Channel Changers: The Rise of the Universal Banker

SOME CUSTOMERS WALK into the PNC Bank branch that Dan Bishop manages in Malvern, Pa., and immediately notice what's there: someone to greet them, an Apple-inspired consultation counter that has iPads and large, flat-screen monitors, and an ATM wall with a high-tech look that silently communicates the machines' advanced functionality.

Others walk in and immediately notice what's missing: no ropes, no partitioned work stations, none of the familiar cues to signify where a customer should go for service. Which leads to the inevitable question that Bishop and his staff field several times a day: Where's the teller line?

"I love that question," Bishop says, without betraying even a hint of impatience, "because that's our opportunity to explain what we're doing here."

What PNC is doing here, in a newly constructed suburban shopping center 25 miles northwest of Philadelphia, is preparing for the future. It envisions a retail banking environment that includes an increasing number of self-service options for customers and more fluid job descriptions for employees. Importantly, this future includes branches, which across the industry, despite shrinking foot traffic, still deliver more product sales than any other channel.

But some time-honored features of the branch may not come along for the ride.

At the Malvern location, one of two test labs where PNC is experimenting with its new approach, not only are there no visual cues alerting customers to the presence of tellers — there aren't any tellers, period.

In their place are "universal bankers," branch employees who can work a cash drawer but also open an account, recommend small-business services, demonstrate how to make a deposit by smartphone or talk to  about a loan. They're similar to utility players in sports, able to fill in at multiple positions, only instead of warming the bench, they're the heart of the starting lineup. 

Sometimes referred to as hybrid sales reps or universal agents, this new breed of employee is cropping up at banks of all sizes, from giants like Wells Fargo, to regionals like Bank of the West, to the $8.7 billion-asset Eastern Bank in Boston (see sidebar).

Slowing foot traffic has had banks rethinking the role and cost structure of branches for years. But now, after nearly two decades of declines (Synergistics Research in Atlanta estimtes that the frequency of branch visits has been falling since 1995, when customers came into branches an average of 4.4 times a month versus 2.8 times a month in 2013) there is a sense that swifter, more drastic change is in order.

At an investor conference in December, PNC Chairman and CEO William Demchak suggested that in five years, only a third of PNC's locations will look like traditional branches. The rest will be smaller, with more automation and universal bankers in lieu of tellers.

Bank of the West is gearing up for  change of a similar magnitude. In the past two years, the San Francisco-based regional has installed the universal banker model at 10 de novo branches and seven reformatted branches. It could see as much as 60% of its branch network go tellerless within the next three years, says Andrew Harmening, Bank of the West's regional banking group head.

That's how convincing the success of the Bank of the West pilot branches has been, and how quickly the San Francisco-based bank wants to move to transform its 19-state, 600-branch footprint.

"Every quarter for us, starting in the fourth quarter, and then all the way into 2016," more branches will adopt the new model, Harmening says. "I think it's making retail banking more relevant for us."

He and other executives suggest that employees who function strictly as tellers will still have a place in the industry, namely at branches where transaction volume is high enough to warrant a dedicated teller line. But for branches handling fewer than 4,000 transactions and 25 account openings per month, the universal banker model frequently makes more sense, according to Jamie Eads, a retail branch strategist at Bancography, a consulting firm in Birmingham, Ala. 

Universal bankers are cross-trained on transaction processing and product sales, which is meant to result in fewer customer handoffs to specialists, fewer missed sales opportunities and greater flexibility to meet staffing needs, which can fluctuate depending on the time of day. Unencumbered by physical barriers that have traditionally separated the teller line from the sales floor, they move around the branch throughout the workday, approaching customers rather than having customers approach them. 

"You're on your feet a lot," says PNC's Bishop, who oversees four universal bankers in Malvern. The branch also has an assistant manager, a wealth management banker focused on affluent investors, a private client banker focused on the mass market, and a financial specialist licensed to handle a wide variety of loan and investment products. The staff also makes use of a PNC mortgage broker and a business banker; both work with multiple branches in the area.

All of the regular staffers, including Bishop and the private wealth advisers, take turns manning the door, ascertaining customers' needs and demonstrating the apps on display at the consultation counter or the new functions available at the Diebold ATMs — which at this location will even cash a check for you.

Referrals to specialists still occur depending on a customer's specific need. While the four universal bankers are licensed to handle teller transactions, other staffers aren't; conversely, the universal bankers don't have the licensing that some of their colleagues do to talk about specific investments.

But generally, the staff aims to provide a seamless customer experience. It's not unlike what the branch's assistant manager, Kia Norris, saw in her previous role at PNC, working at an in-store branch housed within a nearby supermarket. Customers there typically had a single point person handling their visit. "This has been my way of life from the very beginning," the 40-year-old Norris says.

But for Aaron Warnecke, a universal banker at the Malvern branch, transferring from a traditional PNC branch a few miles away marked a significant change — one with the makings of a major inflection point for his career. The 24-year-old, who has a degree in finance and worked for a financial planner in Virginia after college, had trouble finding a similar position after he and his wife relocated to Pennsylvania. He took a job with a PNC branch and worked as a "switcher," spending some days behind the teller window and others on the sales floor, depending on staffing needs.

"It was tough as a teller," Warnecke says. "People tend to discredit you. The phrase we heard all the time was, 'You're just a teller — I need to speak with someone else.'"

At the new branch, he still handles teller transactions. But he says he's also gotten extensive training from Bishop and from PNC's local market managers that has helped him broaden out his conversations with customers, particularly as it relates to their business banking needs.

