Tag: banks

OM in the News: Laying Out the Bank of the Future

bank“JPMorgan’s banks of the future will fundamentally upend Americans’ relationship with banking,” writes The New York Times (April 2, 2014). They will offer more services for customers in far less space. The layout of the new banks has gained urgency across the industry as a growing number of customers use mobile technologies to conduct many traditional banking functions, like check deposits and paying bills, without ever stepping into a branch. Either the bank branches adapt or they go the way of video stores.

JPMorgan is not the only institution trying to reimagine the traditional bank branch with its long rows of tellers standing behind glass. Across Wall Street, banks are looking to slash expenses and wring more profit from retail banking. Banking giants like Bank of America and Citigroup are working to overhaul branches with the goal of more closely resembling an Apple store, where employees holding tablets and other high-tech gadgets tend to customers.

Last year, Wells Fargo opened a 1,200-square-foot “minibranch” in Washington. JPMorgan, whose legacy bank branches averaged about 4,400 square feet several years ago, has already slimmed them down to 2,500 to 3,500 square feet. That firm began by convening focus groups to determine what customers wanted. The findings: space and simplicity.

Within the new branches, the teller line is no longer the centerpiece. That has been moved to the side. The focal point is now occupied by express banking kiosks, a kind of souped-up A.T.M. Aside from their new look, the machines allow more customized transactions. Customers can, for example, opt to get cash in any amount and any denomination, not just in $20 bills or $50 bills. The new machines are safer, too. Unlike traditional A.T.M.s that must be restocked with cash, these units replenish their own supplies from deposits, cutting down on the amount of times that employees have to ferry money to the vaults.

Classroom discussion questions:

1. Why is layout a major concern to banks?

2. What other changes are taking place to make kiosks more secure>?

OM in the News: Wells Fargo’s Layout Goes Small in a Big Way

Branch bank, 1965 vs. Wells Fargo today
Branch bank, 1965 vs. Wells Fargo today

Customers who walk into Wells Fargo’s newest branches won’t see teller windows, safe-deposit boxes or bankers sitting in offices, writes The Wall Street Journal (April 12, 2013). Instead, bank employees will walk around with computer tablets, and the branch’s walls will fold in at night so that only the ATMs are exposed to customers. Welcome to the incredibly shrinking bank branch.

The “minibranch” is the bank’s first effort to create a floor plan that can serve most of a customer’s basic needs in less than half the space of a traditional setup. Typical branches are larger than 4,000 square feet and cost roughly $3 million to build. Older branches can be as large as 10,000 square feet. Minibranches take up 2,000 square feet or less– and their operating costs are 40% to 50% below traditional branches.

Under the new layout, bank employees approach customers when they walk into the lobby and guide them to one of three 19-inch flat ATM screens. There, they can conduct a transaction on their own or receive assistance from the employee who carries the computer tablet and wears a messenger bag that holds a keyboard and cellphone.  The branch doesn’t have a vault; all cash is kept in the ATMs. One of the most unusual features is a series of movable walls, which open to reveal a desk area and banquette behind each ATM. When the branch is closed, the walls are locked into position to hide that area, giving customers access only to the ATMs.

Bank executives acknowledge that the new formats might turn off some customers who walk into a branch because they prefer old-style banking. “Customers are going to a branch for a reason; it is to deal with people, not an iPad,” says one analyst.

Discussion questions:

1. How does this layout decision (see Chapter 9) impact efficiency at Wells Fargo? Customer service?

2. Have minibranches been attempted earlier? With what results?