Free Rise

When I first went to work for Wells Fargo, one of the things that was hard to get used to was what they called their branches: “stores.” In hindsight, it made a lot of sense. Retail banks are called as such for a reason, after all. Most people think of branches as places to transact, but they’re very much retail environments, where brands are established (and refreshed), customers are profiled, and products are sold.

Around the turn of the millennium, the branch looked doom. Online banks with no physical locations were growing fast, and the traditional banks were building out their online capabilities.

Then traditional banks changed tack and doubled-down on meatspace. Major players built thousands of new branches to attract deposits, and some even radically redefined branches entirely. Umpqua’s wi-fi lounges (pictured above) and WaMu’s Occasio were particularly innovative. (Sadly, WaMu’s new Chase overlords are doing away with Occasio.) Commerce Bank grew super-fast with the simple innovation of extending their hours to times that were more convenient for working people.

But now Bank of America is retrenching, shuttering 10% of its branches. Does this mean the end of the store strategy?

Yes and no.

Yes: Retail (consumer and small business) customers are becoming ever more comfortable with online services. As they spend more time interacting with banks online, banks are finding more ways to market and sell through online channels.

No: America is over-retailed in general, and banks are no exception. BofA probably had too many branches to begin with. Other big banks that built out (or acquired) branch networks during the housing boom are probably now looking at their cost structure and finding many unprofitable locations. Shuttering may occur, but people will still want a physical location to transact checks, cash, and the other tangible forms of money that still power our everyday economy.

We can only hope that more of these banks will follow the Umpqua and Commerce models and create a branch experience that its customers don’t hate. Whoever does that will win deposits, and today, that matters more than anything.

NY Times: $200 laptops break a business model. The headline only tells half the story.

A long time ago, Scott McNealy of Sun liked to insist that “the network is the computer,” which was a powerful counterpoint to Microsoft’s (and, insignificantly at that point in history, Apple’s) insistence that “the computer is the computer.”

The Sun vision has become ever more true as the network, especially its capacity and flexibility, has expanded. If all your applications are data are on the network, what do you really need at your fingertips? In most cases, just a great browser, adequate RAM, and hardware that minimizes energy consumption. The operating system, the processing power, and data storage become extraneous for most purposes. The $2,000 PC market will thus become the niche market, and the $200 netbook/smartphone market will become universal like televisions or cellphones.

The article (if not the headline) also covers the network side of the never-ending digital revolution, too. The ascendance of cloud computing is rendering IT investment a ever diminishing factor for web companies. So a thousand flowers may bloom with the encumbrance of owning a lot of equipment and hiring a team to maintain it.

All up, this means that soon almost everyone will be able to afford to use a portable computer and to start a web company (if they so desire). None of this is groundbreaking news, but it’s still a marvel to see it happen.