Retail
12/17/2014

Are Your Retail Branches Too Large or Too Outdated? Here are Some Ideas


12-17-14-Emily.pngWhen it comes to branch innovation, the chatter often focuses on two things: Make it smaller, and load it with technology. But many banks are still left with larger legacy locations, and technology alone won’t drive more customers to your bank. The branch is still seen as a powerful branding tool, and some financial institutions have found creative ways to tap into their local communities, with positive results.

The solution for one credit union was to split their 3,200 square foot branch in half with a local tea house. The space was designed so clients of GECU, a $2-billion asset credit union based in El Paso, Texas, could easily walk over and grab a cup at the tea house—and the restaurant’s regular customers would maybe think of GECU for its next loan. “This shared tenancy approach helps lower costs, and if you can find the right alternate tenant, it will drive in more traffic,” says John Smith, chief executive officer of DBSI Inc., the branch design firm that worked with GECU.

However, a tenancy arrangement with a local business isn’t without its risks. According to the Small Business Administration, roughly half of all new businesses survive for at least five years, and one-third survive ten years or more.

Instead of sharing their branch space with a tenant, more banks prefer to make space available to the community. Even with the rise of digital banking, Portland, Oregon-based Umpqua Holdings Corp., with $22 billion in assets, still values the branch as a way to build client relationships, resolve more complex issues for customers and promote the bank’s brand, says Eve Callahan, senior vice president of corporate communications. As a way to draw in the community, each store hosts events, ranging from Nintendo Wii bowling leagues to an Oktoberfest celebration. For Umpqua’s business clients, Umpqua promotes a local business each quarter and even sells that business’s products within its stores. The program has been popular, with a waiting list of up to 18 months, says Callahan. Decisions on which business makes the cut, as well as which events to host, are made locally by the store manager. “They get to know the local businesses around them, the nonprofit organizations [and] the schools, and program events in their store that are going to reflect what’s happening” locally, she says.

C1 Bank, a $1.4-billion asset financial institution based in St. Petersburg, Florida, designed its newest branch in Miami with the local neighborhood—the Wynwood Art District—in mind. C1 converted an old warehouse into a 4,500-square-foot branch designed with a large, open and adaptable space to host local events, such as art openings. The furniture was designed to be removed for these events, and the bank boasts a kitchen for use by caterers. The space is available for use by local businesses and charities, and the bank itself regularly invites local business owners to network with each other and with C1’s bankers. The unique space—artwork is featured in the branch—makes C1 stand out, and leaves the community with a positive impression, says CEO Trevor Burgess.

In Roseville, California, 120-branch Rabobank N.A., a $14-billion asset subsidiary of a Dutch financial company, worked with DBSI to design a branch that plays on the affluent community’s agricultural roots. A vintage farm truck displays goods from the bank’s customers, such as olive oil, and a glass door opens like a garage to bring the outside in. So far, the bank has used the space for local events, and Kimberly Hval, the bank’s executive vice president and director of channel strategy and support, says Rabobank plans to regularly host a farmer’s market in 2015 as a way to promote the bank’s customers.

Location plays a big role, and sharing space with a coffee shop or hosting events won’t attract more customers if the branch isn’t located in a well trafficked area, says Mark Charette, CEO of commercial real estate design firm Solidus. His firm works with institutions to design for efficiency by minimizing the branch area and relocating another line or channel of the institution—a call center, for example—which creates a cost savings by merging that channel’s location into the redesigned branch.

However, with the right location, a strategy to draw the community in can have a positive impact for the bank. Rabobank attracted its largest depositor through one of its events. “Our community can benefit, and obviously being able to drive in more clients through the experience is certainly icing on the cake,” says Hval.

WRITTEN BY

Emily McCormick

Vice President of Editorial & Research

Emily McCormick is Vice President of Editorial & Research for Bank Director. Emily oversees research projects, from in-depth reports to Bank Director’s annual surveys on M&A, risk, compensation, governance and technology. She also manages content for the Bank Services Program. In addition to regularly speaking and moderating discussions at Bank Director’s in-person and virtual events, Emily regularly writes and edits for Bank Director magazine and BankDirector.com. She started her career in the circulation department at the Knoxville News-Sentinel, and graduated summa cum laude from The University of Tennessee with a bachelor’s degree in Spanish and International Business.