It is generally understood that community banks and credit unions are undergoing a transformation towards a more comprehensive yet customized retail experience. Basic transactions are also being automated, while branch employees are assigned roles focused on higher value personal banking services. A new full-service design is emerging; where interior signage and other messaging differentiate internal offices and zones in terms of their product or service focus. Branch exteriors are also changing, with more emphasis being placed on branding, graphic banners, and the outward projection of interior branding elements through windows into the street.
Branches are also becoming more streamlined, designed around distribution channels. Footprints are shrinking, but the trend towards smaller branches is only one part of the story. A new generation of “hub” or flagship branches is also taking shape that incorporates more imaginative and unorthodox ideas. The size of these branches can range from 1,500 sq. ft. to 7,000 sq. ft. in size, and they all qualify as full-service branches that provide a level of assistance beyond that of basic checking and cash transactions.
Some financial institutions are experimenting with sub-letting to third party vendors in their branches, who offer related services such as independent financial advice, sales, and evaluations of rare coins. These branches are evolving independently from the reduced footprint paradigm, but share much of the same technology and principles. One can envisage a kind of “financial mall” emerging within the larger branches, where vendor services are positioned alongside the organization’s own business lines, each in their own office with its own distinctive signage and retail communications.
Some financial institutions are promoting community or learning activities that require a unique space of their own which functions independently of the retail floor. Events could range from financial learning experiences to mortgage seminars to investment workshops, in a classroom setting with seating, projector screens, and audiovisual teaching tools. These learning environments could compose a significant part of future branch designs, as basic transactions are automated and platforms are re-developed for other activities.
The Branch as “Financial Mall”
To remain competitive, bankers are being forced to view their branches differently, and to consider third party service offerings made available to clients through co-tenants or sublets within their branches. Third party vendors can help financial institutions solve problems for small business owners and individuals alike. It is more desirable to open small business accounts at financial institutions where a broader array of business solutions can be found. A partnership with a vendor can offer certain types of small business expertise that the financial institution cannot. They can help with overtime compliance, taxes, workman’s compensation insurance, and more. The bank can promote itself as uniquely catering to small business owners’ needs in ways the competition hasn’t considered. This level of differentiation is a huge advantage for organizations who embrace change earlier than their challengers.
A branch could host a combination of both aligned partners and branch co-tenants. For example, a bank could have a Certified Private Accountant (CPA) as a tenant in a branch with a corner station or office, not functioning as part of the bank, but simply renting space. For the CPA, being in such close proximity to clients who might need this service would constitute great convenience. A bank could also operate a formal referral arrangement with a service such as an independent financial adviser. These businesses would benefit from positioning themselves in a bank branch, because banks are perceived as safe and secure, and promoting this type of location sends a positive message. In some situations, businesses relocate into banks primarily for security reasons or to boost professional credibility, so in the right location there would be no shortage of offers. Some banks have experimented with Starbucks type entities as co-tenants, which is a way to create traffic and expose new people to the brand. Umpqua Bank in the western United States, ING/Tangerine in Toronto, and Capital One 360 in Boston have all introduced high profile versions of the café branch to considerable fanfare and with great success.
This combination of heavily promoted differentiated spaces and offices, and beverage centers or even community rooms, conjures an image of the branches as a kind of public space. These branches will emerge as versatile financial and community resources over the next ten years, provided they’re sited in prime locations and are designed to be easily modified to serve market changes as they occur.
The Post-Transactional Branch Interior
The most basic function of a bank or credit union is to act as a “reservoir” for peoples’ money; cash and checks are deposited, and cash is withdrawn, in an age-old transactional symbiosis that feeds both the institution and its constituents. Traditional profit mechanisms have now been expanded into a much larger array of products and services, and branch staffing practices have been radically revised to accommodate this. Currently, banks and credit unions are adopting two chief models as part of the new approach:
Universal bankers located in “pods” or dialogue towers.
Universal bankers are a new kind of bank employee. Their recruitment and training are unorthodox by usual bank staffing standards. Individuals with a public-facing, sales-oriented personality and training are now desirable over more introverted people, preferably from modern retail backgrounds such as Apple or Verizon. In these hi-tech stores, visitors are greeted at the door by employees carrying tablets. Banks and credit unions need to hire individuals native to these types of scenarios in order to make dialogue banking a success. Among the most sought-after qualities are customer relationship building, service skills and sales closing skills. These talents combined with knowledge of banking services may take several years to develop.
Transactions automated via interactive teller machines (ITMs).
