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Vra Winter 09final

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

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

Published in Economy & Finance , Business
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  • 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.