Many community banks and credit unions are sited in buildings that, though once appropriate for their needs, are now regarded as cavernous chambers from a bygone era. These legacy branches are growing more conspicuous as financial institutions turn to newer streamlined designs for greater efficiency and higher per-square-foot value. Today’s mini- and micro-branches are more cost-effective, agile, and designed around their strengths based on transaction data and location. Legacy branches, by comparison, are not built for on-the-fly adaptations to the rapidly evolving retail landscape. Their seeming immovable appearance masks a sluggish and vulnerable reality. But it’s not too late to save the day. Financial institutions can lower expenses and boost profits by consulting with industry experts who can deliver a custom solution for branches that are costing organizations too much money. The legacy branch issue is in many ways the “elephant in the room” for many banks and credit unions, and there’s a working fix for every branch, regardless of shape or size. But be warned: While smarter space can remedy the legacy branch problem in terms of its functionality, branches sited in poor locations should be closed and consolidated rather than renovated in their current environment.
Here’s a list of the surest signs of legacy branch problems in your network. Check to see if you qualify for a consultation session with an industry professional.
1. A Multi-Station Teller Line with Staff Unoccupied Most or All of the Time. This is a classic sign of a legacy branch. Long teller lines that more resemble barricades than welcoming financial resources for customers were the norm for many years, and some financial institutions remain saddled with these types of fortifications. In addition, they are rarely, if ever, fully staffed due to declining branch traffic, and those tellers who are present throughout the day are often unoccupied for long periods. This is clearly an inefficient set-up, and a dramatic re-design of the teller environment is required.
One of the single most effective elements in a legacy branch transformation is the transition to dialogue towers (or teller pods, as they’re also known). Pods are the game changer. They are the key to opening up the teller line area and creating a very different experience for the customer. Transactions themselves are now automated via cash recyclers. These machines do all the work, enabling the staff to engage more deeply with customers. Gone is the “head down, counting money” image of the bank teller, replaced by a more welcoming interaction by universal agents trained in customer relations and service-oriented skills, in particularly sales closing skills with a view to expanding the financial institution’s relationship with each customer. Universal bankers aren’t made overnight; they must be hired according to a new set of criteria, and trained over the course of several years to attain the highest levels of customer service.
The universal agent staffing model involves a notable “roaming” aspect where the agent moves from behind the tower to greet people as they enter the branch. They may also carry a tablet with which to help customers navigate the online platform, to make appointments for consultations, or to educate them on the use of new banking technology in the branch. This approach is similar to that used in Verizon or Apple stores with an emphasis on customer service and communication. It’s a far cry from the glass or wire partitions of the traditional teller line and customers and members love it.
2. Large Areas of “Dead Space”. Dead space in a branch is the equivalent of dead air on the radio; something that shouldn’t happen under any circumstances. When large areas aren’t utilized in some way, it gives an impression of abandonment and inconsistency. Customers will view your brand’s value proposition as incomplete and even shabby, especially if the decor hasn’t been updated in a while. This type of appearance can spell doom for a financial institution, especially with today’s new retail paradigm, where electronic and graphic messaging is being used to great effect, and every square foot of the branch has some function or relevancy.
Large old spaces cost a lot to maintain and repair, so a popular solution to the dead space issue is to rationalize the space by subleasing it or creating “other use” environments within the branch. Small business advisories, certified public accountants, and insurance companies are all relevant business types to consider as extended service offerings. “Other use” space can include a much broader range of possibilities. A mixed-use community space inside a branch is also a great solution to the legacy space issue, where people can take health management seminars, receive real estate advice, attend vendor speaking engagements (travel agents, retirement/investment), or fun activities such as a coffee-shop, yoga classes, and more. In fact, almost any investment that seeks to fill dead space with some form of activity is a huge step in the right direction for legacy branches.
3. A Platform Whose Focus is Outdated. Legacy branches can be identified as much by their chief activities as by their size. If your branch is obviously designed for cash transactions with little to no accommodation for other financial products and services, then it may be time for an upgrade. If your branches are split between a teller line and forbidding-looking back offices (accessed by securely locked doors and fronted by impenetrable frosted glass or thick paneling), your customers may be crying out for transparency and openness. Older branches tended to be designed primarily with the branch staff in mind and creature comforts for customers a distant afterthought. There may be a private office where loans can be discussed with the manager behind closed doors, but these are usually conducted on a by-appointment basis (far from the current state-of-the-art where branches constitute a financial solutions center for customers, offering an array of financial services sometimes with third party vendor-tenants operating in part of the retail space). There are definitely some contexts in which it’s appropriate for cash transactions and other more basic interactions to compose the only activities, but in today’s banking world those locations can be efficiently serviced by a single advanced terminal such as an ITM.
