Banks hope futuristic flagships can tempt new customers


* Europe's banks spruce up branches with high-tech kit

* Need to compete with online rivals and cut costs

* Results sometimes fall flat

* Bank executives say new flagships boost brand awareness

* U.S., Asia-Pacific banks test bolder ideas such as robots

By Lionel Laurent

VELIZY, France, Nov 3 (Reuters) - Installation art,interactive walls and a robot doorman; the flagship branches ofthe world's top banks have come a long way from the iron grillesand potted plants of old.

To compete against online-only rivals and to attract a newgeneration of customers to branches, banks are installing sleekinteriors and hi-tech gadgetry.

ATMs that read fingerprints, touch-screen desks to flickthrough your finances and videoconference units for expertadvice are all on display at payments-technology firm WincorNixdorf's showroom in the Paris suburb of Velizy.

"Banks are investing a lot in their retail branches," saidSteve 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 todrive retail revenue, European banks expect such networks tosupply only 62 percent of sales by 2020 from today's average of81 percent, according to Equinox Consulting.

Banks, especially those still nursing losses from thefinancial crisis, are under pressure to cut costs and arebalancing the need to pare back branch networks by sprucing upselect outlets.

But branches are still the first point of contact for manycustomers and are still the primary location for product saleslike mortgages, new accounts and insurance, underlining theimportance of upgrading them for a more tech-savvy generation.

The difficulty is knowing exactly what belongs in the branchof the future and what is better left behind.

"Are all the things we see in branches today going to beseen in branches tomorrow? I very much doubt that," said MikeBaxter, head of management consultancy Bain's Americas FinancialServices practice.

"There's an awful lot of experimentation of stuff that turnsout to be unsuccessful and uneconomic."

Flashy "bank of the future" branches mixing gadgetry withdesign similar to Apple's minimalist stores have beenopened by BNP Paribas in Paris, Barclays inLondon and Deutsche Bank in Berlin - at an estimatedcost of 5 million euros ($7 million) each.

They include lounge areas, giant interactive screens andother trimmings such as handbags for sale and pieces of art.

Gauging their success is tricky. BNP was willing to givedata 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 thatfootfall was up 40 percent and new clients up 25 percent.

Italy's Unicredit also said that footfall and newbusiness were up at its newly revamped flagship branch in theBulgarian capital of Sofia, which offers "welcoming scents" anda touch-screen wall. Visits are up by an average of 60 percentwhile loans and deposits have doubled, a spokeswoman said.

On the other hand, BNP has done away with some ideas thatfailed to click with consumers: it has scrapped the iPads andtouch-screen desk in favour of an interactive wall.

Deutsche Bank and Barclays declined to give data on singlebranches.

More broadly, some 88 percent of bank executives view theirflagship branches in main street areas as being "successful" inpromoting brand awareness, according to a survey by Equinox.


Beyond Europe, the experiments are even bolder.

In South Korea, where mobile banking has flourished fasterthan in the West, Hana Bank allows mobile users totransfer money to one another by physically "bumping"smartphones. Shinhan Bank has also introducedunmanned "smart" branch kiosks that communicate with handsets.

Commonwealth Bank of Australia is using a mobileapp to drive mortgage sales by offering clients data on housesfor sale, while BBVA's U.S. unit Compass is testingdrive-through ATMs with videoconferencing.

Customers of the Washington D.C. branch of Carolina PremierBank will soon find themselves face-to-face with arobot, which will greet visitors from Nov. 15.

Although some of these advances may prove too gimmicky ornot functional enough to catch on, long-distance banking viavideoconference is seen as a way to reduce branch staffingwithout hurting service, though customers still prefer aphysical point of contact somewhere along the line.

"Mortgage specialists sitting at headquarters, connectingvia 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 usingSkype and Facetime, has not been adopted yet. It will eventually... But not yet."

Increased ATM functionality as used by Citibank Asiaand more secure biometric readers are also promising, he added.

The ultimate question of whether to scrap the branchentirely is one that is not being considered, consultants said.

The preference is for a "hub-and-spoke" model that poolsresources in urban areas and reduces smaller, rural branches.

While this may lead to more ambitious flagship outlets, itcan create gaps for new competitors to fill: France's Nickel,which offers a low-cost current account, is creating a branchnetwork with the country's 27,000 tobacconists.

"Even in developed markets, the death of branches issomewhat exaggerated," Ernst & Young wrote in a 2012 report.

"We will see further evolution of the branch experience fromsomething that looks like a local government office ...(to) ahybrid between coffee shop and technology store."


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