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Edmund Lawler Dec 12, 2016

Coffee, tea or currency?

Amid the smoky aroma of fresh-roasted coffee and the sweet scent of pastries, Scott Maykis starts his morning routine by tapping into the free Wi-Fi at the Capital One Café on Chicago’s Gold Coast.

But he’s not checking into the café-style branch bank for the money. He’s not even a customer. A management consultant who works nearby, Maykis feels right at home in the café

The café’s natural wood textures and exposed ceiling are bathed in sunlight that pours in through its large picture windows. Wall panels and much of the furniture in the café, with its clean, high-tech lines, matches the bold red of Capital One’s distinctive swoosh logo.

“I come here most mornings before work to catch up on emails,” says Maykis, who likes the café’s atmosphere with its soft murmur of conversations. “The coffee is good and at a good price.”

Although Maykis seems indifferent to his host’s branding and banking services, Capital One states on its website that its cafés in Chicago and in nine other U.S. locations “are where our approach to banking comes to life.”

This even at a time when branches are dying off.

In a case of what’s older is new, Capital One plans to open at least six more cafes in 2017, responding to a banking landscape where branches in the U.S. continue to fall as digital banking channels grow. According to a report by Federal Deposit Insurance Corporation, 94,725 branches were operating in mid-2014 versus the all-time high of 99,550 branches in 2009—a 4.8 percent drop.

And while Capital One is not a full-blown bank per se, it has some branch type advantages, including an ATM and representatives who can help explain the institution’s products or provide ATM assistance. At least one perk involves the perk—a 50 percent discount on Peet’s orders for customers using a Capital One credit card. 

The Capital One Cafe experience—unusual by the standards of traditional branch banking—also serves as a shingle for the brand and as a common ground, generating goodwill in the community while keeping the bank’s products and services front of mind. Comments such as this one posted on Yelp in October are typical: “Hands down, one of my favorite spots to work in the city. Plenty of space and their open floor plan has a nice work environment feel to it.”

But McLean, Va.-based Capital One (which declined numerous interview requests) didn’t invent the bank-café format, let alone open the Gold Coast location. It inherited the cafe from ING Direct, an American subsidiary of the Dutch banking giant ING Global. In 2011, Capital One acquired ING Direct, which opened its first U.S. café in New York City in 2001. After the acquisition, Capital One closed some ING cafés and rebranded others such as the one in Chicago.

Undeterred by the trend of banks trimming their branches, Essex Bank is continuing to expand its network of physical outlets in Virginia and Maryland. The Richmond-based bank, with $12 billion in assets, has 23 branches in Virginia and Maryland. But to borrow from banking parlance, it isn’t business as usual.

Its new branches are about a third smaller and have ditched the bullet-proof glass teller cages and vaults in favor of a more open floor plan to create a less formal atmosphere. Coffee and Wi-Fi are free, while customers and community members are welcome to plug into chargers, laptops and tablets at each new branch’s tech bar.

In that relaxed setting, branch staff can strike up conversations with customers and prospects. Instead of immediately pitching products or services, branch staff might for example ask customers to share a bit about themselves, says Lawrence Wood, vice president, director of marketing and communications. “The idea is to take the interaction a step further if possible and to see how we can meet needs rather than sell products.”

Relationship-building in the new branches has paid immediate dividends. One in Annapolis, Md. generated as many new accounts in two months than was anticipated for a whole year, Wood says.

The open-concept architecture of its six new or retrofitted branches speaks volumes about the bank’s welcoming brand—but the people staffing the branches are more important than the design. “There is no silver bullet to reinventing branch banking,” Wood says. “It still relies on people. You can have a marvelous facility and not exactly the right people and the facility doesn’t compensate for that.”

Across the pond, Virgin Money has created seven unique branches in England and Scotland. “They all have their own character and interesting features for customers to enjoy and have fun,” says Scott Mowbray, director of external communications for Newcastle-based Virgin Money.

For example, “One floor in one of our London lounges is fitted out like an airliner cabin—including airliner seats, overhead lockers and floor lighting. In Sheffield, we have two full-size bowling alleys on the ground floor and a library-type space above. In Glasgow, we have a cinema room.” What next, a video game parlor? Maybe not—but don’t bet against it just yet.

As quirky as Virgin Group’s founder Richard Branson, the lounge branches not only generate buzz but also new business for the bank’s more standard 75 branches. “The payback is that the lounges are a strong commercial success,” Mowbray says. “They drive customer acquisition and retention and performance in branches adjacent to our lounges are improving significantly.”

He adds that “customers may just want some general advice or put their feet up and unwind. In this environment, it is just about our staff ensuring they have all they need for their visit—even if that’s just a cup of tea or coffee.”

Whether the new Capital One Cafés score as the consumer’s cup of tea or coffee remains to be seen. But at least a deep discount on java offsets any ATM fees you’ll encounter after your visit. 

Edmund Lawler is a business writer, author of six books and former editor at BtoB Magazine.

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