But, the reports of the death of branch banking have been greatly exaggerated, as it turns out. Bank branches are simply being reimagined, and new, more modern sites are being unveiled by Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), and JPMorgan Chase & Co. (NYSE:JPM) even as clunky, older locations are shuttered.
New economic reality
It’s true that over 2,000 branch closings is quite a bit for one year, but banks are realizing that it isn’t cost effective to maintain locations in sparsely populated areas. As those branches are trimmed, new, more technology-dependent locations are springing up in larger urban areas.
Wells Fargo & Co (NYSE:WFC) recently opened a branch in what it calls the “neighborhood bank format,” in Washington, DC. Wells notes that the tiny, 1,000 square-foot site is a big change from its usual branch size, which is usually three to four times the new location’s footprint. The branch will offer large-screen ATMs as well as a paperless business concept, with employees using wireless phones and tablets to serve customers.
JPMorgan Chase & Co. (NYSE:JPM) has introduced its own new branch style, with interactive ATMs as well as tablet-toting clerks and cash-counting machines. These modern improvements will eventually grace all of the bank’s new sites, but the company doesn’t plan to roll out the changes for current locations.
Adding to the bottom line
For Bank of America Corp (NYSE:BAC), its new branch concept has more riding on its success than just saving money. The bank will have all the accouterments of its peers’ snazzy new sites, though its footprint will be gargantuan — 12,000 square feet — compared to that of Wells.
That’s because Bank of America Corp (NYSE:BAC) is planning to make its new branch sites a kind of mini-banking center , where customers can videoconference with remote advisors, and do practically any transaction that would normally be available only at a main bank location. One transaction that B of A is pushing at these brand-new sites is mortgage lending.
Even as the mortgage business cools, Bank of America Corp (NYSE:BAC)’s CEO Brian Moynihan disclosed in the bank’s first-quarter earnings call that the plan is to increase the number of mortgage banking specialists in branch locations, as well as processing staff for the back office. CFO Bruce Thompson noted that this drive has helped boost mortgage originations by 57% year over year.
As a Bank of America Corp (NYSE:BAC) executive recently commented, customers still want the face-to-face banking experience. The biggest banks are figuring out how to give consumers what they want in that arena, while still containing costs and increasing profits. The reinvented branch model is still new, but it definitely looks like a step in the right direction.
The article Big Banks Bet on Slick New Branch Model originally appeared on Fool.com and is written by Amanda Alix.
Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.
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