Financial industry C-suites are being confronted by a staggering number of new branch models available to their institutions. And each branch model isn’t confined to a single, un-editable template; new branches or renovations can now be designed along modular lines, with a spectrum of variants for every operational element. This heady blend of different banking herbs and spices can be applied not just to a single branch, but to all branches in a network. Each slightly different level of service, or technology, or retail sales capability, can be scaled from the smallest microbranches to the older legacy models that urgently require solutions to the issue of “dead space”.
The technological and commercial improvements that exposed the dead space issue have led directly to the small branch revolution.
“Modular” in this context refers to branch hardware and furniture. Desks, merchandise dispensers, even beverage centers, all can now be fabricated and installed independently of each other while remaining complementary in every way. As branch design responds to customer preferences, industry trends and new technology, the physical environment must be capable of adapting in real-time. Modular branch networks enables this. Modules can be designed not just to be adaptable though; they can also be designed in such an efficient configuration that stellar ROI can be generated from much smaller branch footprints than one would expect. This requires thorough programming by industry design professionals, and input from numerous disciplines. For this reason, an integrated project delivery approach is highly recommended.
This isn’t a fairytale; prefabricated furniture, walls, and entire floor plans can be rearranged and replaced cheaply and quickly. A small, branch of this type, boldly inserted into a prime nook in the right retail environment, is impossible to compete with. It’s the financial industry equivalent of a hippo trying to fight a wolverine; the hippo simply doesn’t have the agility to catch and vanquish the smaller, faster entity (itself no slouch in the fisticuffs department, mind). In the past, large legacy branches succeeded because there was no other option for consumers. Today, there’s not just more advanced technologies that enable customers to bank online, but an entirely different species of animal competing for business right there on Main Street.
If you’re a community bank or credit union CEO, and you know you have problems with wasted space, or competing with what seems like a futuristic alien invader in your territory, the time is right to spring into action. Here are five key reasons why investing in small modular branches will put you ahead of the pack and recoup that ground lost to the legacy albatross.
1. Lower Construction Costs It goes without saying that purchasing costs and rents are lower for smaller parcels of land or retail spaces. New builds are significantly less expensive when the square footage is smaller. The money you save on construction costs can now be contributed to other necessary aspects of the project, such as branding and signage, window treatments, floor coverings, interior design, and determination of the most efficient modular elements. Smaller construction costs can also mean more real estate opportunities, meaning smaller branches can be incorporated in a greater variety of physical environments. It also means, if a financial institution has the budget, they can can build two branches for the price of one older type branch. The huge advantages of this, given the hippo-vs.-wolverine analogy above, are all about ROI, convenience and market positioning.
2. Lower Operating Costs Poor efficiency ratios and process management are costing financial institutions millions of dollars. Today’s community banks and credit unions cannot afford to be satisficing when better-defined operational solutions exist. The approach to constructing, renovating or moving into a new branch should involve consultation with industry professionals prepared to perform an intensive project study prior to construction. There are no shortcuts to branch transformation success; the project study is serious business, and should be treated as such.
All of the project stakeholders should participate in this conceptual phase, so that no planning errors occur and the financial institution is presented with the most accurate ROI analysis before they commit more deeply to the project. When this care is taken, the branch design, aesthetics, profitability and customer journey can be predicted as accurately as possible. This enables the financial institution to implement the most efficient operational strategy. In the case of the smaller branch with modular fixtures and walls, every twist and turn of the customer journey, and every individual piece of equipment, (from the cash recycler, to the heating system, to window dimensions) should be designed for maximum performance. No, we’re not joking. We do it all the time.
3. More convenience for clients Branch location is still important to millennials, in fact more important now than ever, which is why strategic location experts should be consulted prior to any new real estate investments. There’s a ritzy kind of brilliance associated with the smarter branch we’re seeing today, but all the bells, whistles, movable walls and universal bankers in the world won’t be effective if you site it in the wrong place. A branch location specialist will study all your competitors’ deposit data in the area. They can make determinations of the exact composition of the people making those deposits. They can study local large employers. They even work out exactly where on a specific street a branch would best be sited. All of these parameters can be superimposed on a map and analyzed to pinpoint the very best (read: most convenient) location for your nifty little smart branch.
But it doesn’t end there; a proper determination for new small branch location goes way beyond data and geography. The site selection company should have boots on the ground. Only by sending “agents” into the retail environment can you properly gauge intangible qualities and physical drawbacks not apparent on maps or in data. Your strategy for branch location should be at least as serious as your project study for construction: 40% of financial institutions fail to hit target deposit goals in their first year due to poor branch location. These are shocking statistics. Don’t become one of them.
All this heavy-handed diligence might seem like overkill, but branch location, convenience, and future deposit goals are tightly correlated. If you treat these fundamental aspects of branch transformation like a gamble, you stand a good chance of failure.
4. Lower wage costs A crucial money-saving element in any small branch transformation is the installation of a dialogue tower. Dialogue towers are inextricably linked to two other things: The universal banker and cash recycler. These three elements are central cogs in the dialogue banking machine. The recycler frees up the universal banker’s time, allowing for unencumbered interaction with clients, which leads to cross-selling. Note: Universal bankers aren’t made overnight; they must be trained in the art of sales and engagement. They must also be chosen based on their innate skills and love of people pleasing. As a result, you’ll have a high value employee capable of doing the job of three lesser employees. Thus, you’ll save money on employee wages while cultivating an enhanced value proposition with regard to customer service. It’s a win-win, for you, for the employee who now has a higher value skill-set, and most importantly for the customer, who’ll be more closely connected and more loyal to your brand.
5. “Future-proofed” against redundant technologies Being flexible with regard to scalable processes and services, and employing “snap-on” and “snap-off” furniture and equipment, is the new branch environment philosophy. An industry in flux needs fast fixes and adaptable mindsets. Employees using modular equipment are confident their jobs are secure because their institution is ready to take on any unforeseen hurdles that may arise. When your branch interior is designed by experienced industry programmers, every inch counts. An incredible degree of efficiency and usability is designed and built into the working and retail environments. In addition to furniture and functional elements, modular walls are proving invaluable to small or micro branches; many of these smaller branches now use modular or movable walls to partition off the rear consultation space while keeping the fully automated lobby accessible to customers 24/7; ultimately, convenience is King.
The above five points should be uppermost in mind when planning a small branch initiative. There are certainly other factors, but making sure these five are in order will ensure you don’t waste your money. Implementing universal bankers may seem like a daunting prospect, but they’re not going away, so you need to start now. Spring into action, and sucker punch the opposition like a wolverine – with small modular branches that are agile, adaptable and meticulously planned through a branch design and construction expert.