VRA Winter White Paper on High Performance Branches By Brian N. Reno-VRA

1. High Performance
Branch Design
Winter White Paper January 2009
VRA architects
retail planning, architecture, development consulting, project management
Center for Financial Innovation 2.0
In this White Paper:
account, or take a loan
In 2002, VRA architects, in
application. VRA has continued to re-
concert with the GRFI dis-
• What’s new at the
fine its dialogue banking
tribution planning consul-
Center for Financial
The branch includes a concepts and recently com-
tancy developed the Center
Innovation business resource center, a pleted renovation of the
for Financial Innovation, or
consumer coin counter, a CFFI to incorporate areas
CFFI, as a real-world labo-
• New client case living room style waiting of improvement realized
ratory to test dialogue
studies and experi- area with electronic mer- over the last 5 years. The
banking concepts and rela-
ence with dialogue chandising where current current CFFI design in-
tionship building elements
baking concepts promotions and the brand cludes remote teller drive
in the branch environment.
is reinforced over LCD ups that allow the MB Fi-
screens. nancial Bank’s Personal
In 2003, VRA brought in
Bankers to service the
MB Financial Bank to oper-
VRA’s clients from around drive up customer, simulta-
ate the CFFI, and the new
the country visited the neously with the lobby
branch design was suc-
center and began to adopt without increasing the
cessful in reducing the
these ideas for their own number of staff required to
cost of branch operation
branches, utilizing VRA operate the branch.
by allowing the bank to
architects to help them
operate with 2 to 3 fewer
design, construct and pro- The electronic merchandis-
employees, in comparison
ject manage new branch ing, cash recycling and
to a traditional branch,
development. other equipment has also
while continuing to deliver
been upgraded to take
excellent service. This has
VRA has worked with many advantage of improve-
been achieved through the
clients such as Rabobank ments in this technology.
use of ATM’s, teller cash
in California, Continental
Center for Financial Innovation 2.0. recyclers, and a universal
Bank in Pennsylvania, The CFFI continues to be
operating environment
Franklin Savings Bank in available to financial insti-
where every employee can
New Hampshire and Xceed tutions interested in under-
spend time with the con-
Winter White Paper Financial Federal Credit standing the nuts and
sumer to understand their
Union with a nation-wide bolts issues in implement-
needs as well as do a cash
rollout of these concepts. ing the new automation
transaction, open a new
Center for Financial 1
Innovation 2.0
Attributes of High Performing Branch Systems
Attributes of High 1
Performing Branch
Systems
♦ ♦ ♦
Branch distribution The branch size and Employee incentive
Location, market 2 determined by market configuration is deter- programs must be
and size consid-
potential and product mined by market po- developed to encour-
erations for the
demand fit with the tential and modular age profitable banking
branch.
financial institution’s standard elements. relationships & stake
core strengths in holder responsibility.
Continental Bank, 3
♦ Consistent branding,
product and service.
Building New
♦ Understand the value
use of technology, and
Traditions
♦ The best sites within uniform excellent of existing branches
Xceed Financial 3 the best markets are customer experience and redesign them to
Building, Branching
selected and priori- reinforces the branch meet upside potential
and Re-Branding
tized for development. identity and cross and increase effi-
Optimizing Branch 4
selling performance. ciency.
Investment

2. High Performance Branch Design Page 2
Location, Market and Size Considerations for the Branch
Retail bank usage is driven by convenience and visibility of location and the draw of
consumers to that location by the environment around it. Common site selection mis-
takes such as choosing a great site in a poor market, or conversely a poor site in an
excellent market can be equally disastrous to the bank’s bottom line.
Retail bank profitability is achieved by matching product and service offering to the mar-
ket demand. A bank that traditionally offered products to entice savers in a mature
market area would need to reorient it’s product mix and employee sales training for a
branch in a new green field suburban area where demand for loans was prevalent.
For those with the ability to build de novo branches the bank might select markets that
match it’s existing highest performing branches, with confidence that it’s experience ,
expertise and product mix are one of the keys to profitability.
New Altura branch in
California
Market demand or potential can change due to competition, or changes to consumer
draw factors around the branch i.e. the Wal-Mart next to the branch closed and relocated
to a new site.
