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Banks Don't Know How To Keep Their Retail Branches Relevant

Capital One Café

Consumer banks are still adjusting to suit their physical footprint to a world driven by mobile banking.

Capital One has been at the forefront of revamping its retail branches with its Capital One Café concept, with casually dressed employees, services run through iPads and coffee service. Other banks are beginning to follow suit with their own ideas, The Wall Street Journal reports.

Out of 480 Capital Oné retail branches nationwide, about 36 are in the Capital One Cafe format. PNC Bank has begun to open "solution centers" where the basic elements of banking are handled by ATMs and staffers serve as support for more complex issues, the WSJ reports.

Only a handful of PNC solution centers have opened so far — the company expects to launch 25 by the end of 2020, the WSJ reports. PNC CEO Bill Demchak said at a conference in September that the early outposts already bring in four to five times more customers than a traditional branch.

In some ways, the tension between mobile and in-person banking resembles the online shopping-fueled transformation of retail in general. As of 2017, about 52% of consumers primarily accessed their bank accounts through a mobile app or website, according to a Federal Deposit Insurance Corp. survey, but nearly 25% still used retail branches more than websites.

Though brick-and-mortar locations are still agreed upon as necessary, the obsolescence of traditionally formatted banks is more apparent than ever. A managing director for a banking-focused hedge fund was able to open a TD Bank account in nine minutes online while waiting for an hour to be served at a Philadelphia branch, the WSJ reports.

Even with the early positive indicators, Demchak is not convinced that this new wave of retail branches will ultimately be the way to move retail banks to appealing to customers rather than simply necessary.

“It’s a long-term exercise to figure out how to grow our brand with retail consumers across everything we do, and nobody has been successful with that,” Demchak said at the conference, according to the WSJ.