Self-driving cars. Self-checkout at supermarkets. And now you can add self-service banking to the list.
Bank of America is experimenting with completely automated branches that have radically smaller footprints and no on-site employees. The bank has already opened one of these so-called “robo branches” in Minneapolis, and two in Denver.
Bank of America’s traditional branches run about 5,000 square feet. The new robo branch models are about a quarter of that size.
The automated branches feature nothing more than an ATM and a meeting room for video conferences. Similar to an Apple Genius Bar, customers make an appointment through the bank’s mobile app.
Once you’ve pre-scheduled your meeting, you show up at the robo branch and have a one-on-one video conversation with a bank employee who works in remote location. As a security measure, the video conferencing rooms can only be accessed with a Bank of America ATM or debit card.
BofA hopes these discussions focus on life’s more complicated money matters, like getting a mortgage, planning for retirement, opening a small business or applying for a car loan, but there will probably be plenty of folks who simply want to pop in and rag on employees over various service issues.
The branches will temporarily have on-site “digital ambassadors” to answer questions and ease customers into the concept as the bank irons out any kinks, but they ultimately intend to eliminate any human presence altogether.
Bank of America already has some 3,500 digital ambassadors — a role that’s been around for about a year now — deployed throughout its branch network, so the role isn’t unusual or unique to the robo branch prototype.
You could argue that branch-based video conferencing is an awkward concept, and that’s probably a fair assertion. In the Digital Age when people can Facetime and Skype each other from the comfort of their own homes, it doesn’t seem to make much sense why someone should have to get in a car and drive to a quasi-branch simply to have a two-way video conference. Yes, there are definitely security and privacy concerns involved with internet-based dialogue about financial issues, but that’s a problem that financial institutions will have to resolve. (It is The Financial Brand’s position that branch-based video conferencing is only a temporary solution with few applications and a limited shelf-life. Ultimately financial institutions will offer — because consumers will demand — secure video conversations with bankers using their own digital devices.)
“I don’t believe analysts who say the branch is dead. That’s just lame.”
— Charles Liu, Head of Branch Transformation at BofA
Writing about Bank of America’s new robo branch concept, The Washington Post ominously speculated that “bank tellers are the next blacksmiths,” but BofA spokeswoman Anne Pace was keen to point out that live banking isn’t disappearing at America’s second-largest retail bank. About one million people a day still walk into one of BofA’s 4,597 locations and interact with bank employees.
“These virtual centers are additive to our traditional centers and complement them with digital capabilities,” Pace says.
According to the bank, the automated mini-branch pilot program is simply intended to test customer response to alternate delivery methods in the brick-and-mortar channel.
“This is just a test. They are in the very, very early stages. We haven’t rolled these out extensively,” Pace explains. “We are going to see how these go, see what we learn and make a decision from there.”
Many in the financial industry like to speculate about what “the branch of the future” will look like, but when you’re the size BofA, you will undoubtedly be operating multiple models scaled to varying footprints.
“There is no one-size-bank-fits-all anymore,” Pace adds. “We have different centers based on different communities. We are taking some of that savings from mobile banking and reinvesting it into new centers, renovating others and hiring more specialists to provide advice and guidance.”
BofA says it is also testing new branch formats in San Francisco, Boston and New York that feature gobs of tech and real, live human beings.
It’s clear though that the bank has its eye on more efficient, more profitable delivery models, fueled in large part by the shift to digital channels.
“We are simply following our clients,” Pace said. “Mobile banking users increased to 21.6 million, and 19% of deposit transactions are done through mobile. That’s equivalent to 880 financial centers.”
The new robo branches were first mentioned during a Q&A session at an investor conference, where BofA also announced it will be opening 50 to 60 new branches over the next 12 months. However, the bank will also be closing branches in certain markets, so the 50 to 60 branches do not represent a net increase. Bank of America opened 31 new branches in 2016.
Bank of America had 4,579 financial centers at the end of the fourth quarter of 2016, compared to 4,726 in the fourth quarter of 2015 and 5,900 at the end of 2010. They also operate 16,000 ATMs.