both pedestrians and vehicles may share the same line
Capital One is among the banks trying to keep branches relevant to customers by offering coffee and regular events. RACHEL WISNIEWSKI FOR THE WALL STREET JOURNAL
PHILADELPHIA—It is happy hour at the Capital One near Rittenhouse Square, and drinks are on the house at the Peet’s Coffee on the branch’s second floor. Staff tell customers to make themselves comfortable.
At a PNC Bank a few blocks away, customers approach tellers stationed behind windows. There is a Keurig machine for anyone who wants coffee.
A visit to the two locations on a recent morning illustrates one of the biggest head-scratchers in the banking business: what to do with the insides of their bricks-and-mortar storefronts.
U.S. banks have closed thousands of branches in recent years and poured billions of dollars into the smartphone apps that customers increasingly use for many of their daily banking needs. But customers still want the option of a physical branch, especially when they have problems that are tough to solve over a web chat.
Capital One Financial Corp. has around three dozen cafes and has been opening around 10 annually for the past few years.
PHOTO: RACHEL WISNIEWSKI FOR THE WALL STREET JOURNAL
In 2017, some 52% of people primarily used their bank’s websites or mobile apps to access their accounts, according to a Federal Deposit Insurance Corp. survey, up from about 39% in 2013. But nearly one-quarter of bank customers visited a teller more often than a bank’s website, the survey found.
“Customers want the physical and the digital,” said Tom Brown, founder and chief executive of Second Curve Capital, a hedge fund that focuses on the banking industry. “And you have to deliver both.”
How to best do that remains an open question. Banks are still trying to figure out exactly how to balance spending on branch upgrades and digital offerings to maximize deposit growth.
Banks are approaching this challenge in different ways, Mr. Brown and his employees found on a recent tour of bank branches in downtown Philadelphia. In September, they gathered at the city’s 30th Street train station, where Mr. Brown handed them $100 bills to open bank accounts at a number of branches. Mr. Brown told his team to look out for anything unusual: “Funny is great,” he said.
Among the branches visited was the Capital One Café with its coffee happy hour.
Capital One Financial Corp. has about 480 branches and around three dozen cafes. It has been opening around 10 annually for the past few years, said Lia Dean, the bank’s head of bank retail and marketing. Customers can expect the full suite of banking services at both the company’s cafes and its traditional branches.
Capital One’s cafes are a response to consumers who often find bank branches intimidating and stressful.
PHOTO: RACHEL WISNIEWSKI FOR THE WALL STREET JOURNAL
In modeling the cafes, Capital One responded to what it heard from consumers: Bank branches were intimidating and stressful. At the cafes and branches, the employee dress code is relaxed, and customers can open accounts on iPads. The cafes also host community groups and hold workshops such as “Talking Money With Your Honey,” which focuses on finances in relationships.
Ms. Dean said the customer response to the cafes has been positive, but she declined to provide details about how they are performing compared with the bank’s traditional branches.
Another challenge for banks trying to figure out how to map out their physical spaces: Consumers have grown used to the ease and speed of doing business on their phones.
Second Curve managing director Zach Maxfield opened a TD Bank checking account on his phone in nine minutes while he waited to speak with a teller at one of the bank’s branches on South 11th Street. He spent nearly an hour waiting in line to fund an account he opened online and get a debit card.
“It’s much less painful to open an account online,” said Mr. Maxfield.
“We regret if we didn’t deliver on our goal in this instance, and we’ll continue to work with our store teams to ensure consistently great customer experiences,” a TD spokeswoman said in an email.
In-cafe events are one way in which Capital One keeps its customers engaged.
PHOTO: RACHEL WISNIEWSKI FOR THE WALL STREET JOURNAL
Across town at the PNC on South Broad Street, no one was greeting customers at the door. The teller windows made the location feel unfriendly, Mr. Brown said. He struggled to work a computer encased in glass.
Linda Morris, PNC’s head of retail branch banking, said the bank has plans to upgrade a number of its branches.
PNC has been opening what it calls solution centers around the U.S. with open space and areas to gather, she said. ATMs handle routine banking services; branch bankers work with customers who need more attention. Staffers spend much of their time at community events elsewhere, where they talk about the bank and invite people to visit a PNC branch.
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The early results are promising: The solution centers bring in four to five times more deposits than other new branches, PNC Chief Executive Bill Demchak said at a financial-services conference in September. The bank expects to have 25 of them by the end of next year, he said, more than it originally projected but still a tiny fraction of its 2,400 branches.
“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,” Mr. Demchak said.
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Write to Allison Prang at allison.prang@wsj.com
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