Westpac raises heat on mall landlords

Q: What is the "Bank Now" format and how will it change customer experience?

Bank Now moves tellers into open-plan kiosks with sofas and meeting areas, upgrades ATMs so customers can perform more banking without staff, and prioritises street-front access and advice-based interactions rather than large teller halls.

WESTPAC is increasing pressure on retail landlords to come to the party with rent relief and flexibility for its new-look branches, or risk losing them as tenants.

By InvestSMART · 26 Dec 2012

By InvestSMART ·
26 Dec 2012

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WESTPAC is increasing pressure on retail landlords to come to the party with rent relief and flexibility for its new-look branches, or risk losing them as tenants.

Bank branches are among the many tenants of malls that will be making big changes in layout and shop requirements in the next few years. The changes will be driven by department stores, which plan to reduce floor space, and food outlets, which will expand.

To cater for the changes in demand, landlords are already being flexible with opening hours and shop layouts.

Space is also being allocated for pop-up shops and shorter leases, as well as for different trading times.

A spokesperson for Westfield shopping centres said discussions with tenants and their needs took place daily and, where possible, changes were made.

Westpac plans to invest an initial $240 million to upgrade its network of 680 branches throughout the country.

Each branch will shrink from an average 350 square metres to about 230 sq m. That is a result of the moving of tellers into open-plan "kiosks" containing couches and meeting areas. Automatic teller machines will be upgraded to allow customers to do most of their banking without speaking to a teller. In these instances the bank is looking for street-frontage access.

As an initial step, Westpac is planning to refurbish a third of its branches in the next three years in its "Bank Now" format. The remainder of the network will progressively be upgraded as leases expire.

According to Westpac's property managers, discussions are under way with all landlords, including Westfield, CFS Retail and Stockland.

If no solution can be reached, the bank branches could move from shopping centres to suburban strips when leases expire.

CFS Retail said malls were conscious of the changing needs of tenants and landlords were trying to accommodate them.

Jason Yetton, group executive of Westpac retail and business banking, said the introduction of Bank Now branches was a direct response to the technological changes sweeping the banking industry.

"The advent of mobile banking, first through smartphones and now tablets, has completely altered the way our customers bank with us," Mr Yetton said.

"As a result, they want more advice from our staff about how to get the most out of their finances and how to plan for the future."

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Frequently Asked Questions about this Article…

What is Westpac’s plan for upgrading its branches?

Westpac plans to invest an initial $240 million to upgrade its network of 680 branches into a new "Bank Now" format with smaller, more open-plan layouts, upgraded ATMs and a focus on advisory meeting areas.

How many Westpac branches will change and on what timeline?

Westpac will shrink the average branch footprint from about 350 sq metres to roughly 230 sq metres. As an initial step, the bank will refurbish one-third of its branches in the next three years, with the remainder upgraded progressively as leases expire.

Why is Westpac reducing branch size and changing layouts?

The reduction in size and new open-plan kiosks reflect technological shifts — mobile and tablet banking — that mean customers do more transactions digitally, so branches are being reconfigured to focus on advice, meeting space and streamlined in-person services.

What is the "Bank Now" format and how will it change customer experience?

"Bank Now" moves tellers into open-plan kiosks with sofas and meeting areas, upgrades ATMs so customers can perform more banking without staff, and prioritises street-front access and advice-based interactions rather than large teller halls.

How are shopping-centre landlords being affected and what flexibility is being sought?

Westpac is pressing mall landlords for rent relief and greater flexibility on shop layout, opening hours and lease terms (including space for pop-ups and shorter leases) to accommodate the smaller, street-front-focused branches and new trading needs.

Which mall landlords are in talks with Westpac and how have they responded?

Westpac’s property managers are in discussions with major landlords including Westfield, CFS Retail and Stockland. Westfield said it talks with tenants daily and makes changes where possible, and CFS Retail said malls are conscious of changing tenant needs and are trying to accommodate them.

What could happen if landlords and Westpac can’t reach an agreement?

If no solution is reached when leases expire, Westpac branches could relocate from shopping centres to suburban street-front strips to better suit the smaller, advisory-focused Bank Now format.

How will technology upgrades like improved ATMs affect Westpac’s branch role?

Upgraded ATMs will allow customers to complete most banking transactions without speaking to a teller, which supports smaller branch footprints and shifts branch roles toward providing financial advice and planning help rather than routine transactions.