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 via sensors and automation.

A GE employee looks over plans for JPMorgan Chase’s high-tech energy management system inside the utility room at a branch in Larchmont, N.Y
Back, back office
A GE employee looks over plans for JPMorgan Chase’s high-tech energy management system inside the utility room at a branch in Larchmont, N.Y

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 percent 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 use data 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.

But in installing new technology in the heating ducts and lawn sprinklers, JPMorgan in some ways is taking a less flashy approach to branch innovation, focusing on HVAC, lighting and other less-than-sexy aspects of the business. The energy sensors will be invisible to the average customer, according to Owen.

The company is also piloting the use of solar panels in a handful of office locations in California, Texas and Phoenix, both on rooftops and on parking lot covers. It is also looking at upgrading the insulation it uses in office locations.

“We’re constantly thinking about the branch, and evolving the branch, to make sure it suits our customers’ needs,” Owen said. “As new technology innovations become available, and they are relevant for our branch network, we’re going to apply them.”

In 2016, JPMorgan Chase’s branch count declined 3% from a year earlier, to 5,238, the company said at its annual investor day in February.

JPMorgan will pilot its latest program at 10 branches in New York and New Jersey, with the goal of expanding to 4,500 branches by the end of 2018. The number includes owned branches as well as leased branches where it has control over the utilities.

Once the energy sensors are installed, JPMorgan will be able to control various energy functions, such as the thermostat and lawn sprinklers, from its network operations center in New York. The technology is designed to be responsive to predetermined thresholds.

“It really is as much of a big data story as it is an energy consumption story,” JPMorgan's David Owen says.“You can say, when it’s light outside, don’t turn the lights on. When the room is unoccupied, don’t turn the lights on. If you hit a certain time window and there’s no motion, turn the lights off. If it’s wet outside, don’t water. If it’s dry outside, water, and water until it’s wet enough,” Owen said.

Local branch managers will be able to make adjustments to the temperature and other functions within a certain range, but the idea is to centralize control in New York — and reduce the number of instances where, for example, branch managers inadvertently left lights on overnight.

Data received from the local branches will be stored in the cloud. In the coming months, JPMorgan will test how best to utilize, and respond to, the information it receives.

Owen expects the system may even make JPMorgan more efficient in spotting and responding to maintenance issues in branches across country.

“We’re getting all of this data as a result of deploying these sensors and these systems, so I think we’re just scratching the surface, in terms of where we can go next with technology,” Owen said. “It really is as much of a big data story as it is an energy consumption story.”

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Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.