Redesigning the Community Bank Branch
As an increasing number of consumers use digital channels to handle basic banking transactions, the look and feel of bank branches needs to change – for community banks as well as for larger institutions.
“As we move from handling transactions to providing consultative services in the branches, the typical teller line with its barriers will have to go away to create a more open-store approach,” says Lawrence Wood, marketing manager of Richmond, Va.-based Essex Bank, which has $1.1 billion in assets and 20 branches.
Wood is scheduled to appear at the upcoming BAI Retail Delivery 2014 in a session entitled “The Impact of Digital on Retail Banking” to outline his community bank’s plans for modernized branches that eliminate teller lines and create a relaxed environment for financial discussions between customers and bank employees. Essex has already replaced one of its existing branches in Annapolis, Md., with this new branch model, is working to remodel a second and plans to build a third one from scratch.
The new branch model will measure around 1,300 square feet, compared to 2,000-plus in most existing Essex branches. The offices can also be located on smaller lots than Essex has typically needed for a branch. “This model enables us to look at locations that were not viable before,” Wood says.
In the Annapolis branch, Essex eliminated the teller area and replaced it with a casual café-style office. “The officer in a cage is behind us. Instead, we have sit-down areas where conversations can take place or customers and staff can move to semi-private offices for more detailed discussions,” Wood says.
The Annapolis branch also features a coffee bar that serves a special blend from a local roaster and an area for children to play while their parents talk to branch staff. This design is particularly appealing to younger customers, says Alan Davis, an associate principal and architect with Richmond, Va.-based based Baskervill, the architectural and interior design firm that helped Essex create its new branch.
Banks looking to create similar models need to reconsider many of the details that go into building a branch, Davis says. For example, he notes that Essex’s Annapolis branch uses a special type of glass in its windows to create greater visibility. “Customers are likely to use their tablets to conduct financial transactions and the technology bar is located near the exterior wall. We needed glass that cut down on the glare,” he explains.
“Branches in the future are going to have a lot more touch screens, not just smart ATMs, but also video conferencing devices and banks need to think about the design requirements this technology requires,” Davis adds. As far as the interior layout goes, banks need to get rid of the “silo effect” common today where different products and services are separated and use common areas instead, Davis says.
Essex’s Annapolis branch has been open about six months and has exceeded the bank’s initial expectations, according to Wood. “We have opened more new accounts in the first two months than we had expected to open in one year.”
Operational changes and shifts in job responsibility of branch employees are required as well as design changes, Wood adds. “There is not the distinction in personnel responsibilities that we once had. Dedicated officers and tellers alike – everyone performs the same job.”
The advantage of training employees to handle all types of financial needs – usually referred to as “universal associates”—is that customers do not have to wait until someone is available when they walk into the branch or be passed over to someone else once they’ve begun discussions. Also, this arrangement helps customers develop relationships with specific bank staff members, creating a personal banker approach that is available to all customers, regardless of deposit size, Wood says. “A customer can call this banker anytime with a question rather than have to call an 800 number and talk to a stranger.”
Davis says that use of technology such as video conferencing also changes staffing requirements when specialization is required. For example, mortgage bankers won’t have to travel or establish offices in every branch; instead, they can be located in a central office or in a limited number of regional branches.
These changes in the look and feel of branches are largely the result of more customers embracing digital channels, according to Wood. “Digital can enrich the customers’ interaction with the bank without replacing the branches. Even if customers embrace digital channels, they still want to be treated nicely when they do enter the branch.”
“With the right integration of technology and branches, digital channels complement rather than compete with the branches. But you have to design around this integration to make sure you have the right architectural and organizational designs to enhance the customer experience,” Davis says.
Wood believes the new branch approach works for all banks but is most advantageous for community banks. “This holds real promise for forming relationships with customers, which is something that is really important to community banks,” he says.
Ms. Giesen is a contributing writer to BAI Banking Strategies based in Libertyville, Ill.