Aba White Paper 10 01


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ABA Journal White Paper By Brian N. Reno

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Aba White Paper 10 01

  1. 1. ABA Banking Journal’s White Paper for August 2004: Bank Building Design/Building Trends EXECUTIVE SUMMARY Financial Facility Design & Development Trends By Brian N. Reno PRINCIPAL OF VRA ARCHITECTS SENIOR VICE PRESIDENT OF THE FRERICHS DESIGN GROUP N ational and regional banks continue to build real estate and zoning pressures, the average size of branches and acquire each other at record new retail branches is shrinking from 5,000 S.F. to levels while locally-owned community 4,000 S.F. banks compete with them for both talent Use of cash management solutions is decreasing the and real estate. number of tellers required in a branch. ATM and At the same time, credit unions are discovering the internet banking delivery channels are slowly benefits of community charters and new branches. increasing their overall share of transactions, and Insurance and investment companies are beginning therefore less teller and cash transaction space is to explore the need for brick and mortar branches being built into branches. as well, after successfully entering the internet, A backlash against the proliferation of financial telephone and direct marketing banking channels. institutions and their lack of sales tax revenue Even paycheck loan stores are considering generation for local governments has caused branching out into new financial service product increased regulations and restrictions to be imposed lines. by government in the form of financial institution As the competition increases, branch design development moratoriums and denial of “special continues to evolve. use” or “conditional use permits” for drive-up banking facilities. Combined with increasing real While freestanding branches are still favored, estate acquisition costs, we are observing a move storefronts, and even supermarket and modular towards leased storefronts and shared-out parcels branches have become a necessary form of branch that might have been avoided in the past. building due to intense retail competition in commercial real estate markets. Regional and national financial institutions today need flexible design program elements that can be Branch building size and development trends: Due utilized in new freestanding facilities, lease to increased use of teller automation and increased Page 1
  2. 2. • storefronts or legacy branches to maintain brand Electronic Media & Merchandising identity, sales culture, new technology rollouts. Programs • Conversely, many of the new locally operated Treating the Customer as Guest / Superior “community banks” and credit unions are taking Service advantage of their smaller size to customize and Borrowing the playbook from top retailers like differentiate their branches to reflect their Starbuck’s™, Nike™, and Target™, financial community and consumer culture, and local retailers are striving to differentiate themselves by product/service potential on a branch-by-branch “Creating a Memorable Experience.” Most basis. Financial institutions continue to develop consumers equate going to the bank with a trip to limited service, loan focused, or private banking the post office (a necessary evil). facilities on smaller sites when freestanding sites for traditional full service branches are not Even while electronic banking transaction available. alternatives have proliferated, consumers have shown they prefer to build relationships with a The community bank’s focus on high balance, high financial institution at the branch face-to-face, and value consumers and the business community, financial institutions have responded. allows for wide variance in the areas of service level and design where local decision making, familiar faces and handshake are the main form of relationship marketing. The latest trends in banking revolve around creating a positive customer experience. Financial Retailers are Re-defining the Consumer Banking Experience by: • Offering personal service more akin to a concierge than a clerk • Eliminating long lines at the teller window Branch Design Trends • Offering coffee, juice and cookies I. Elements of the Positive Experience • Automating coin deposits Defining the Brand Experience • Providing conference rooms and seminar • Color Identity rooms for customer use • • Information / Education Featuring the business or customer of the month • Creating a “lifestyle” magazine to replace • Entertainment brochures Page 2
  3. 3. • Introducing a “family room” type atmosphere that won’t displace or irritate other more time to allow consumers to be comfortable while sensitive consumers. being entertained and educated by video The same principles can be used to highlight programming in the waiting area, tossing out investment services, business banking or insurance the formal image of banking. product areas. • Providing play areas for busy parents’ children Design the branch and the interior sales platform • to be visibly approachable but have adequate Using color and brand identity to create a privacy to conduct sensitive interviews and memorable identification with “a positive collection of consumer information. Inform, branch experience” educate and entertain customers while promoting • Creating “boutique” areas within the branch to the bank’s services, products and brand identity. serve specific niche markets like small business Examples of successful design concepts include: and investments • Use of color, graphics, ceilings, floors and • Marketing directly to the 70% of their millwork to guide the consumer through the customers who frequently use the drive-up in branch and direct them to greeter and sales lieu of the branch lobby areas. • Locating sales and greeter zones at the entry for the branch to eliminate confusion. II. Enhancing Relationship Sales The primary trend in branch design continues to be enhancing the sales environment at the expense of transaction functions. By automating and creating higher efficiencies in the transaction processing areas, financial institutions are reallocating sales area and banking talent to the sales platform. Design trends that can both focus the sales person and attract the consumer include: • Creating self-directed education and