Size of a retail branch should be driven by understanding the market potential. For ex-
The difference ample many smaller 1,000 S.F. or less supermarket or in line storefront branches lo-
between a good cated in high potential markets never get beyond $10– $15 million in deposits because
site and poor they are to small to comfortably and adequately service the market demand. Further-
more, the overcrowded or transaction oriented environment is not conducive to rela-
site for a
tionship sales. That said, most market’s today can be adequately served by branches of
branch bank can
2,000 to 3,000 S.F.
be measured in
less than 100 To achieve the new streamlined efficient branch teller cash recyclers, self service termi-
nals and full function ATM’s allow the service level to stretch beyond the traditional foot-
yards.-George
print limitations.
R. Frerichs
VRA utilizes and recommends the GRFI market assessment system when planning for
High Performing Branch distribution. The GRFI Model incorporates competition, demo-
graphic, site and market data to select sites, evaluate potential of existing locations and
prioritize and accelerate profitability for branch distribution development.
Center for Financial Innovation 2.0.
New Continental Bank branch in New Xceed Financial dialogue banking branch in El Segundo California
Pennsylvania.

3. Winter White Paper Page 3
Continental Bank, Building New Traditions
Continental Bank finds includes remote video tellers
banked marketplace.
success by combining history and drive up ATMs.
The exterior design uses
and their traditional brand Electronic Merchandising
standing seam roofs,
linked to new design Systems in the Universal
limestone and brick façade in
concepts. Banking Pods and waiting
concert with large areas of
areas engage the customer
glass to create a 2,500 S. F.
Continental Bank came to while queuing or waiting.
branch that appears to
VRA and GRFI to select new be much larger than its size
high-performing branch Continental also imple-
and dominate the urban
locations and develop an mented custom interactive
corners and shopping center Universal relationship banker
efficient branch model that it coin-counting systems that
out-parcels where the new pods at the Continental
could roll out quickly in ma- have touch-screen presenta-
branches are located. Branches.
ture and green field market tions to attract children and
areas. The design brief in- adults, and a small business
The interior design
cluded investment and small center to create a space for
incorporates universal
business banking focus areas local entrepreneurs to gather,
dialogue banking stations
to be developed within each and a meeting environment
with remote teller units to
branch and enhance cross for its small business cus-
serve the drive up while
selling. tomers.
simultaneously working with
lobby customers. This allows
VRA developed exterior and The new branches were lo-
the bank to operate with
interior design concepts that cated in Blue Bell, Limerick,
fewer employees in the new
incorporated Continental King Of Prussia and West
branch initially and in the
Bank’s colonial heritage and Norriton, PA and have been
future.
brand while employing the very successful in quickly and Self service touch screen coin
latest dialogue banking economically expanding Con-
With their new remote tube counter.
concepts and self-service tinental’s deposit and cus-
teller units, each facility has a
concepts to compete tomer base.
2 to 3 lane drive-up that
successfully in a heavily
Xceed Financial Xceed Financial
Building, Branching and Re-Branding for Success was able to develop
new and reconfigured
acquired, the existing
Xceed Financial Federal The new facility template in- branches in as little as
branches were renovated to
Credit Union’s goals were to cludes sit-down and stand-up
six months in
develop the new brand image
expand its existing branch universal sales and transaction
California, New York,
and realize the productivity
distribution through develop- pods with teller cash recyclers,
and Texas by utilizing
and efficiency gains of the
ment of new branches and as well as full-service safe
VRA’s Project
new dialogue banking con-
mergers. deposit boxes and coin-
cepts. counters and ATM’s to handle Management Team.
GRFI developed a distribution convenience transactions. The
Typical branch size is de-
strategy to vet merger candi- branch environment facilitates
pendent upon the real estate
dates, identify upside poten- member interaction with staff
available and market poten-
tial in existing branches and and cross selling via electronic
tial, and range from 1,900
identify high-performing new merchandised waiting areas
S.F. to 3,000 S.F.
branch locations. that include a coffee bar and
large club chairs that encour-
The first re-configured
VRA worked with the credit age the member to dwell in
branches were completed in
union to design new the space.
