Earlier this week, BusinessWeek ran an article called The New Bank Branch: Internet Cafes and Rent-a-Rooms, highlighting Umpqua Bank as an institution with some innovative branches – complete with coffee, Internet, and conference rooms that can be rented out by community groups.
The article includes comments from Bob Meara, senior analyst at Celent:
“the traditional branch, with Greek columns and steel vaults, will give way over time to smaller, sleeker, and more inviting branches intended for less deposit or check-cashing…”
We’ve certainly seen examples of the smaller and more inviting branches, one of which is Umpqua Bank’s neighborhood branch. But, while we may see more of ‘smaller, sleeker, and more inviting branches’, it’s important to recognize that this approach isn’t appropriate for all institutions in all markets.
This point is illustrated in the cover story from last month’s Bank Technology News - The Future of the Bank Branch.
In this article, Jeffry Pilcher from The Financial Brand makes a great point:
“Everyone in the fnancial industry is looking for a single blueprint, and it doesn’t work; it depends on who you are serving, what products you are offering, where you are located and the competition you face.”
Experimentation with the branch environment is not a new idea. Examples that come to mind include: ING Cafes, Umpqua Bank’s Innovation Lab, WaMu’s Occasio branches, Reliant Bank’s branches with Maui Wowi Smoothie Shops, or Union National Community Bank’s Gold Cafes.
Are these innovative branch concepts really the future of bank branches?
As the BTN article points out: “Washington Mutual’s experiment in futuristic branch design-at a cost of $1 billion- has come to an ignominious end” as Chase converts the Occasio branches to the more traditional branch layout that is part of the Chase brand. Read more about the WaMu/Chase branch conversion here and here.
The BTN article also talks about ING’s Cafes, noting that they have ‘no transactional ability whatsoever.’
While it works at one location, it simply wouldn’t be practical for Umpqua Bank to implement the Innovation Lab concept at all of its locations.
Reliant Bank probably won’t offer smoothies at all of its locations.
And, Union National Community Bank has already killed the Gold Cafes, converting those branches back to traditional branches.
Looking at these examples can be discouraging for bankers who may be looking for the ‘single blueprint’ silver bullet that will create the kind of branch that people want to visit. In reality, it gets back to knowing your customers, knowing your market, and creating a branch environment that fits with your brand. For some, that may mean offering coffee. For others, that may mean traditional teller lines.
These examples may show us some cool and innovative ideas, but they also tell us that these ideas don’t always work out in the end.