Bolder banking

April 5, 1999

Using a retail format to sell personal services, branches adopt a cozy, sometimes mall-like setting that might have information kiosks, Internet cafes, customer greeters and television tuned to financial networks.

Some southeastern Michigan financial institutions are dumping their traditional image and opting for retail chic.

Gone are the chandeliers, the sweeping wooden staircases, the marble fixtures, and walnut and cherry desks. Now the branches tout televisions tuned to financial news networks, information kiosks, customer service representatives modeled after Wal-Mart's successful customer greeters, and storefronts for loans and investment services.

Financial institutions are mounting a defense against businesses attempting to eat into their market share. Competition is proliferating as nontraditional financial institutions such as broker Merrill Lynch, insurer State Farm and even retailer Nordstrom begin offering banking services.

But banks and credit unions, no longer content to take a backseat approach to marketing their products, are using the new retail format to be more aggressive in selling services other than checking and savings accounts.

"We are trying to make more of our branches like retail stores," said Chris Gill, Michigan National Bank director of distribution and network planning. "We want more of an experience that you see at the Gap, Eddie Bauer or the Disney store where you walk in and browse."

Last month, Michigan National opened a Southfield branch that features an investment center and Internet cafe. A 30-inch television in the investment center keeps customers up-to-date on the latest financial news in a living room setting.

Instead of traditional teller stations, the branch uses video screens and pneumatic tubes to communicate with customers. The remote teller system allows teller stations to operate more efficiently, because one teller can handle simultaneous transactions at more than one window.

The bank plans to build as many as 20 similar branches within 12 to 18 months, Gill said.

Credit Union ONE in Ferndale wanted to capture the shopping mall feeling in its new corporate branch.

Designers and architects installed a large central desk for customer service at the front of the branch, created separate areas for loans, new accounts and investments, and put teller stations near the back.

The reasons for moving the teller stations were twofold, said Armando Cavazos, Credit Union ONE president and chief executive officer.

"Traditionally you would have tellers up front, and let's say it's a busy day, and the line is really backed up," he said. "Customers would open the doors, see the line and say, 'Forget it.' "

But by putting tellers in the back, customers are forced to walk through the branch, thereby increasing the credit union's ability to market additional products and services to individuals.

"It's like grocery stores that put popcorn at the end of the store and make the store smell good," Cavazos said. "You have to pass the candy and chocolates and other things to get to (the popcorn)."

In addition, the setup allows Credit Union ONE to keep parts of the branch open even after teller hours are over.

The Ferndale credit union, which opened within the last year, is composed of three segments -- tellers, financial products and electronic services. The electronic services area at the front of the branch consists of two, 24-hour automated teller machines and an interactive kiosk that provides information on mortgages and auto purchasing.

Financial institutions are opting for new layouts after realizing that their brick-and-mortar branches were designed in a traditional way, which involved waiting for customers to come in, said Mark Weber of Seattle-based Weber Marketing Group, which designed a plan for Credit Union ONE's new corporate facility.

Financial institutions' last line of defense is to beef up customer service and marketing to keep customers from wandering, Gill said.

He acknowledged that financial institutions' existing customer base is being threatened by other companies providing financial services and products.

So institutions wanted to try a new concept.

The retail approach appears to be paying off.

Credit Union ONE has noticed an increase in new customers since the corporate branch opened, Cavazos said.

National City Corp., the new owner of First of America, is converting about 10 of its southeastern Michigan branches to a Bank Express format.

Tellers and sales staff are being replaced by a team that handles deposits, withdrawals, loans, investments and other tasks, said Paul Clark, president and chief executive of National City Bank Michigan-Illinois.

All that is missing in the move to retail is the food court.

Don't laugh, Gill said. That is a strong possibility in some Michigan National Bank branches.

Credit Union ONE tried, unsuccessfully, to get a Starbucks coffee cart in a branch during peak morning hours.

"I'm not sure about a food court, but I don't see why not," Cavazos said. "There isn't any reason why we couldn't lease out (space) so that when you stop in, you can pick up flowers."

Wells Fargo Bank has successfully embraced the idea of meshing retail and banking with its year-old marketplace branch concept.

The bank took seven of its larger, older branches in California, gave them face-lifts, and became partners with Starbucks and Briazz Deli to create a one-stop banking and shopping experience.

The new marketplace branches -- four in San Francisco, two in Pasadena and one in Orange County -- were stripped of their traditional furnishings and replaced them with couches, tables, contemporary lighting fixtures and fireplaces. Then, in came Starbucks, Briazz Deli, Pressing Business dry cleaners and a Wells Fargo copy and postal service center.

To accommodate all this, the full-service branch was condensed into a much smaller space, leaving space for retailers.

The idea was to create an environment where bank customers can take care of a laundry list of errands, said Lisa Rossi, Wells Fargo spokeswoman.

"You can do your banking, get a cup of coffee and sit down," she said. "People eat lunch there."

The banking portion of the branch has regular hours, but the retailers stay open until 9 p.m. Rossi said ATMs, both inside and outside the branch, allow customers to take care of basic banking transactions after business hours.

The change is paying off, and Wells Fargo is reviewing whether to use the concept in more of its branches.

"We've got more people coming in, and we are seeing the number of new customers rise in those (marketplace) branches," Rossi said.

Contact Lorene Yue at [email protected] or 1-313-223-4651.

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