Do branch customers want a “destination,” somewhere they can linger and enjoy themselves, or just a place to get their transactions done as quickly as possible? Roseburg, Ore.-based Umpqua Holding Corp. is betting on the destination concept with its new “neighborhood store” branches.

Umpqua plans to build six such branches in the Portland area within the next six months. Small, cheap and quickly built, the stores will sell products from local retailers and feature comfortable computer booths with electric votive candles to help create a comfortable ambiance. There’s also a “Discover Wall,” an interactive, multi-screen video display providing information such as local home prices and the bank’s available mortgage products.

“We feel the need to give people a reason—the environment, culture and operations—to go in the branch,” says Lani Hayward, executive vice president of creative strategies at the $5.4 billion-asset institution, which currently has 95 branches.

Umpqua has long been a believer in destination branches. A decade ago, it began offering Umpqua-branded coffee in its branches and went on to add Internet workstations, newspapers and local art exhibits.

“I’d applaud the bank for trying innovation and pushing the envelope,” says retail banking consultant Richard N. Speer Jr., CEO of Atlanta-based Speer & Associates, Inc.. “The question is whether that will work on a mass scale or just in select locations.”

Speers says the question of whether people by nature want to linger at a branch or just get in and out quickly has no clear answer. “Human nature varies by segment,” he says. Historically, he adds, destination branches have met the most success in niche markets such as retirement communities.

The best-known example of destination banking in recent years may be Seattle-based Washington Mutual, Inc.’s Occasio branches, which are designed to look and feel like retail stores. The Occasio branches’ “same store deposit growth” has historically been above average, says Theo Moumtzidis, managing vice president at New York-based First Manhattan Consulting Group.

At BAI’s Retail Delivery Conference & Expo last November, as reported in BAI Banking Strategies Retail Delivery Insights , First Manhattan president James McCormick presented mystery shop findings indicating that branch customers valued faster service over a Starbucks-like ambiance.

Fast transactions are a must at destination branches too, says Moumtzidis. “It’s important to not let the extra features complicate the banking experience,” he says.

Umpqua’s Haywood agrees. She says the neighborhood store branches will be easily recognizable as places for speedy banking transactions.

Haywood says each store can be built in 45 days, with a total cost of $300,000, about one-third of the national average for traditional branches. She says a pilot neighborhood store opened nearly two years ago in Bend, Ore. and gathered $72 million in assets within 18 months. The typical bank branch holds about $50 million in deposits and can take as long as 10 years to reach that level, Moumtzidis says.

The Umpqua stores are about half the size of a typical bank branch, without parking or drive through windows, and are designed to fit dense urban strips, Haywood says. They will also feature space-saving technology such as cash recyclers, which accomplish many cash-handling functions, she adds.

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