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Coming to a hip café near you: a bank branch?

Sep 24, 2018 / Consumer Banking

Envision doing hatha yoga, hearing new music or catching an art exhibit in a really non-traditional setting: a bank branch.

CaixaBank, the Barcelona-based bank holding company, is trying this idea out in its new imaginCafé in the Catalan city. The bank is melding a conventional bank branch into an eclectic destination that offers “culture, fun, technology, youth—all in the same place.” The branch opened in December of last year, and was a recent finalist in the BAI Global Innovation Awards for Innovation in Marketing.

Now, “imagin” this: Inside the nearly 4,000 square-foot space, customers can make deposits or take out loans while enjoying local musicians, lectures, a workspace/media lab and presentations of the latest in high-tech gadgetry.

The innovation doesn’t end there. You can even register online to be informed of future events as an “imaginer.” The cafe also features a gaming arena, art gallery, “Garden by Samsung” (video screening room), gathering space (“Agora”) and a cafeteria, which offers 8 percent discounts to bank customers.

While the word in banking for the last decade is that branches are dying, imaginCafé argues, in everyday terms, that branches can be full of life. Nor is it alone in leveraging community as a selling point. U.S. institutions such as Umpqua Bank and Capital One are working the same forward-looking turf: the bank branch as meeting place and communal space.

The Caixa café’s theme is interactive creativity. It even hosts what it calls “multimedia laboratory on the ground floor for real geeks who love digital culture, but above all, not to miss any of the experiences related to digital creation.” The idea is to create a space that engages younger customers in the digital age.

“The idea of imaginCafé,” says Caixa spokesman Fernando Garcia Lopez, “is based around the creation of a physical center—modeled on a cultural center—with events that interest young people, based mainly in the fields of music, art and design, technology and entrepreneurship. This allows us to establish a platform with content for young people, an online channel that can reach young people without them having to visit the center.”

It’s all about millennials

Caixa is also piloting a “Family Store” in its imaginCafé through its subsidiary PromoCaixa, that sells everything from mobile phones to household appliances, for which the bank provides zero-percent financing. The branch has its own unique website and social media and is partnering with Rodilla, Movistar, Adidas, ESL, Barcelona Tech City, and a number of educational institutions, such as SAE, Universitat de Barcelona and Universitat Oberta de Catalunya.

It will mark an extension of an imaginCafé concept that CiaxaBank says is aimed primarily at one demographic: millennials. It doesn’t even use the word “branch” in its marketing, calling it instead “a space for discovery and creation specifically aimed at the millennial market.”

Targeting mobile banking-savvy millennials, according to CaixaBank’s managing director Juan Alcaraz, “imaginCafé will be a truly disruptive experience, creating an entirely new foundation for relations between a bank and its young customers. The aim is to create a place where young people can discover new ideas and the latest trends, while also crafting experiences and reaching out to our customers in an unprecedented fashion.”

Clearly, that’s a smart move. Millennials and branches don’t necessarily mix, according to survey data from a recent BAI Banking Outlook survey. Just 38 percent of millennials said they would prefer a bank with access to branches (even though they don’t use them very often). That compares to 57 percent of baby boomers.

Lopez notes that to date, imaginCafé has attracted a healthy volume of potential customers: “Between 800 and 1,000 daily visitors—more than 170,000 since opening—53,000 followers on social media and more than 140,000 visits to the website. In addition, we have recently activated register, starting a database of more than 3,500 loyal users in just a few weeks.”

Cafe banking closer to home

In the U.S., the cafe banking experience has been employed by Capital One and Umpqua Bank. Capital One has 10 coffee-shop style branches that feature internet banking services in Chicago, Los Angeles and other cities. The cafes offer free wifi and pastries from local bakeries.

Calling its branches neighborhood “stores,” Umpqua offers local products for sale along with free coffee and cookies. They also host yoga classes and family movie nights. As Tearsheet notes, “Umpqua Bank is driving traffic back to the branch through modern co-working spaces where customers can relax and have fun.” But for all that fun, there’s a serious element: “The motive behind Umpqua’s move is to create an experience that fosters sales of higher-value products.”

Involved challenges for innovative branches

While Caixa’s—and other holding companies’—experiments may work in the burgeoning coffee shop culture of metropolitan areas, opening branches in non-traditional settings has not gone well for many U.S.-based banks in recent years.

The national U.S. trend, most notably, has been moving solidly against branch banking in general in recent years as banking customers have been using more mobile apps, ATMs and non-traditional fintech portals.

Last year alone, some 1700 U.S. bank branches were closed. With hundreds of alternatives to conventional banking available on smartphones and computers, customers have had few reasons to do business with human tellers.

Overall, the number of FDIC-insured branches has been on a steady retreat since June 2009, when the deposit insurance agency reported that offices peaked at around 100,000. Nearly 2000 branches were shuttered last year, “representing the fastest rate of decline in U.S. banking offices since the trend began in 2010, and exceeds the five-year annual decline of 1.6 percent.”           

Meanwhile, as U.S. banks merge, consolidate and eliminate branches, the trend is that more banks are moving out of non-traditional sites.

TCF National Bank closed 37 branches in Jewel-Osco supermarkets in 2016. With more than $23 billion in assets, the bank has more than 300 branches from Arizona to Wisconsin. A bank spokesman said at the time the institution chose to replace the branches with ATMs, noting “we are able to redirect resources to fund our customer service initiatives while preserving convenient access to basic banking services.”

And yet, Chase announced Monday that it would open 50 new branches in Philadelphia, Delaware and southern New Jersey over the next five years. It’s part of a plan to open 400 branches across the country—an aggressive move to use its corporate tax cut windfall to strengthen its retail reach, according to CNBC.

As for whether any of those branches will welcome yoga mats and music fans remains to be seen. Perhaps not. But at the very least, CaixaBank and a few of its select peers have taken one mighty huge leap into the branch banking future—thanks in part to supercharged cafes that far outclass the typical lineup of stale cookies, foam cups and a coffee pot over by the teller windows.

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To see a video of the imaginCafé, click here.

John F. Wasik is the author of Lightning Strikes and 16 other books. He writes and speaks about innovation and financial services. His work has appeared in Reuters, the New York Times, Bloomberg and Consumer’s Digest.