Magazine article American Banker

$200M Savings in the Air Vents? Inside JPMorgan's Branch Retrofit

Magazine article American Banker

$200M Savings in the Air Vents? Inside JPMorgan's Branch Retrofit

Article excerpt

Byline: Kristin Broughton

Consider for a moment that the future of the bank branch may lie in the HVAC system.

As the industry hems and haws over the role of brick-and-mortar offices in the age of mobile banking, JPMorgan Chase -- the nation's largest bank by assets -- is making significant investments to retrofit its branch network.

The company recently announced plans to install high-tech energy sensors across its network, with the goal of slashing energy consumption -- and ultimately saving $200 million in utility costs. Through a partnership with GE, JPMorgan plans to install the sensors in heating, air conditioning and irrigation systems in nearly 85% of its 5,300 branches nationwide.

Think of sensors as a Nest home thermostat on steroids, giving JPMorgan the ability to monitor and control everything from office temperatures to sprinkler systems from its headquarters in New York. The project, more importantly, is a new twist on branch innovation, one that may provide a future blueprint for the industry on how to trim costs -- and reduce emissions -- as storefront locations remain important even to the most high-tech customers.

"There is certainly an economic component, so it makes good sense financially, but also we like the environmental aspect of it," said David Owen, chief administrative officer at JPMorgan. "The way the costs are going to manifest themselves is very directly through reduced utility, reduced energy costs."

Owen declined to provide details about the cost of installation, though he said that the company will realize the $200 million in savings over 10 years.

There are other benefits, as well, including the simple marketing boost that comes from telling customers about going green. Additionally, younger employees, in particular, say they prefer working for companies that are committed to sustainability, according to Owen.

The project is the second phase in a multiyear collaboration with Current, a division of GE that focuses on clean energy technology. JPMorgan last year announced plans to install energy-efficient, LED lightbulbs across most of its branch network.

Together, the two projects are projected to reduce the energy-related consumption at the $2.5 trillion-asset company by 15%, including a 50% reduction in lighting.

"If you take out nine miles of rail cars of coal, that's how much coal consumption we're taking out by using these two programs," Owen said, noting that it's the equivalent of 120,000 tons of coal.

At a time when forecasting the future of the retail branch is a major preoccupation, the retrofitting project shows how JPMorgan is putting its own high-tech stamp on a slow-to-evolve area of the industry.

Other big banks such as Bank of America recently unveiled plans for automated branches, equipped with ATMs and video-conference rooms, where customers can have Skype-style meetings with loan officers and other specialists. …

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