BMO Bank of Montreal has been on a seven-year journey to transform its branches for the new era of digital banking. The outcome has been smaller branches that make innovative use of technology, Paul Dilda, head of BMO’s North American branch and ATM channels, tells Robin Arnfield
"Branch transformation has been a journey for BMO, says Paul Dilda, head of BMO’s North American branch and ATM channels.
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"We started to review our branch strategy in 2008-2009, and had two primary objectives: improving the brand-aligned customer experience, which involved looking at our branch format, and increasing staff productivity. Traditionally, we had a cookie-cutter approach to branch format and would go into a new market and build a 5,000-square-foot branch with a big teller line and lots of financial advisers."
However, BMO noticed that European banks were deploying smaller footprints for their branches. "So we started to ask ourselves whether there was a smarter way of doing branch banking," Dilda says. "We carried out a review of everything we did in our branches to see how we could make the branches more productive and save ourselves time, space, and staffing and rent costs."
BMO engaged Toronto-based design consultancy Figure 3 to help it with its branch transformation programme. "We wanted to create a smaller footprint where we used space more efficiently and deployed technology to help staff become optimally efficient," says Dilda.
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By GlobalDataBMO’s branch transformation programme is part of a wider trend which has seen all the major Canadian banks deploying smaller branches and making greater use of technology (see "CIBC elevates its branches into the modern era," RBI 712, April 2015)," says Mark Smith, national industry leader in KPMG Canada’s financial services practice.
"North American banks are moving from having full-service branches everywhere to a variety of different sizes of branches," Smith says. "Branches are becoming a multi-functional space with meeting rooms and with very few, if any, designated offices. Also, the role of the branch workforce has changed and is being augmented with interactive kiosks offering videoconferencing with remote tellers and experts. As you remove simple transactions as much as you can from branches, they become places where staff help customers with more complex transactions and with services."
"Looking forward 10 years, we will still have branches, but, because of the growth of digital banking, we won’t need long teller lines," says Dilda.
Neighbourhood branches
The initial outcome of BMO’s work with Figure 3 was the launch of the bank’s first smaller-footprint neighbourhood branch in Toronto in 2009. As of May 2015, BMO has opened 30 neighbourhood branches in Canada, with several more in the pipeline, plus three neighbourhood branches operated by its US subsidiary, BMO Harris Bank.
Neighbourhood branches are the next size down from BMO’s Metro branches, 4,000-square-foot branches which BMO still builds in markets which are appropriate for this format, says Dilda. The next size up is BMO’s Universal branches, larger, legacy branches which BMO no longer builds.
"We looked at the idea of just cramming all the standard elements of a branch into a smaller location along the lines of ‘honey, I just shrunk the branch,’" says Dilda. "In the end, we decided to redesign the branch format and do things differently. We noticed that the layout of our traditional branches, with staff enclosed behind walls, was a barrier to achieving our service values, which require branch staff to provide a friendly, welcoming environment for customers."
The design of BMO’s neighbourhood branches has an open, transparent layout, where staff are more accessible than in its traditional branches. "Our neighbourhood branches are intended to be intimate and inviting," Dilda says.
"The first neighbourhood branch was 2,200 square feet, but we can go to 2,500 to 3,000 feet, depending on the needs of the local market. Our base format for neighbourhood branches is now 2,500 square feet, but the design is really scalable and we can optimise the size of the neighbourhood branch for individual markets. Using our smaller footprint branch model, we can go into places where we couldn’t have gone with a larger branch."
Customer response to the neighbourhood branch design has been very positive, Dilda says. "Customers using our first neighbourhood branch in Toronto told us that it was set up for delivering service, which was exactly our goal," he says.
"We have developed four core brand-aligned design principles – open, accessible, human and intuitive – that can be scaled to all our branch formats."
Paul Dilda, head of BMO’s North American branch and ATM channels.
First Canadian Place
The open, transparent design of BMO’s neighbourhood branches is at the core of its totally remodelled 21,000-square-foot flagship branch at First Canadian Place, Toronto.
"We apply the look and feel of our neighbourhood branches across all our branch formats," says Dilda. "So we took the neighbourhood branch core design principles – open, accessible, human and intuitive – and scaled them up to apply them to the First Canadian Place branch."
The First Canadian Place branch includes digital signage, tablets for use by customers, meeting pods, and open, accessible workstations for use by staff. "We provide a secure wireless network for the staff at First Canadian Place so that they can move around the branch with laptops to open meeting areas or private meeting rooms," says Dilda. "We also created a dedicated wealth management centre at First Canadian Place with wealth advisors and planners plus private banking staff."
Flexibility
BMO has a flexible approach to its neighbourhood branch design. Initially, BMO had a policy of not providing safety deposit boxes in its neighbourhood branches, in order to save space. "But we found that in markets where there is a demand for safety deposit boxes, for example in ethnic neighbourhoods, we needed to include a safety deposit vault in the neighbourhood branches," Dilda says. "We also use cash-recycler technology for our tellers, so the neighbourhood branches don’t need a cash vault, as cash is stored in a customised safe."
Instead of having financial advisors based permanently in its neighbourhood branches, BMO decided that these staff should visit the branches to meet with customers by appointment. "This meant that we could replace permanently-owned individual offices with client meeting rooms," Dilda says. "Also, our neighbourhood branch bankers work in an open environment, and can hold conversations with customers at a banker’s desk or in a meeting room."
