Branching Trends, Best Practices and
How to Differentiate your Financial Institution

By Mark Brandt and Joseph Sullivan

As the banking world becomes more and more saturated with competitors and branches, it helps to remember that essentially every bank and credit union offers the same products and services. It is the manner in which you differentiate yourself from those competitors, by making your customers and members feel valued and satisfied that leaves a lasting impression.

Based on our experience through hundreds of market assessment studies across the nation, we have seen that the best way for community banks and credit unions to differentiate themselves from their competitors is to create a memorable experience for the customer that will make them want to return to your branch to do their banking. In this article, we will examine some of the current branching trends and best practices in the financial services industry that will allow you to develop a branch that can create this memorable customer experience.

Before delving directly into the design, look and feel of the facility, we must understand a little about the customer who is going to use this facility, and what they want. We at Market Insights, Inc have seen from our extensive experience, that as smaller banks and credit unions begin to pursue younger customers, shifts in thinking, marketing and facilities have to be made in order to attract this younger segment. The reason for this shift is because of the different expectations of younger clientele. Generation X and Y customers come into bank branches for very different reasons than their older counterparts in the Boomer Generation. Younger clients these days are coming to bank branches for things such as investment advice, financial planning, and retirement planning. They want to feel as though they are welcomed, they are being listened to, and that they have a connection or relationship with their banker. In essence, it is about the "experience."

Likewise, older customers want to feel a connection with their bankers. They want to feel comfortable in the branch, and want to be recognized and feel valued. This feeling remains constant even though older customers tend to come to branches for different reasons than the younger customers. This older clientele is coming to the branch to do more transaction based business, and would prefer to see the branch visit as more of a social outing. They come to the branch to deposit their social security check, cash their CD, make savings account deposits, visit with their favorite teller or banker and have a cup of coffee. They want a branch that provides them with a memorable experience as they conduct this business with your bank. And, if you can provide this memorable experience for them they will keep coming back to your bank over and over again.

Now that we understand a little more about the customers' needs and wants, we can examine in more depth how to fulfill these through branch design. When focusing on younger markets it is critical to offer a good variety of relationship based products such as first mortgages, investments, financial planning, retirement accounts, etc. Selling these types of products will allow for more personal interaction and relationship building with customers, not to mention cross-sell opportunities for your bank or credit union. Branches need to be designed with this specifically in mind so that there can be a conscious effort made to maximize face-to-face interaction with customers.

It is most important to recognize the needs of the demographic markets you serve. As mentioned above, if your market dynamics are weighted towards the younger age groups then these types of customers want financial advice, so design your branch to capitalize on that.

With all of this customer information in mind, it is time to look at some current trends in bank branches. The Tower Group published a paper titled 2003: The "Big Squeeze" on Operational Efficiency. In this paper they predicted that in 2006 banks worldwide would spend approximately $45 billion on delivery channel technology. They also reported that a substantial portion of this spending will be used to enhance and improve the customer experience with the branch. So, as you can see, with all of the money to be potentially spent on building new branches and renovating older branches it is critical that that best design elements and technologies be used so that the end result may be the type of branch that can truly separate your bank or credit union apart from your competitors.

We here at Market Insights Inc, have done hundreds of assessment projects with clients all over the United States, and are seeing current branch design trends incorporate the use of a concierge counter more and more frequently. This concierge counter serves multiple purposes, but its main purpose is to create a welcoming atmosphere for the customer. The customer wants to feel welcome as well as feel that someone at the bank or credit union is genuinely interested in their needs, and is going to take the time to correctly diagnose and find a solution for their financial problem.

Another popular design trend is to remove the teller windows from branches, thus eliminating teller lines and queuing. This format provides a more open feel to the branch, where customers have increased exposure to all of your strategically placed products and services, as opposed to being limited to a teller line.

Replacing the teller lines is a mix of new technology and service. For example, some banks are using seated teller stations at various locations throughout the branch, and another popular concept is to use full service teller towers. A good example of a bank using teller towers is Washington Mutual and their Occasio branch concept. Both of these examples allow customers to interact more fluidly with bankers and give them better exposure to the whole branch, as opposed to coming in for a deposit and heading straight for the teller line.