4. Poor Environmental Experience. This includes architecture that is no longer meaningful, or provides a client with a negative rather than a positive experience. When visitors to the branch encounter these moribund architectural and design features, it is like being subjected to black & white TV when one expects HD color. Banks and credit unions today are designed to maximize natural light and build a customer journey through the branch layout that is logical and more efficient. Every square foot is rigorously programmed to guarantee a memorable customer/member experience. The physical branch environment has been re-designed from the bottom up, with traditional configurations replaced by more contemporary solutions. For instance, banks and credit unions are seeing the positive results of using curves rather than orthogonal edges and corners. Curvature can save space and direct customers more gently, plus it makes the branch appear modern and sleek. Another improvement is the use of transparent (or branded) glass walls that foster the sense of transparency so lacking in the “closed doors” type branches discussed above. Glass walls are soundproof and offer as much privacy as any other type of wall, and they can be made to look either traditional or somewhat futuristic. Other devices for transforming the appearance of older branches include: Opening up ceilings with circular “clouds”, soffits and skylights, and installing larger exterior windows that reach from floor to ceiling.
Color theory and brand application have been discussed for decades now in other industries but we are seeing the financial industry starting to employ the same techniques and achieving a positive effect. Banks and credit unions are developing comprehensive branding themes, including a color palette applied to the entire branch that delivers a powerful message to customers/members. When the design and color palette are consistent across all delivery channels (branch, website, mobile applications, standalone ATMs, etc.) it reinforces the brand experience. When the carpets, furniture, walls and other interior design elements bear the same distinctive features as the website and mobile apps, it supports efforts to create an omnichannel experience and attracts both new clients and staff. Implementing the universal banker model discussed in Point 1, above, entails bringing in higher value employees who will approach their position with a more critical eye, and is more challenging than the hiring process for a traditional teller. Banks and credit unions must be current and “all in” when it comes to the dialogue banking experience in order to secure the best staff and inspire a high sales closing performance in them.
5. The Space May Not Promote Business Lines of Service. Typically, legacy branch designs didn’t include brand merchandising or retail communications elements, and this is still in evidence in some legacy branches. Retail communications includes all types of digital and printed merchandising and branding, such as multimedia displays, elements with touch-screen functionality, leaflet dispensers and kiosks. Flat screen TVs and other electronic displays that promote products and services are now de rigueur in new branches across New England. Retail communications uses language and imagery to increase clients’ awareness of an organization’s range of services. When applied in conjunction with sales-oriented universal bankers who are skilled in cross-selling and closing, it can increase loyalty and profits. Legacy branches were generally not designed with these features incorporated into them, but back then retail banking was a much simpler business.
Those of us who are old enough will recall the plain walls and relative lack of compelling service information in the branches of the past. This outdated mode of relating to customers is still evident in some legacy branches. Today’s consumer is different; they demand a level of communication and convenience that our grandparents couldn’t dream of. Banks and credit unions that aren’t utilizing multimedia advertising of their business lines of service run the risk of losing wallet share and loyalty to competitors. For this reason, the retail communications piece of a branch transformation is more than interior design; it can create a living personality for a financial institution that attracts new customers, garners greater loyalty from existing ones, and results in the opening of secondary accounts and more.
Community banks and credit unions are being confronted by a need for change in the way they do business. This is based on the necessity to lower costs, shifting retail paradigms, and technology. They now have to provide competitive digital delivery online and craft a new kind of welcoming atmosphere in their branches. The universal agent staffing model and modern banking technologies are an important piece in the transition puzzle, but legacy branches are the most disadvantaged. These branches are oversized. They were designed and built with a very different purpose in mind to today’s agile micro-branches that can be sited inside retail stores, shopping malls, airports and hotels. So-called “branch in a box” advanced terminals now exist as stand-alone drive-up islands with an audio-visual connection to staff in a call center that can perform dozens of banking tasks. Simply put, unless legacy branches are ideally located to be flagship banking hubs, they cannot compete with the new type of bank branch.
Do your branches have one or more of the above symptoms? If so, it is time to consider a consultation with an industry professional to identify where the problems are. Then together you can design an effective custom solution for your branches.