Why your bank branch is looking more like a café

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When you go to your bank in 2025, it’s going to look different than the branch you visit today.

Changes to physical branches are happening relentlessly and, it seems, banks are rethinking and renovating themselves faster than ever in cities, in the countryside, on streets and in malls. The new bank branch is looking less like an intimidating, echo-laden cathedral of cash and more like your favourite coffee lounge.

Indeed, at least one Canadian bank, the online-oriented Tangerine (owned by Bank of Nova Scotia), operates outlets it calls “cafés” where you can do your banking with the help of a “café associate.”

“It’s something that I think banks are struggling with, and they’re trying different approaches,” says Roy Kao, senior advisor on finance and commerce at the MaRS Discovery District in Toronto.

Bank branches are evolving into different places than they used to be partly because so much of day-to-day banking has moved online and to mobile devices, says Jennifer Reynolds, president and chief executive officer of Toronto Finance International, a public-private partnership between the financial sector, government and academia.

“Even now, fewer and fewer people are going to branches for those easy transactions. They’re going to go even less,” she says.

There are also fewer branches than there used to be, giving financial services a smaller footprint in commercial real estate but still a need for space in locations convenient to customers. One big bank alone, Royal Bank of Canada, has closed at least 40 branches since 2015, and said last year that it will shrink the square footage of its branch network by at least 20 per cent by 2023, as clients move their banking chores to apps, screens and keyboards.

A survey last year by U.S. website Bank Innovation found that 41 per cent of the site’s readers, mostly financial services executives, believe that branches will cease to exist altogether.

Another 31 per cent said the future branch will look more like a glorified ATM, and about 15 per cent said the future branch will be staffed by robots.

That’s not exactly the way Ms. Reynolds sees bank branches evolving in Canada, though. Branches will become more people friendly, to take care of customers with needs that can’t necessarily be solved online or on a 1-800 call.

“There are always going to be some things in banking where you want or need to talk to a person. That’s why I don’t think branches will ever totally disappear,” Ms. Reynolds says.

“I suppose you could do some of these things on the phone, but sometimes there’s no substitute for looking someone in the eye.”

Unlike the consolidation and closing of branches that took place in previous decades, the coming changes are driven more by what customers want. A survey done for another financial industry website, The Financial Brand, found that in the United States, 88 per cent of adults said they feel they still need a physical branch to visit.

“When asked the importance of a physical bank five years from now, the sentiment remains consistent – with 84 per cent saying a physical branch will still be important,” says the research. This comes even though 86 per cent of those surveyed pay their bills and transfer funds online.

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“If you’re thinking about the branch of the future, you’ll want to know what the customer of the future looks like, too,” says Wade Stayzer, senior vice-president and chief member experience officer for Meridian Credit Union in Ontario.

“We won’t be building big branches with big vaults anymore,” he says. “It comes down to what services are value-added for people and which ones are not.”

As in other aspects of the business world, customers are more informal than in the past, in everything from the clothes they wear to the appointment times they book, and branches are already starting to reflect this, Mr. Stayzer says.

“Branches of the future will have smaller footprints. They will become more modular, with spaces that can be reconfigured easily for different meetings and services,” he says.

You’ll see less cash, too, and when cash transactions are involved, they’ll either be self-serve through an ATM or video transactions, with the customer talking to someone on a screen.

People will come into branches to see actual people for services such as mortgage applications and renewals and financial advice, Ms. Reynolds says. The banks are all trying to make their spaces friendlier as well – calling a branch a café is not just metaphorical, it’s also accurate, because many branches already invite customers to help themselves to free coffee.

“Maybe you won’t even meet across a desk. You might be sitting on a couch,” Ms. Reynolds says.

The location of branches is changing, too. This is partly a reflection of urban planning trends, with millennials and Generation Z people living in downtown areas.

Indeed, in late January, Meridian entered a $30-million sponsorship deal with Civic Theatres Toronto (a collection of city-owned live theatre spaces). The 15-year deal, to take effect in September, includes renaming the city-owned Sony Centre for the Performing Arts in downtown Toronto as Meridian Hall, and locating a branch within.

“We’re putting a branch in a theatre building, because that’s where people go,” says Mr. Steyzer.

Mr. Kao at MaRS sees branches popping up in smaller locations. “We could even see truly mobile branches, where the bankers come to you at work or at home,” he says.

Ms. Reynolds at Toronto Finance International says the past trend toward branch closures will likely ease, as many of the underused sites have already closed and it’s easier to maintain smaller branches that cater to only a few types of financial needs.

As we move toward 2025, Ms. Reynolds says to watch also for a difference in the design of urban branches and rural ones. Farmers and merchants in smaller centres sometimes need to do face-to-face transactions that are different from city dwellers.

It’s hard to predict exactly what the in-person needs of the customer of 2025 will be, Ms. Reynolds adds. Younger customers already don’t even know a world when you had to go to a wicket and ask a teller to withdraw cash or deposit a cheque.

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