The Evolution of Branches: Building Relationships
By Pamela M. Green
OK, Pam, next time we find something in the lobby we’ll just give you a call instead of putting it in lost and found,” said Jeannie, the customer service rep of my bank, with a twinkle in her eye. This was after a particularly bad week when I had left my debit card in the ATM machine, an L.L. Bean gift certificate at the teller counter, and my keys among the deposit slips. They had to call me about the gift certificate, which I had not even noticed missing. By the end of the week everyone in the branch had had a chance to razz me about being absent-minded.
Banking is all about relationships.
Branches are the place where those relationships start. In their constant quest for new deposits, banks are building de novo branches, purchasing existing branches and implementing technological innovation at a faster pace than ever before. They leave no stone unturned in finding ways to serve existing customers and bring in new ones.
Insurance agents and investment advisors are popping up in branches everywhere. Some lobbies offer Internet cafes with wireless service for checking e-mail or doing online banking. There are flat-screen TVs running cable weather stations. Even Starbucks. A host of innovations – some more successful than others – are springing up in bank branches in Maine and around the country.
Banks that put all of their eggs into the Internet banking basket five years ago are now going back to putting some money into bricks and mortar again. “Internet banking is a great tool,” says Border Trust President and CEO Earle Harvey, “but we also have to be located in spots where people want to do business. You can’t just tell people to go to the Web site.” Most banks in Maine have settled on some combination of cyber-banking and good old-fashioned branch services.
Best of Both Worlds
Kennebec Savings has opened a location in Manchester that uses the best of both worlds. The bank built an attractive facility at an intersection of Route 202 and two other commuter routes to Augusta. Referred to as the Electronic Banking Center (EBC), it is considered a branch, but a self-service one. Its card-access vestibule contains an ATM, an Internet banking station and a plasma-screen television that runs bank ads and a cable weather station. Beside the ATM is a phone which rings the main office switchboard in Augusta if assistance is needed. The outside drive-up is accessible to everyone.
“We wanted it to be anytime banking, and we wanted to make it a place for all of our delivery channels to converge,” said Kennebec Savings CEO Mark Johnston. “And the timing was right for taking advantage of Check 21.” The ATM not only dispenses cash but also accepts deposits of cash and checks directly into the ATM without an envelope or deposit slip. When a check is deposited, the ATM reads it and images it. The customer sees the check image on the screen as well as on the printed receipt. The image is sent electronically to the main office where it undergoes a visual verification, eliminating the whole step of transporting physical checks.
It was a challenge to go real-time across all platforms, given different systems and vendors, but that has been accomplished at the EBC. Ironically, the Internet banking piece was the last to be upgraded to real time. “Now if you make a transfer on your Internet banking at home and then go to an ATM, you’ll find it’s already posted. If you make a deposit at an ATM and head home and check your Internet banking account, it will be there,” said Johnston.
The EBC’s Internet banking station contains a security sensor so that if the customer walks away from the monitor without closing out of a transaction, the screen prepares to log out unless the customer clicks OK to continue.
Johnston says that the industry needs to think about the best way to deliver services, and this is a good alternative for delivering what people want at a cost that is good. The operating costs are negligible. Says Johnston, “We built a nice building, but the cost of continuous operations is low.”
Operational costs rise exponentially when banks add full-service branches with live employees, so homework and planning are paramount. Rivergreen Bank, looking for a location in Saco, zeroed in on the old Dexter Shoe outlet. “You’d always like to be downtown right next to everything, and unlike other businesses, banks don’t seem to mind looking at each other across the street,” said Bill Cannan, Rivergreen’s CEO. “But as a smaller institution, we have to be nimble about where to put our resources.” Downtown was prohibitive for Rivergreen, but they knew they couldn’t be out of sight and out of reach. Figuring Dexter Shoe had done some demographic research before developing that site in the first place, Rivergreen did some additional market and traffic surveys that showed promise. In addition, its Route 1 location, closer to the auto dealers and other commercial enterprises, gives the bank good visibility as a commercial-oriented institution.
The newly renovated location is slated to open in July. Architects incorporated elements of the old Dexter building with its high ceilings and open beams, adding lots of glass and roof angles. Like most Dexter locations, it offers easy access and lots of parking. In fact, Rivergreen is so positive about this location that they have leased another former Dexter Shoe building in York. That one is on the drawing board for a September opening.
Proximity to commercial customers is a strategy that Border Trust will make good use of at its new Topsham location. The bank will be the primary tenant on the first floor, and the upper floors will provide professional office space. In a unique business center set-up, the base rent for the upper floors will include phone, administration, conference room, audiovisual, mail, furniture, Internet, copier and fax services – all aimed at small professional businesses. “There will be lots of people coming into the building to do business,” says bank CEO Earle Harvey. “The addition of tenants such as an insurance broker or investment advisor would be a nice complement to the bank’s financial services.”
