Why Banks Are Giving Tellers Raises, Instead of Firing Them All

By
Emma Kinery, Bloomberg
20 August 2018

Bank branches still have greeters, coffee and sometimes fresh-baked cookies. At HSBC, there’s also Pepper, the
finance robot. About 4 feet tall, Pepper is shiny white with a lemon-shaped head, large eyes that light up blue, and
a tablet attached to its chest.

Pepper might seem like HSBC Holdings Plc’s vision for a not-so-distant future
without tellers, but that’s not so, according to Pablo Sanchez, the firm’s head
of U.S. retail banking and wealth management. The robot’s job is to lure
pedestrians into HSBC’s flagship on Manhattan’s Fifth Avenue, then pose for
selfies, field basic questions and direct customers who need real help to the
right human.

Pepper outside an HSBC branch

Source: HSBC
When Goldman Sachs Group Inc. launched its digital consumer bank, it conducted a survey on customer attitudes.
It turns out people want to find answers without assistance -- until they can’t and immediately want help from a
qualified banker. There’s high tolerance for self-service until it fails, and then there’s no tolerance. As banks across
the country reassess branches, those findings keep getting validated.

It’s one reason why many bank tellers are getting raises this year. Conventional wisdom is that the job -- held by
almost a half-million Americans -- is entering a sharp decline. The U.S. Bureau of Labor Statistics projects banks
will eliminate more than 40,000 positions in the decade through 2026. That would likely suppress teller wages,
which hovered around a median $13.50 an hour last year.

Yet, in interviews and anecdotally, a more nuanced picture emerges. After banks received generous tax cuts in
December, several of the nation’s largest -- including Wells Fargo & Co., PNC Financial Services Group Inc.
and Fifth Third Bancorp -- said they’re raising their minimum wage to $15 an hour.

Branches and tellers aren’t going away entirely. Instead, as customers turn to mobile phones for routine financial
services, tellers are being upgraded, taught to pitch loans, guide local entrepreneurs and offer technical support. The
result is that at many lenders, a job widely seen as endangered by automation is starting to pay more.
“Years ago tellers just had to give you an account balance or find out if you wanted fives or tens,” said Christopher
Maher, chief executive officer of Ocean First Financial Corp., New Jersey’s fourth-largest lender. “Now they have
to solve problems like my PayPal doesn’t work, or my Venmo doesn’t work, or why doesn’t Uber accept my card?’’

Ocean First created a nine-week “certified digital banker’’ course, training staff on a variety of banking and payment
platforms. The company said it aims to have 500 graduates by year-end. BBVA Compass Bancshares Inc. is helping
tellers earn certifications and licenses to help customers with more complex financial decisions. The strategy is to
increase the number of universal tellers who can answer all questions. To reflect those skills, Ocean First bumped
its minimum wage to $15.

Remote Tellers
Sometimes there isn’t a need for an in-person teller. When a retirement home asked Ocean First to open a mini-
branch in its complex, the bank couldn’t justify the cost. Competitors were experimenting with video tellers, so it
tried that. Video teller machines look like ATMs -- but with the option of pushing a button and connecting to a
human. One teller can support 10 machines, performing almost any service available at a normal branch. Every
branch OceanFirst has built since then is equipped with the machines, allowing them to stay open longer.
“It’s not simply ‘Oh I have mobile banking, therefore it’ll work,’’’ Maher said. “It’s got to be how you hire people,
how you train people, how you reward people and how you manage

Still, it’s undeniable branches are getting slimmer. Entryways with towering marble columns and private offices
spread over 10,000 square feet are becoming a relic. Most branches built today are a fourth to an eighth that size,
with open floors to look larger.
“You don’t want to have a big mausoleum of a branch that has 12 teller windows and there’s two tellers,’’ said
Sanchez of HSBC.

BBVA is going modular. Walls expand or contract as needed, turning a conference room into a spot for desks. The
bank has found customers like the convenience of banking online, but that they want the security of brick and mortar.
So while every product is available online, each branch has its own “client experience manager’’ -- 650 in all -- to
ensure people are treated well when they arrive in person.

Even if technology is ready to take over banking, not all customers are ready. Some are still uncomfortable using
ATMs to make deposits, or even cash withdrawals, according to Jim Matera, head of consumer business at Apple
Bank for Savings. Rather than shrinking, it’s adding branches.
“We’re trying to continue to update our technology,” Matera said. “But we are not moving to a fully self-service
kind of model. At least not in the near future.’’

Some major banks are studying local communities and opening specialized outlets. In areas with high concentrations
of entrepreneurs, PNC and Santander Bank have been rolling out branches catering to small businesses. PNC has
also taken a similar approach to tailor locations in college towns.

Santander wants small-business branches to feel like community hubs, inviting in local groups and offering financial
education. Maria Veltre, who oversees branch transformation, likened the model to Lululemon’s hosting of yoga
classes.

Couches and Coffee

Branch banking is also getting cozier. PNC hosted focus groups to hone its
atmosphere -- buying rounded furniture for a “shoulder to shoulder’’
experience. Some new Santander branches have couches and “nooks” so
customers feel like they’re in someone’s home. Veltre says mobile banking apps
give people identical experiences, while branches make personal connections.

Santander couches
Source: Santander

Capital One Financial Corp. is taking that a step further with its cafes. It points to a survey showing most people
find banking and money stressful.

Before opening a cafe, the bank sends taste testers to the city to pick local snacks. People are encouraged to wander
in, buy a latte, relax and meet with a complimentary “money coach” to develop a financial plan. They aren’t bankers
and aren’t supposed to push specific products.
“They’re going to welcome you to sit down on the sofa, you’re going to have a cup of coffee,” said Lia Dean, the
bank’s head of marketing and retail. “You can share an iPad together and just have an experience that feels more
comfortable, more modern and takes the stress out.’’