Another branch trend geared toward technology is teller assisted self-service kiosks or teller stations. This is somewhat similar to what you might find at some grocery stores that have self-service checkout lines. The bank customers are allowed to handle their own transactions at self-service teller stations. In an article written for BankersOnline.com by Miles Busby, Founder and President of Source Technologies, reports that usually two or three of these assisted self-service towers are overseen by one teller, allowing that teller to instantly assist anyone who might need help. The technology would allow the teller to pick up in the middle of wherever the customer left off in the transaction process, as well as gives them the customer's information such as name, account information, and transaction details.   Busby states that this technology also provides a bonus for early adopters in the form of the "gee-whiz" factor. He says that "only a small percentage of banks offer this type of technology, and it leaves an indelible brand-print on customers by giving them the array of service that they never knew was possible."

A great example of a bank implementing some of these newest ideas and technologies in their branch template is Old National Bank, a current client of ours here at Market Insights Inc. With help from Market Insights Inc, Old National Bank has been expanding its branch network into a number of targeted markets. In the footprint of their northern markets, Old National Bank has been implementing some new design trends and technologies with every new branch they build. Deborah Robinson, Vice President of Marketing for Old National Bank says, "It's about bringing people back into the branch." In a brief interview she stated that, "we have really made an effort to connect the branch design to our community banking philosophy."

Some of the design trends that they have incorporated include a greeter or concierge at each new branch to direct customers to appropriate areas. Another amenity they have implemented which has seen great success is an internet or "cyber" café area where they serve Starbucks coffee and provide internet access so customers can surf the web in comfort if needed, as well as serve special treats on Fridays.

Another feature of their new branch design is a financial library area where customers can read books and periodicals on various financial topics. This library area also contains children's books, so that customers' children may remain occupied while their parents are conducting their banking. Old National Bank has also installed flat screen plasma televisions in their new branches that show financial news from networks like CNN.

One of the most popular features of Old National Bank's new branch design is the community center area. The bank has tried to design their conference rooms larger so that they may be used by community groups for various functions. The branches have been set up so that community groups may use these conference rooms after hours, incorporating separate entrances as well as branch security. These conference rooms have been widely popular for all the new branches in which Old National Bank has incorporated this design.

Another design concept that Old National Bank implemented was community specific photography. In continuing with the bank's community focused philosophy, Old National Bank has hired local photographers in some of their newest branch markets to take photographs of various things that make those communities unique. The bank then displays this photography in the branch as a way to connect with the community. For example in Anderson, IN they call this photo expose "Eyes on Anderson."

In regard to implementing these new branch design trends, Deborah Robinson says, "it is really the best way for us to differentiate ourselves from our competitors." What Old National Bank did, in addition to strategically performing target market assessments with the help of us here at Market Insights Inc, was to utilize some quantitative and qualitative studies within the communities to decide what type of amenities to incorporate with the new branches in the northern markets. An example of this is the conjoint analysis that they performed in order to rank which specific amenities potential customers in their new markets would want. The results from these studies were specific branch design concepts for specific areas which really allowed the bank to give the community what it said it wanted.

When thinking about designing a branch that will differentiate your bank or credit union from your competitors, it helps to draw on some purely retail store examples. A great example of this idea is Nordstrom's. Most anyone who has ever visited or shopped at a Nordstrom's store has come away with a certain feeling about their experience. The key word in this statement is "experience." What a retail store like Nordstrom's does is create a shopping "experience" for you that is very hard to find at any other store you will visit. Essentially, this "experience" is what you need to create for your current and potential customers or members. You need to give them the "wow" feeling so when they leave your branch they will remember you and want to come back to do their banking with you. Above and beyond just leaving them with a "wow" feeling, you need to leave them with the feeling that you can provide all of the solutions to their problems and that you have the resources and understanding to be able to help them.

Again, to refer to the opening statement, it is the manor in which you differentiate yourself from your competitors, by making your customers and members feel valued and satisfied that will leave lasting impressions. If you can achieve this with your clientele then you can truly set your self apart.

Mark Brandt is a Project Manager and Director of Primary Research for Market Insights Inc., a Chicago-based market research and consulting firm specializing in financial service organizations. You can reach the Market Insights Team at 800-348-0220 or email Mark specifically at mbrandt@formarketinsights.com

Market Insights Inc. provides branch network optimization studies, demographic studies, site selection, strategic mapping, competitive intelligence, strategic planning, marketing, professional speaking, training and sales culture.

We have worked with over one hundred and sixty clients in the United States and Canada in more than 1,200 markets. Our proven process has resulted in 90% of our clients engaging us for additional projects. The growth and prosperity of each client is our #1 priority.

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