information centers within the branch that focus on core products as well as investments, business banking or other market appropriate consumer demographic segments. • Use of enhanced way-finding and service level • Understanding the cultural differences of signage to identify core product and service different consumer ethnicities, gender, age and areas and differentiate non-traditional / non- economic experience and designing the insured products. relationship banking platform to decrease customer intimidation and increase customer • Continued and expanding use of electronic comfort and contact. For example, a suburban merchandising systems. These systems allow branch may cater to families by adding a mass customization of message on a branch- child’s play zone thus freeing the parents to by-branch basis or overnight updating of all make financial service decisions without branches system wide. With a variety of video interruption. A branch in a mature market slide, video animation and video poster formats area, however, might do well to create an area these systems are poised to replace larger that caters to the social and convenience needs poster, and kiosk and wall display systems. of elderly or retired customers by providing copy, fax, stamps, and refreshments, in an area Page 3
  4. 4. This is due to combination of factors including with the goal of enhancing customer contact rapidly decreasing video display cost, new and and relationship building. easier video programming software / management tools, and the need for more strategic and specific video merchandising to III. Using Design Strategies to Reduce Staff compete in diverse consumer market places, Overhead and Increase Efficiency i.e. one branch’s dominant customer segment Once the investment has been made in bricks and is different and might support increased sales mortar branches, a well-located facility can deliver of deposit products, while another’s might best a return on investment (of construction and land support consumer loans. There is no need to cost) in three to five years. However, during future communicate message frequency (to all operation of the branch, the annual cost of staff has branches) when easy segmentation of message been the biggest impact on profitability and a well- via electronic display could be much more designed branch can minimize future staffing meaningful to the customer and more expansion. profitable to the financial institution. Design strategies that allow the branch to grow • Electronic merchandising also provides the profitability include: ability to associate the marketing message with • today’s current events, educational and Designing for efficient operation during peak entertainment content and this provides an and spare hours in both the sales platform and enhanced experience and benefit to the transaction areas. Good planning allows for consumer. excellent visibility, and control of the customer service experience by as few as two • Point-of-service and sale merchandising will relationship managers (Traditional New continue to support relationship sales Accounts or Customer Service Staff). environment but now frequently takes the • form of a lifestyle magazine that presents the Planning for future transaction growth by financial institution products in the context of building in room for future ATMs, teller cash goal and dream fulfillment for the consumer, dispensers, and cash recyclers instead of instead of a typical brochure communicating additional tellers. rates, fees, minor differences of commoditized • Designing for universal sales and transaction products. positions where all services from loan • Financial institutions continue to experiment application to a cash transaction can be with unique sales platform designs, including handled by cross-trained personnel during greeter kiosks, stand-up dialog banking kiosks non-peak times or in low density suburban or and sit down customer consultation rooms, rural branches. Page 4
  5. 5. • What does the future hold? Leverage the internet and interactive electronic systems within the branch environment to enhance waiting areas and generate customer profiles, loan applications Will an efficient, exciting, and entertaining retail and to help guide the consumer and banker in banking experience keep us in the branches? defining the best product and service relationship balance. Will consumers migrate to a future OnStar™ • Design the branch to be efficiently utilized on banking network and bank from their car instead an extended hour basis for customer loan of the drive-up? closings and consultation without opening non-sales areas of the branch. • Use the “hoteling” concept to allow flexible use Will your kids want to bank only on their PDA / of conference areas and closing offices by cell phones while you still bank at Starbucks™ in investment, insurance, trust and financial the morning? planning staff on a part-time or appointment basis. Stay tuned. • Privacy can be maintained through utilization of modular furniture with careful attention to acoustical, floor, wall, and ceiling finishes while maximizing the potential number of sales positions within the branch. Brian Reno is Senior Vice President and a Retail • Design Consultant with The Frerichs Group in Segment merchant and commercial Chicago, IL and Principal with VRA Architects in transactions from consumer transactions at the Park Ridge, IL teller line to decrease consumer wait times. • Utilize teller cash dispensers to minimize the number of drive-up lanes required and/or The Frerichs Design Group increase drive-up through-put. 400 East Randolph Street, Suite 700 • Utilize automated self-service merchant cash Chicago, IL 60601 and coin dispensing equipment to move this service out of the teller line and into the 24- Work: 312 856 1444 hour zone, increasing customer convenience and reducing teller staff operations. • Locate drop boxes, envelope depositories or use VRA Architects automated receipt producing night drops to off 1018 Busse Highway load simple deposit transaction away from the teller area. Park Ridge, IL 60068 • Consider remote video teller units in lobbies or Work: 847 993-0200 x25 high volume facilities in combination with cash dispensers in order to combine drive and lobby teller functions into a super-efficient remote transaction processing center. Page 5