The growing cacophony over the future of branch banking is richly-threaded with expressions like “reduced footprint,” “mobile,” “digital,” “tellerless branch” and “multi-channel integration,” but amid the calls to build ever-smaller custom micro-branches, there is another issue: large legacy branches.
Large legacy branches are large square footage branches, whose owners or tenants cannot simply leave, for one reason or another. They were built in another era, one in which huge vaults and voluminous paper trails were the order of the day. As such, these large legacy branches have excess space that urgently needs repurposing, as the rent on these properties often impacts branch ROI.
Consequently, space-sharing, co-tenancy, collaborative workspaces, whatever you want to call it, will be a strong trend in 2015 and beyond.
Space-sharing is an emerging practice that takes form in numerous ways, and is the logical solution to the legacy branch problem. Retail subletting has existed between big box stores and smaller retailers for years, but economics and a diversifying workforce are dictating the need for more flexible and mobile working conditions.
General business spaces are yielding solutions such as hoteling and hot-desking to reduce costs, by having workers use the same workstation at different times. Large legacy branches are faced with the slightly different problem of filling space with something extra. Fortunately, this is compatible with the general direction banking is taking, that of the branch-as-community-lounge concept.
Some larger banks are already taking the initiative to great fanfare, including Umpqua and ING/Tangerine. Community banks are doing the same, with informal furniture, coffee bars and dialog towers.
The Coffee Shop Branch
Picture the scene: A hangout space with Wi-Fi, coffee tables, lounge chairs and a teller pod. There’s a counter bearing the well-positioned logo of a famous coffee manufacturer, behind which baristas bustle and burlap coffee bags bulge from shelves. Along a wall are several small consultative offices with glass walls. Digital communications fixtures adorn walls and transaction stations, announcing financial services and community events. Is this a bank, or a community center and coffeeshop?
It is both.
The Branch as Classroom
On the outside looking in? A local branch promotes a financial management class during a learning fair. The class is conducted in a repurposed section of the branch that can be viewed from within the transactional area of the branch and/or from the branch exterior, depending on whether it takes place during the day or in the evening. Outward facing media inform the public as to what the class entails and how it can benefit them. The space is edgy and intriguing in an urban kind of way. There’s a flat screen TV and a digital whiteboard. “Students” relax in comfortable chairs while taking notes from the presentation. Several classes, aimed at different loci on the customer lifecycle, are offered, for the young, middle-aged and old alike.
Internet Café Branches
Banks and credit unions are morphing into Web-based service centers using an expanding array of distribution channels to attract customers. The types of supplemental space-usage projects described above are fast becoming the expected as opposed to the exception.
Consumers seek convenience and transparency to complement the mobile access they enjoy via banking apps and hyper-connectivity to insurance, healthcare and other digital accounts. They’re finding this convenience and transparency in the new branch concept. The caffeine connection has proved a versatile and appealing way for financial institutions to introduce multi-use retail spaces, but expect to see increasingly creative uses incorporated into the branch retail environment. Here are some we think are going to be realized, assuming they haven’t already:
- Community centers
- Investment classes
- Mortgage management classes
- Healthcare & insurance advice
- Home repair workshops
- Book clubs (possibly with local libraries taking ownership)
- Online banking guidance
- Coffee shops / music venues
- Enterprise centers; fiscal responsibility and loan advice for startups
Ian Hough is the Director of Marketing at Solidus. He writes about retail evolution and futurist applications and services. He is particularly fond of alternative narratives and viewpoints.