Wells Fargo: America's 'Boring Bank' Gets Makeover

Adam Jeffery | CNBC

On an ordinary corner in downtown Manhattan stands an ordinary bank branch. Formerly a United Colors of Benetton store, Wells Fargo predecessor Wachovia fashioned it into a retail bank, filling some 4,500 square feet upstairs with tellers, financial advisors, couches and desks.

The downstairs couldn't be more different. With the aura of an unfinished basement, Wells Fargo executives have used the space as a laboratory to conceive a new vision for the branch—smaller to scale, but still full-service.

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Jonathan Velline, who heads Wells Fargo's branch strategy, went to the drawing board last year with a dilemma: Eighty percent of customer transactions didn't need assistance, but 70 percent of customers still visited a branch every six months.

In other words, the bank couldn't ditch the branch altogether—after all, at 6,000, Wells operates the most branches of any bank in the United States.

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Velline just needed to make it cheaper, and more convenient to the customers who needed it. "We storyboarded it out, but there¹s only so much you can tell looking at 2-D paper," he explained in an interview with CNBC.

That idea went from paper to a prototype in the Chelsea basement but has come to life in the trendy "NoMa" neighborhood of Washington.

Next week, a Wells Fargo outpost, no bigger than a studio apartment, will open its doors to the public. The entire store is built around a central corridor of ATMs, which remain open at all hours. During a typical day, the walls behind those units slide open, revealing hidden meeting rooms where customers can talk privately with advisors.

Because it's smaller, it's significantly cheaper to run.

"The operating expenses are going to be somewhere around 50 to 60 percent of a traditional store," said Velline. "And that means as I'm considering opening up new stores, I can effectively have two of our neighborhood banks for the price of a traditional store."

Cost and location, in the new strategy, must go hand in hand. A recent Sanford Bernstein report ranked the top branch operators in each of five dense banking centers—Ohio, New York, Chicago, Dallas, and Atlanta—with Wells Fargo¹s competitors outranking it in everyone.

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Growing a branch footprint in high-traffic cities requires expensive real estate—and less of it, if you¹re still looking to grow.

"We just couldn't fit it into these more urban, higher rent, smaller footprint areas," Velline said.

It's a popular mindset that JPMorgan Chase, operating the second-largest branch network, and Citigroup have also adapted in the last year.

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For Wells, it¹s not just the space that makes it small, but the strategy. Not only do the ATMs and advisors share space; the aim of the new "mini-branch" is completely paperless. No need for hefty copiers, faxes or file cabinets, and all the money is stored in the ATMs instead of a vault.

The paperless minibranch is how Wells Fargo—whose executives proudly call it a "boring" bank—plans to propel itself in the 21st century, where consumers are shifting at double-digit rates to mobile banking. And it still plans to grow, for the majority of customers who still show up."

We¹re not closing stores. We¹re opening stores," Velline said. "We're trying to make ourselves more convenient for our customers."

—By CNBC's Kayla Tausche; Follow her on Twitter: @KaylaTausche
—By CNBC's Jesse Bergman; Follow him on Twitter: @JBergmanCNBC