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Discarded, boarded up and abandoned during the 1990s, bank branches are staging a Lazarus-like comeback, with a new look, new feel and a newly acknowledged role in keeping customers happy.
The days of the bank branch should, on the face of it, be over, shunted into the gutter by advances in phone banking and online services. But that's not what's happening.
Bank executives say the neighbourhood branch, or shop in the mall, is showing itself to be a crucial way of keeping business - and potentially winning over new customers.
A BNZ money machine works just as well as an ANZ or ASB one - so there's no way you can really use it to show superior service or a winning approach.
But the game changes when you head into a branch, where you might be impressed by a friendly face or helped by the knowledgeable staff.
One bank that didn't exist in the 1990s is Kiwibank, established by Government through the PostShop network in 2002. With 600,000 customers and $8 billion in deposits and loans, it's now well-established.
Customer service, says spokesman Bruce Thompson, is what sets it apart.
"Prior to Kiwibank setting up in 2002, there had been a lot of bank branches close across New Zealand," he says.
"At that point we reversed it, and we started to open where the other banks had closed. Essentially we reversed the trend."
Kiwibank's franchise model means it can quickly ramp up the number of branches in its network.
Every PostShop, plus other bookshops, hardware stores and Lotto shops, among others, has become a Kiwibank branch, getting paid a commission on transactions.
Just two years after opening, Kiwibank had 310 stores - by far the largest network of any New Zealand banking operation.
"I am not seeing the other banks opening a whole lot of branches," says Thompson. "It would be fair to suggest that banking activity in New Zealand has significantly changed because of the arrival of Kiwibank. That means the banks have looked at their networks and the impact of closing branches, the impact of not being open to meet customer needs."
Thompson accepts that many people, himself included, don't really use branches at all, preferring to use online or phone banking.
This is not true for everyone though, with many people preferring the personal service, and others who are concerned about or suspicious of using new technology.
"It's hard to forecast precisely how banking behaviour will change, but our retail network is a vital part of Kiwibank's operations and, from our perspective, will be for the foreseeable future," says Thompson. "There will always be people who prefer to deal face to face."
But Kiwibank's franchise and commission model means it may be better placed to cope with any decline in branch activity, since every one of its stores does something other than banking, be it post services, hardware or Lotto sales.
And if new customers keep signing up - Kiwibank says it's getting 2000 new customers a week - then it's not as important if the proportion using a branch is declining.
Managing director of ANZ Retail Banking, Wayne Besant, says that nine new ANZ branches have opened in the past four years, taking its total network to 150, and a new Auckland branch in Mt Eden is opening in the next two weeks.
But why branches? It's all about the things that drive customer satisfaction, says Besant.
"You've got ATMs, online banking, the relevance of branches. The key factor in all of that is that face-to-face interaction with customers still drives the majority of customer satisfaction, for us. The branch network remains crucial to customer satisfaction."
It's one of the ways, he says, that a bank can make itself stand out from the competition.
"Things like internet banking and ATMs are all things that customers expect to be working and working well. Where you exceed customer expectations, and therefore drive greater customer satisfaction, which ultimately drives customer advocacy, is in face-to-face interaction. That's why branches are so important."
A pleasant experience with a bank employee in a branch - no matter how minor - has a much larger impact than an ATM working fine.
"That's the key, that's why the branch network has to be relevant for customers," says Besant.
"They have to be in the right location - seven-day openings, the convenience in malls, those elements all have to come into play."
He admits that the banks have learned from the past.
"I think one of the lessons banks have learned, particularly during the 1990s, is that the branches are really important to customer satisfaction. From my perspective the branch network will continue to be a big driver of customer satisfaction and advocacy."
But that doesn't mean banks can stand still. "The lesson that the industry has learned is to make sure that our branches remain relevant. "
Chris Bayliss, BNZ's general manager of retail banking, is coy about pending changes to its branches.
There are, he says, "some new initiatives rolling out this year."
"While we've seen an increase in online banking, we still have a large customer base who want a face-to-face experience in the form of friendly fast service in convenient locations," says Bayliss. "The branch network will always be a critical part of the business and an important part of meeting customer needs."
Westpac's chief operating officer, consumer banking, Graeme Sayers, says the number of branches in its network has stayed steady in recent years, with a slight rise from 195 in 2005 to 198 now.
There has, however, been a "subtle redistribution" with new branches opening at the big malls, such as Sylvia Park and at Albany in Auckland.
"Bank branch use has shifted, with more smaller transactions being completed via ATM machines and through online banking," says Sayers.
"Online banking use for Westpac is growing at a rate exceeding 20 per cent but we are still finding that branches have a major role to play in people's lives.
"The conversations held at branch level are also very important and valued by customers, and enable the bank to build levels of loyalty."
The branch is also a useful channel for selling other products, such as KiwiSaver accounts.
In overall terms, transactions are reducing slowly, but there is still a steady demand for personal "money in and money out services".
"Although the predictions several years ago were about customers migrating all or most of their banking from the face-to-face channels to the internet, this has not occurred, the internet remains a value-add product and has the potential to be even more functionally rich," says Sayers.
"The strategy at Westpac is to remain with a distributed branch network that can continue to service customers' day-to-day transactions but also focus on the more complex, specialised and personal requirements that all customer segments continue to request."
So once knocked around, consigned to a slow and dreary death, the bank branch is back - with a flash new look and a better appreciation in the boardroom of how a person can do things no ATM ever can.
RISING COST OF ELECTRONIC BANKING
While the use of electronic banking is soaring, the cost of using technology isn't getting any cheaper at the BNZ.
The bank took out advertisements last week saying it is hiking its "ATM recovery fee", which it charges for using non-BNZ ATM machines, from 50 cents to $1.
From April 30, the cost of doing business on another bank's machine, whether it be withdrawing money or getting a balance, will double.
It's also doubling its "cash advance withdrawal fee", which is charged to BNZ credit card users using rival. This will now cost $2 per advance.
Blair Vernon, pictured, general manager of strategy and marketing for the BNZ, says the price change "reflects the commercial costs of providing the service and delivering a world class ATM network, and the recovery cost reflects the costs of providing extended services at other bank ATM networks".
TAKING ENVIRONMENT INTO ACCOUNT
National Bank is building what it says is New Zealand's first "environmentally sustainable retail bank" in Blockhouse Bay, in Auckland's inner west.
Some of its features include a custom-made bike locker for staff bicycles and a solar-heated shower for them to use.
Toilets will be flushed with rainwater collected on site and there'll even be on-site composting for food scraps.
Extra skylights are being installed to reduce the need for artificial lighting, and trees will also be planted alongside the carpark.
The working day will be spent under skylights in a building made of renewable resources, and customers can park in a shaded area with strategically planted trees for improved air quality.
"The building will maximise natural daylight and fresh air to reduce the need for artificial lighting and air conditioning, as well as having rainwater tanks for water conservation, and a rain garden to mitigate the need for stormwater drainage," says Rob Perry, the bank's regional manager.
The new eco branch is due to open in July. It will be followed later this year by a second such branch in Gore. Chris Daniels