Border’s Topsham branch was built in response to an overwhelming success with a limited services branch in Brunswick. Having considered heavily banked mall locations, Border Trust decided its business center concept would revitalize the Lower Village in the center of Topsham and give the bank a singular presence in that area. In keeping with its investment in downtown locations, Border Trust will build an Augusta Service Center in downtown Augusta, housing the bank’s executive offices, operations center and lending operations. The bank plans to offer deposit services at this site, but it will primarily be an operations area. This will add 20-plus jobs and Augusta’s first bank headquarters in a number of years.
If you ask a bank president why open a branch in a particular spot, the answer will undoubtedly include these words: deposits, customer convenience, service and relationships.
“It’s pretty hard to attract relationship deposits without location,” says Gorham Savings Bank CEO Chris Emmons. “Our bank’s strategic plan calls for providing convenience to the customer, and that has driven our branch location decisions.” Gorham Savings has moved quickly to take advantage of several opportunities in the Greater Portland area.
Gorham Savings has experimented with a number of physical branch enhancements such as offices with separate entrances where a loan closing can be conducted after hours. Several locations provide offices for the bank’s financial partners, INVEST Financial Corp. and Turner Barker Insurance. Greeter stations have also been used, allowing for an employee to greet every customer who walks through the door. The greeter can direct the customer to a teller or loan officer, open new accounts and staff the teller line during busy periods.
Emmons believes that face-to-face interaction is key. “As a bank thinks about institutional growth and seeking deposits, it’s very competitive out there. Customers like to come in and deal with people face to face. We try to identify gaps in our marketplace where we could offer better convenience to existing customers and pick up some new ones.” With transaction numbers climbing at all locations, the face-to-face philosophy is working for Gorham.
Androscoggin Bank has expanded market areas in Lisbon and Livermore Falls by purchasing existing branches. Its purchase of the Skowhegan Savings office in Livermore Falls not only added to Androscoggin’s deposit base in a region where it already had a presence, but also eliminated a competitor. In Lisbon Falls, where Androscoggin already had a branch, the bank consolidated the purchased assets and assumed liabilities of a Northeast Bank branch into the existing office.
Androscoggin CEO Steve Closson points out that purchasing a branch is more efficient and less expensive than building a de novo branch, but he would consider a de novo entry given the right circumstances. While buying a branch along with its deposits gives a bank something to start with, retention is key. “You’re basing your transaction on deposits at a certain level,” says Closson, “and you do everything you can to hold on to them.” That includes lots of communication with customers, mapping accounts to bring them over to similar accounts at your institution so that nobody is disadvantaged by the change.
Ed Theriault of Theriault/Landmann Assoc. says his architectural firm is designing more de novo branches than ever before. “Banking is like any sales business,” he says. “Unless there's someone physically interacting with people, you’re not going to get into a market.”
Theriault sees a number of trends in branch design, including coin counters, self-service kiosks and a ratcheting up of high-quality atmosphere. Fewer teller stations are the norm, due to greater dependence on drive-up, Internet and direct deposit services. A few years ago Internet cafes became popular, but Theriault says most of these are being pulled out now because people “just want to get in and do their banking and get out.” Similarly, supermarket branches provide visibility and convenience but have not replaced full-service branches in pulling customers toward a wide range of services.
Customers seem to respond to a warm and comfortable interior, and Norway Savings’ new facility in Fryeburg has produced a homelike atmosphere that includes hardwood floors, a comfortable seating area and even a fireplace. It has a computer terminal where bank employees can train customers in how to set up and use Internet banking. Gorham Savings’ branches aim for a colonial look, sometimes featuring murals of local sites. Kennebec Savings’ Electronic Banking Center provides a friendly patter of weather channel information on a plasma television screen. The weather vane on top of the building is a blue heron, a symbol of nearby Lake Cobbosseecontee.
Dialogue banking, created a decade ago by Washington Mutual Bank and gaining interest around the country, is a retail concept that eliminates teller lines and puts branches into a friendly, face-to-face sales relationship with customers. Dialogue towers are placed throughout the branch. A typical tower is a semi-circular station with two counters for customer transactions and a bank employee (financial services advisor) at each counter. A cash dispenser separates the two counters at each tower and provides some distance for privacy. The structure design is more open than a teller line because no cash is being handled and physical barriers can be eliminated. A greeter meets customers at the door and walks them to one of the dialogue towers. Dialogue banking staffers are knowledgeable about many functions and services and are therefore in a position to cross-sell while working with customers – a plus in an era when banks are trying to increase products per customer. Says Ed Theriault: “The staffers in a dialogue banking setting are sales people, not just tellers, and this shows the evolution in branches, which are now being built to handle sales – maybe even more than transactions.”
In the end, branches are partly about bricks and mortar, but mostly about people. Any bank will tell you that their branch employees are a major key to success. Gorham Savings’ greeter gives a friendly first impression. Rivergreen’s employees are service providers who are knowledgeable about a number of services and functions and are also part owners of the bank. Androscoggin Bank tries to retain all of the employees of a branch that it purchases. “They are the people of the community, the faces the customers know,” says Steve Closson. “They go a long way in making a statement about your place in the community.”
And in my case, they know enough to call you when you leave your L.L. Bean gift certificate behind.