the spring of 2008, and were
branches & improve the prof-
immediately successful; al-
itably of existing branches by Xceed utilized VRA to provide
lowing the credit union to
utilizing dialogue banking zoning, site planning, lease
test its sales compensation
concepts that increase mem- review, retail design and con- New Xceed Financial branch in
and new operating models so
ber contact and improve ser- struction documents for all the Lewisville, Texas
that the credit union could be
vice, transaction and sales facilities. Local contractors
ready to roll out the concepts
efficiency. were used in each market
to De Novo branches and while VRA provided coordi-
merged credit union loca-
The Pilot Branch designs in- nated and centralized project
tions.
clude Wealth Management management services to keep
and Business Banking areas the projects moving on time
VRA’s designs use a new,
to support the credit union’s and within budget.
vibrant color palette that The new branches have been
expansion into these product
reinforces the Xceed brand well received by members and
categories.
and helps to differentiate the credit union’s operating
Xceed from the competition. efficiency and growth in tar-
While the new branch loca-
New Xceed Financial branch in
geted product categories has
tions were being selected and
El Segundo, Califonia

4. VRA architects provides turnkey design/project
management services to clients throughout the United
States, Canada and Latin America, specializing in retail
banking facilities. To plan and implement facility ex-
pansion and improvement we offer the following turn-
key solutions:
Site survey zoning and Due diligence services
Site selection and market potential assessment
Architecture, engineering and interior design
Project and Construction management
Branding, Merchandising and fixture design
Internet based electronic merchandising and
Custom fixture systems
VRA architects
Our principals and associates have been involved in
facility planning, design and development since 1985,
Contact: Brian Reno– Principal
and we have worked with more than 300 clients as both
1018 Busse Highway
prime and associate consultants on over 680 facilities
Park Ridge,
Illinois worldwide.
Phone: 847-993-0200 x 125
Our designs facilitate dialogue between the consumer
Fax: 847-993-0201
and the banker, and at the same time, our designs make
E-mail: brianreno@vraarchitects .com
the retail and commercial transaction more efficient,
and make it less costly to deliver excellent service.
On the web @ vraarchitects.com
Optimizing Branch Investment
GRFI’s Modeling, in conjunction with
Average Untapped Upside Potential
Current Challenge
Experience has confirmed that on average the VRA Facility audits, allows us to
Due to the recent turbulent financial
any system with 10 or more facilities has determine aggregate market potential
situation, a significant number of branch
an upside profit potential of at least 20%. by product, on both a dollar and index
distribution systems will change owner-
During a period of tight margins these basis. This procedure allows the finan-
ship in the coming months.
opportunities are beneficial in achieving cial institution to establish realistic
higher levels of profit at virtually no market share goals and objectives for
Achieving Optimum Returns on Your
additional costs. each trade area-site or facility evaluated
Branch Investments
and Understand the cost associated
Many of the acquiring organizations do
In larger systems of more than 20 units, with implementing the program.
not have the capabilities to audit and/or
we often find trade areas with untapped
process the market/site information that
potential in the 40% range. Larger sys- Financial Impact of New Branch Op-
should be developed for these acquisi-
tems see combined profit increases in the erations
tions quickly.
With business potential data in hand,
25 -- 30% range.
GRFI conducts a breakeven, payback
Understanding and acting upon current
and capital recoup analysis as de-
Prioritize Development Opportunities
market-site and facility audit information
With the projected revenues from one or scribed below to simulate future branch
is paramount to achieving an optimum
more potential sites, optimum develop- operations and forecast revenues for
return on recent and considered acquisi-
ment strategies may be implemented to the facility. Comparing refurbishing
tions.
maximize and prioritize profit potential. and operating expenses against newly
projected revenues allows us to develop
Determining Branch Potential
revised operating strategies that have
For more than thirty-five (35) years The
How is the Additional Potential
realistic and manageable timelines and
Frerichs Group has helped clients Identified?
resources.
achieve optimum branch and service- GRFI’s Regression Modeling identifies
related potential. specific untapped product-service poten-
tial that could be realized through the
For more information contact:
These objectives have been achieved upgrading of facilities coupled with new
George Frerichs or Kathy Frerichs at :
through a combination of Mathematical technology, operating models, and re-
GRFI LTD
Modeling and Architectural on-site facil- newed sales efforts and/or marketing
400 E. Randolph Street
ity audits. Now, as in the past, we assist programs
Suite 700, Chicago, IL 60601
clients in their efforts to extract opti-
312-856-1444
mum dollar potential from their branch
Fax 312-856-1444
systems.