than 4000 square feet.

The Bank of the West, which is a unit of BNP Paribas SA of France, operates in the 19 Mid western and Western states through 700 branches. They recently inaugurated five branches that were significantly smaller in size. These branches have a central teller pod receiving and dispensing cash and glass enclosures without doors.

“A day spent at a big branch does not make sense anymore from the customer’s perspective or the bank’s,” stated Andy Harmening, the head of the regional banking group of the Bank of the West.

On a Friday morning recently, workmen were seen putting the final touches on the new 1,250 square foot Wells Fargo branch in Washington. The employees were sitting in a huddle at a corner, receiving training on how to use the computer tablets that would be the medium of operations from now on.

However, the new style would not replace all the 6,200 branches of the bank. Instead, it would complement the traditional style and would be mostly found in urban regions. “We could not set up units in certain neighborhoods because of the too much space we were requiring.”

With headquarters in San Francisco and being the fourth largest US bank by asset size, Wells has been developing this new format for the last few months. A prototype has been constructed in the basement of a Manhattan branch.

Under this new layout, customers would be approached and guided by bank employees to one of three flat ATM screens (19 inch) when they enter the lobby. Through this ATM, the customer can self-serve all transactions of have assistance from a bank employee carrying a tablet, a portable keyboard and a cell phone.

Both the customer and the employee can use the ATM machines. These new machines also dispense single dollar and $5 bills besides the usual $20s and $50s.  The ATMs would also double as bank vaults.

Behind every ATM there would be a banquette and a desk area. This small area would have movable walls. When the bank closes in night, the walls move into place to lock that space behind the ATM, letting customers access only to the ATMs.

A sliding glass door would separate a small rear office in the lobby. This door closes at night too.

Bank executives also say that they risk losing some customers who prefer the traditional style.

“Customers walk into the bank to deal with actual peoples and not iPads,” said the analyst from R.W Baird.

Banks have previously tried new designs, often ending up disastrously.

Washington Mutual patented a particular format called the ‘Occasio’ in 2004. This format replaced teller windows with cash dispensers and free-standing counters. The bank was able to remodel only half of its about 2,200 branches before collapsing in September 2008 due to bad debt.

J.P Morgan purchased the remnants, but was quick to remodel back to the traditional style as customers found ‘Occasio’ very misleading.

Kevin Hartmann