"That was something I was interested in before but wasn't given the opportunity to pursue," says Warnecke, who joined the Malvern branch when its opened last July. "I'm utilized in different areas now, and I work with our business clients here to develop solutions."

ADOPTING A STAFF MODEL like the one PNC is testing requires more than just crowning tellers or platform sales staff as universal bankers. Employees coming over from the teller side need to be trained on products and licensed to talk about loans; platform bankers, traditionally the primary sales generators in a branch, need to learn how to balance a cash position and comply with the record-keeping and reporting requirements of regulations like the Bank Secrecy Act.

"It's a higher level of training required," says Steve SaLoutos, the Midwest head of metropolitan banking for U.S. Bank, which has been adding universal bankers to the mix at many of its branches.

SaLoutos started in the industry 30 years ago with a summer job as a teller at a community bank. At Minneapolis-based U.S. Bank, he still works the teller line at least once a year to help stay connected to the experience of the 2,000-plus tellers at his 550 branches. In his experience, it's easier to teach a good teller about lending than it is to teach a good salesperson the technical work of processing teller transactions.

"The best tellers know how to look at the customer and have a conversation rather than looking at what keys to stroke to process a transaction," SaLoutos says. "That's always my problem doing it just one day a year — I'm looking at screens instead of the customer."

Compensation is another important consideration. In addition to paying universal bankers more than the $25,000 median pay for tellers in 2012 (as much as 50% more, some analysts estimate), banks with these hybrid employees have had to rethink their systems of incentives. Whereas tellers often are paid to generate referrals to other areas of the bank, universal bankers are responsible for both finding the lead and closing the deal.

"They're salespeople in this environment, so they have different benchmarks," PNC's Bishop says.

But even if the training is there and the incentives are recalibrated properly, there is still the matter of physical logistics.

"What has to happen [for the model] to work seamlessly is that the facility has to be designed in such a way that there are no barriers," says Bancography's Eads. "For instance, the old, traditional teller line with the teller drawer that you have to unlock that do any type of transaction — that's a huge barrier to the universal agent model."

At PNC's test branch in Malvern, the teller drawers are kept in the back, behind closed doors. When the universal bankers need to complete a teller transaction, they simply excuse themselves, retrieve the cash, and bring it back to a quiet corner of the sales floor, where the amount is verified in front of the customer.

Another deliberate design feature of the branch is its shared "offices," essentially two cubicles with dividers that can be moved around for varying levels of privacy. A banker might invite a customer to this area to open an account or to go over loan documentation.

LuAnn Chavez, who lives 20 miles away in Bala Cynwyd, Pa., and is an inventory coordinator at an office near the Malvern branch, says she stops in two to three times a week, usually to make deposits for her husband's catering business. She knows most of the staff by name and says she feels a difference from other PNC branches she's been to in the area, especially in terms of the friendliness and attentiveness.

"I like that I don't have to stand in line on a Friday to withdraw money and have to wait for a teller who then tells me, 'One minute — I have to take this drive-thru,'" Chavez says. (There is, in fact, a drive-thru window at the Malvern branch, but it has no teller tube, just two ATMs.)

The increasing utility of ATMs is a big reason why the job prospects for tellers look less attractive than they used to. Wells Fargo recently opened two mini-branches in Washington D.C. with ATMs that issue debit cards on the spot and dispense $1 and $5 bills in addition to the typical $20 denomination for cash withdrawals. iPad-wielding employees at these branches, which are about half the size of a typical branch, act as technology tour guides.

The bank's teller software, which runs on staff members' tablets, can talk with the ATM software when self-service complications arise. For example, an alert might pop up telling the staffer that the customer at a particular machine has reached the withdrawal limit. This acts as a prompt for a troubleshooting session with the customer, and more broadly, makes two historically separate channels act as a unit.

Another piece of equipment proving key to the universal banker model is the cash recycler, which automates transactions, stores and dispenses money and lets multiple employees work out of the same drawer. (Recyclers also are being used at traditionally staffed branches, as an efficiency play at the teller window.)

CYNICS MIGHT SEE the adoption of the universal banker model as a sign of an industry that's under pressure to be doing more with less. But Bancography's Eads says it's not just banks that are benefitting.

"I don't think we'd be seeing this occur at such a rapid pace if there weren't some benefits to the customer," she says.

Synergistics' research shows that a majority of consumers, including those who have migrated to channels outside the branch, want a human being within the branch as a backup plan, and view tablet-equipped employees as a means to improve the overall experience. The firm's data is pointing to something branch managers like Bishop have observed: more software may be running in the branch, but it's the people that make it work.

"Without the staff I have here, the tech means nothing," says Bishop, who describes employees at the Malvern location as people "who have a stage presence and can walk someone through the banking experience and put it in such a way a customer understands it."

As they get customers more comfortable with the technology, branch employees like those in Malvern may end up hastening the drop-off in the need for bricks and mortar. That irony isn't lost on Bishop. But he suspects that by the time today's emerging technology becomes so familiar to customers that it no longer requires the assistance of a live person, there will be new services and formats to introduce — and perhaps some transactions where the human element simply can't be replaced.

If he's right about that, then the branch lives on — but likely not in the way it does at most institutions today.

"Assisted self-service is the way it will end up fairly quickly," says Kevin Travis, who leads the distribution practice at the consulting firm Novantas. "As far as I can see, the teller line is gone."