Looking back at the bank branch

I remember going to bank as a child. I had to stand quietly with my mom in the winding line leading up to the teller counter. The wait was a little easier, knowing there would be a lollipop at the end, but standing there looking up at that tall counter, I always wondered what was going on behind it. How did the tellers get back there?  How did they get out? What was happening that we weren't supposed to see?

From impressive, stately architecture to formal interiors with vast marble floors and rich wood counters and desks, banks were a physical representation of everything solid and secure. They needed to convey security and the message that your money was safe there. Cash itself is so systemic and embedded in every element of traditional branch design. Work processes and even layouts of branches were designed around the movement of cash and cash needs.

Key elements of traditional banks that were built around cash processes include:

  • Security of cash
  • Thick, heavy building materials
  • Physical barriers between cash and customers
  • Dual control practices
  • Redundant cash processes

Let's look at the some hallmarks of traditional branch operations and why they exist.

Teller counter. A tall, imposing physical barrier between customers and staff, designed to reduce visibility and accessibility to cash. The teller line sent a clear message — your  money is safe with us.

Cash handling procedures. Every cash process, procedure and policy was developed for cash security and counting accuracy. The reason tellers count, recount, denominate, face, orient, strap and segment drawers is to ensure accuracy and keep cash secure.  

Dual control. The practice of using two staff members to perform and witness vault and other high value transactions, provides an extra layer of accountability. But it's a burdensome practice that creates artificial staffing requirements.

The context of security itself has also changed over the years. Of course, banks still need to secure cash and customers still need to feel their cash is safe but how customers view the role of the bank has evolved. They no longer look to banks as the guard of and primary access point to their cash. Banks are just one financial resource for customers and transparency earns trust.

The New Paradigm

“Customers may not visit a branch regularly or much at all, but the fact that it is there if they need to deal with a real person is what counts. That is why smart bankers continue to believe in branches but continually change their appearance, design, offerings, hours and, yes, technology to meet customer needs.” American Banker

Traditional in-branch transactions have steadily declined over the past ten years.  This has forced banks to look inward at branch costs, efficiencies, and how they interact with customers.  Retail banking has traditionally been a key touch-point for customers, and simply closing branches is not the preferred option. Because, despite the costs, bank executives understand the importance of the branch as critical to the customer relationship.

It's true that customers visit the branch less frequently, but they still expect to have a branch nearby when they need it. In fact, convenience of branch locations is a key deciding factor in selecting a bank. According to John Elmore, vice chairman of community banking and branch delivery at U.S. Bancorp, "Proximity… is a very, very important factor to bank selection and their continuing relationship with a bank."

With all the other options available today, people come to a branch because they want a personal experience. Even though branch visits are down, customers still want the option of a personal interaction when they need it. The 2016 TimeTrade State of Retail Banking survey reported that location/hours is the number one factor in choosing a bank. So having locations close to where customers live or work provides a significant competitive advantage for a financial institution.