"In some markets, our high-net-worth clients may have a high demand for wealth management services," says Dilda. "So we can add permanent office facilities for investment advisors in neighbourhood branches in these markets instead of using visiting experts."
Videoconferencing
Initially, BMO offered a videoconferencing service in its Canadian urban neighbourhood branches enabling customers to speak to remote financial advisors via desktop videoconferencing units. But after piloting the service, BMO discontinued it.
"What we found was that, in an urban environment, customers really wanted to meet their advisors face to face, not by video link," Dilda says. "It turned out that urban customers were happy to make an appointment to come into a neighbourhood branch and meet their advisor, rather than carry out a videoconference. For relationship-based services like financial planning, we are in favour of face-to-face meetings, at least in the initial stage of the relationship."
However, BMO does provide videoconferencing at 50 of its branches in rural parts of Canada, where financial advisors cover large geographical areas. "Because of the great distances and the harsh winters in these regions, it makes sense for local advisors to use videoconferencing," Dilda says.
Smart branch
BMO Harris Bank opened its first "smart branch" in March 2015 in a Chicago suburb.
"The smart branch leverages the learnings we got from the neighbourhood branch, but, unlike the neighbourhood branch, it doesn’t have a teller line," says Dilda. "Instead, customers use video feeds at NCR Interactive Teller machines to speak to remote tellers. The smart branch is an open space where the staff, whom we describe as ‘universal bankers,’ use tablets and laptops to help customers. Staff are also able to instantly issue debit cards to customers at the smart branch."
In addition to Interactive Teller machines, the smart branch includes advanced ATMs which allow customers to set their transaction preferences, and withdraw cash using smartphones instead of debit cards.
The universal bankers can help customers perform self-service transactions at the ATMs and the NCR Interactive Teller machines. "For example, they can over-ride cash withdrawal limits or print out certified cheques, and they can also provide information on products and services," says Dilda. "The design of the smart branch is intended to facilitate good sales conversations between bankers and customers."
BMO Harris is piloting high-definition videoconferencing with remote product experts such as mortgage advisors at its smart branch in a dedicated videoconferencing room. "We’ve seen tremendous uptake by customers of our video expert service," says Dilda. "Customers don’t need to book an appointment to speak to a remote expert. They can just walk into the smart branch, and, within a few minutes, if the expert is available, hold a videoconference with them."
Currently, BMO has no firm plans to open smart branches in Canada. However, it is revisiting its earlier decision to stop providing video links to remote experts at its urban Canadian branches, and is looking at options to offer this service again, Dilda says. "But, right now, we’re concentrating on scaling up our plans to roll out smart branches in the US," he says.
Branch transactions volumes differ between Canada and the US BMO has found. "There is enough regular transaction and sales volume in our Canadian branches to justify keeping the roles of teller and banker separate," says Dilda. "So we don’t intend to remove traditional tellers from our Canadian branches, or to deploy universal bankers who handle both sales and service in Canada."
Studio branches
In August 2011, BMO opened a scaled-down version of its neighbourhood branch in the Oakridge Center shopping mall in Vancouver. The 1,200-square-foot Oakridge Center branch, which features self-service technologies such as a foreign currency ATM and an online banking kiosk, replaced BMO’s previous branch in a local Safeway supermarket.
"The Oakridge Center branch was a prototype of our smallest branch format, the studio branch, which is designed for locations where people live and work such as real-estate developments, and uses more technology than neighbourhood branches," says Dilda.
BMO opened its first studio branch, an 800-square foot branch located in a condo block, in Montreal in May 2013, with a second studio branch opening in July 2013 in a mall in Port Colborne, Ontario.
"Studio branches don’t represent a large market for us," says Dilda. "We see them as a very specific application and as more of a convenience centre which is more transactional than our other branches. We opened our Montreal studio branch because it represented an opportunity for us to be the first bank to get into a developing area."
The studio branches’ features include:
- Open banker workstations: traditional enclosed office spaces have been replaced with an open layout to allow customers greater visibility and access to branch staff;
- Shared customer meeting spaces which allow for more comfortable, collaborative and private conversations between customers and BMO staff, and
- Customer connectivity: BMO’s Wi-Fi network provides free Internet access for branch customers for their banking and other personal needs.
Although, as a general principle, BMO believes in keeping the roles of its Canadian tellers and bankers separate, its studio branch staff are able to handle both sales and service depending on a customer’s needs.
ATMs
In March 2015, BMO Harris Bank launched Mobile Cash, a QR code-based service enabling customers to withdraw cash from ATMs using smartphones without needing debit cards. As of March 2015, 750 of BMO Harris Bank’s ATMs were enabled for Mobile Cash, with a further 150 ATMs due to offer the service by June 2015.
"In the US, all our ATMs are image-enabled so they can accept envelope-free deposits," says Dilda. "We’re also working on offering mixed-media cash and cheque deposits at our U.S. ATMs, and letting customers withdraw different denominations of notes."
BMO is currently in the process of upgrading its network of 2,200 ATMs in Canada. "Mobile Cash is definitely on the roadmap for our Canadian ATMs," says Dilda. "Right now, we’re focusing on adding envelope-free deposits as well as the ability to deposit cheques and cash simultaneously in Canada."
