Bank branches are set for a radical makeover to include sofas, coffee shops and cashiers walking around mingling with customers.

Market analyst Datamonitor said the new-look branches could be in operation next year as banks realised the importance of the branch for generating business.

It said the new branches would have self-service stations where customers could process simple transactions themselves as well as facilities for internet and telephone banking.

Financial services technology analyst Christine Skouenborg said: "During the height of the dot.com boom, the expectation was that the advent of the internet and other remote channels would spell the end of bank branch networks.

"Today, the picture that has emerged is decidedly different from what was expected."

The report says the traditional glass divide between customers and cashiers is set to disappear as wireless technology enables staff to walk around the bank to customers, giving the branch a more open-plan feel.

Staff will also be able to serve customers as soon as they walk through the door and help people while they are standing in queues.

Datamonitor said it was also likely non-banking services such as estate agents or travel agents could be present as the concept of the "bank shop" developed.

The group expects almost one in five branches throughout Europe to have been transformed by 2004.

It said the first were likely to be in affluent urban areas such as Brighton and Hove.

Friday April 4 2003