ITMs are like ATMs, but with an audiovisual link to a remote teller, and capable of a much wider variety of different transaction types. Implementing ITMs requires forward planning and good communication between the financial institution and its members/customers. Customers confronted by an ITM (and no tellers) may be resistant to the change, so the organization needs to assure and educate them on the proper use of the technology. There is some overlap with the universal banker model in that branches that are automated via ITMs need public-facing individuals to interact with customers in more meaningful ways that drive profits for the institution itself. ITMs also drive greater efficiency and higher employee productivity because a smaller number of tellers in call centers can help customers in multiple branches and so are always busy.
Retail Communications and Branding
Regardless of which of the two above models are adopted, the post-transactional or automated branch needs to broadcast its purpose to visitors in a refreshing, welcoming and friendly manner. This is achieved by utilizing creative media and compelling signage that highlights the organization’s history, personality, products, and services. Retail communications guide the branch visitor to specific destination points where the visitor can begin to engage with the brand personality in deeper ways. The smaller versions of these branch prototypes make use of every conceivable area in the branch, so there is no “dead space”, or uncertainty around messaging or purpose in the branch interior.
The “Billboard” Branch Exterior
As branch footprints shrink, the need to differentiate and be noticed becomes more important. For this reason, branch exteriors should be designed as marketing billboards for the brand. This can be achieved in a variety of ways.
Branding Facades or Towers
A branch as small as 1,000 sq. ft. or less can be designed and built in a way that will project the branding outwardly. An effective approach is to design a tall façade or tower, with transparency that offers an opportunity for messaging to be displayed through the glass. These branding considerations would be embedded in the architectural guidelines and would be created in response to the context the branch existed in (urban, suburban, etc.).
If this architectural feature was a tower it would be possible to put digital branding inside it, so at night it would become a landmark, a digital beacon. People in neighboring shops and restaurants would notice it, and this would position the branch as being emblematic, or as a destination point.
This would be visible from adjacent roads and highways for several blocks depending on the area. A teller-less automated branch with ITMs and a footprint smaller than 1,000 sq. ft. can make its presence felt and declare its convenience quite effectively in this way.
Banner displays on the exterior are an excellent way to create an engaging, attractive and memorable frontage for a modern branch. Vertical banners (of the type one often sees on the exterior of a museum or theater building) allow for positioning of both horizontal and vertical lettering, including branding, information about services, and special offers.
Displays such as this require visual questions to be answered; how fast are passers-by traveling, etc. They have an iconic look. For New England, they might want to exhibit a certain historic nature, a sense of time. They can orient the building, with the iconic aspect facing the road, taking advantage of the perception of the general shape, form, and size of the building.
Vertical banners articulate any message effectively, especially when set in a rhythm that works with the design and proportions of the building. They can also be emphasized using artificial light at night, which brings a similar kind of attention as with a branding tower.
Branded Pylon Signs
Smaller branches might sometimes be set back from the road behind a parking lot, or otherwise obscured, which means they will need some other means of making their presence known. One visibility device is a branded pylon, with a clock and temperature display. Pylons help to convey the fact that the branch is there to passing motorists and pedestrians.
Convenient, Comprehensive and Visible
Prototype branches that are small, agile, convenient, easy to find, and which offer all the services of larger hubs are now a reality. Some of these branches may be completely automated via ITMs with no tellers in attendance, while others may employ tellers working at dialogue towers. Footprints can vary from ~850 sq. ft. to 1,600 sq. ft. Some configurations may even be as large as 2,150 sq. ft. with additional office modules. Each design has been thoroughly programmed, with all parameters designed to function optimally in its custom space. This type of highly rationalized modular branch will become the norm over the next decade, not unlike the retail franchises whose stores have evolved into custom mix and match outlines. Each of which may be slightly different, but collectively they bear a resemblance to one another. Most companies want to avoid homogeneity from branch to branch, but a brand as global as Starbucks (with 23,000 branches worldwide) has obviously had to develop a highly organized and effective design department to achieve this. Smaller banks and credit unions currently enjoy a huge advantage over other industries in this regard.
Community banks and credit unions are the perfect size and the time is right to fully exploit this type of modular design. Let’s imagine a financial institution with between 10 and 30 branches, and between $500M and $5B in assets, with a history in New England. This organization has been aware for a while that dialogue banking, or automated branches (or a combination of the two), is the model that will dominate future branch design. They’re also aware that retail communications and branding have become an integral part of branch design, for both new builds and renovations. This type of organization is poised to differentiate themselves from the competition and be seen as more relevant for years to come.