Bank of America Corp. will close some retail branches and replace them with investment advice by video-conference.  Can you spell "compliance nightmare?"  Trial conferencing begins this month, with Merrill Lynch associates dispense advice to customers from afar.  By 2012, the bank might even consider using virtual people for dispensing investment advice - for an intro on creating a virtual person, go to 'toolsinternet' or 'ehow'. 

    The New Reality.   U.S. banks may close as many as 5,000 branches through 2012, Meredith Whitney said in an 11/18 report.  Bank of America, which peaked at 6,149 branches in 2007, is behind only SF-based Wells Fargo in terms of U.S. banking centers:  Wells has 6,335 locations; JPMorgan has 5,268;  Citi 1,001.

As many as 10% of Bank of America branches eventually may become "specialty stores," with a Merrill associate, a small-business adviser or mortgage expert, or video links to those representatives, says BofA executive Walter Elcock.  CEO Brian Moynihan emphasized marketing products to customers across deposit, small business and wealth management divisions in a November meeting for the bank’s top 200 executives.

Branches in Los Angeles and the Washington, D.C., area will begin trials of the video conferencing rooms this month.  Clients will speak with Merrill associates in Hopewell, NJ, Jacksonville, FL, or Chandler, AZ.  Of course, the associates are trained to give investment advice, but don’t have set relationships with clients, as financial advisers do. 

"The physical channel is going to be an anchor for a long time to come.  Does it have to be more efficient? Yes. Is it more challenging right now with the way the economics have changed in the business?  Yes.  But what is surprising is how many people want it there."  -- Walter Elcock.

    Compliance Concerns.   One would presume that Bank of America and other financial institutions will look long and hard at compliance issues - like who can view the video conference, live or on tape?  Scripts will need to be vetted.  Disclaimers may need to displayed early and often. 

Compliance Insights hasn't thought out all the compliance and legal implications - but we're sure there are many.  No doubt Bank of America and other financial institutions are devoting serious due diligence to the concept of video conferencing, and other uses of technology. 

Here's a thought:  "virtual compliance officers."    [Bloomberg, 2/10]