How Wells Fargo Is Re-Imagining Urban Branches

Inspired by the positive customer response to its mini-branch in up-and-coming NoMa, Wells Fargo has opened a second in another hip Washington, D.C., neighborhood.

The new branch is on the corner of 14th and U Street, an area teeming with restaurants, shops and new apartments and condos. The new branch is roughly half the size of a typical Wells branch, and like the NoMa branch, it features a range of self-service options that appeal to on-the-go city dwellers. The U Street location also comes with private rooms, should someone wish to open an account, and a space where business customers can deposit their heavy cash loads.

These new, urban branches represent an attempt by Wells to better reach consumers who are comfortable using technology. Because they are significantly smaller than a typical branch, they are also helping Wells to reduce branch overhead at a time when branch traffic continues to decline.

Banks across the country are likely to keep close tabs on Wells as they too look to re-engineer branch networks in response to dropping foot traffic and the adoption of digital technologies that allow for more efficient workflows.

PNC Bank and Fifth Third Bank already have branch of the future concepts in place, while others like Eastern Bank in Boston are thinking about new models for a channel associated with customer acquisition.

To be sure, mini-branches aren't intended to work everywhere. Branches in suburban areas need to be larger to accommodate parking and drive-through bays. Then, there are functions self-service technology can't commonly do, such as dispense coins or serve all a business customer needs.

The neighborhood stores, however, suit the urban market of young professionals who could easily get to work by foot or subway and are comfortable doing things themselves.

Indeed, both Wells Fargo's futuristic branches feature sophisticated ATMs that instantly recognize a user's preferences, issue debit cards on the spot, and even spit out $1 and $5 bills. Employees, too, have to be versatile. Typically toting tablets, they are trained to do everything from cash checks to demonstrate technology to originate loans.

Employees are also well-equipped to troubleshoot.

The bank's teller software, which runs on staff members' tablets, can talk with the ATM software when self-service complications arise. A staffer would get an alert, say, that the customer at machine number two hit his ATM withdrawal limit. That prompt is meant to motivate the employee to troubleshoot the customer restriction, and more broadly, make the two historically separate channels act as a unit.

"The difference between full service and self-service is getting less and less over time," says Jonathan Velline, head of ATM banking and store strategy at the nation's fourth-largest bank. "It's an important finding for us.… We create a handoff from self-service to full service."

The neighborhood store experience is also an extension of a use-less-paper effort the bank has been working on within all of its branches for years. Wells, for example, has had touchscreens in front of all its teller counters to remove the need to, say, fill out a deposit slip, from the customer interaction since 2012. In so doing, the teller experience within traditional branches has become more like using an ATM. Wells Fargo's newest neighborhood branches offer the latest wrinkle of that ongoing trend: the teller and ATM queues are one and the same.

The bank opened its first neighborhood store about a year ago — which it first mocked up in a New York basement — to fit into an urban area at a more cost effective price. Since that branch opened, Velline says transactions there are similar to those observed in its more traditional branches.

"That gets back to the fact: there are more similarities between the ATM and teller," says Velline.

This finding jibes with recent industry-wide research. Consumers are receptive to tablet-equipped bank representatives who assist with transactions, according to data from Synergistics Research. Some consumers, though not most, could worry about invasion of privacy and security-related issues related to the self-assisted models, says Genie Driskill, chief operating officer of Synergistics.

To be sure, consumers will and do channel hop, which pressures banks to design experiences that are in harmony with one another regardless of whether a service is delivered through a mobile app or a physical store. A Wells customer can, for example, set up an appointment with a branch banker via a mobile app.

"There's no one-channel customer," says Wells' Velline."We have to figure out how to make great interactions with customers no matter where they choose to bank."

That, of course, includes the branch and Wells Fargo has come to consider its neighborhood store as its branch of the future in denser markets.

"You want to get as close to customers as you can," Velline says.