Will “Mini-Branches” Ensure the Survival of the Branch Network?

by. Michael Downs and Heather Horrocks

In a recent article, “Wells Fargo Mini-Branches And The Shrinking Retail Footprint”, published by the Financial Brand, they examined a new branch concept being rolled-out by Wells Fargo that is dubbed the “mini-branch” or “neighborhood bank format”.

According to the article, “Branches are central to Wells Fargo’s strategy”, said Jonathan Velline, head of Wells Fargo ATM Banking and Store Strategy.  In an effort to make the bank more accessible to customers, Wells Fargo is refining their branching strategy and therefore opening more stores in their branch network.  They are also decreasing operating expenses by “50-60% of a traditional store,” said Velline.  “This new neighborhood bank concept complements our traditional stores to help us bring the Wells Fargo store experience to more customers.”

So continues the debate around the future of branching and the demise of traditional banking facilities…

Is this the future of branching?  It very well could be according to Jim Haack, President of Momentum, ”Financial institutions have seen the growth in alternative delivery channels such as online banking and mobile banking, dramatically affect the role of the retail branch.  But in spite of these changes, branches remain an influential delivery channel that can enhance a credit union’s relationship with members.  Credit unions are realizing that retail branches are becoming more about providing members with access to specific services and the type of branded experience they can provide”.   According to the FDIC, staff compensation represents as much as 44% of a bank’s operating expense.  As such, financial institutions that deploy branch network strategies that focus on efficient use of space and leverage technology will be in position to significantly reduce branch operating costs.

Our team at Momentum is starting to see this trend among our own credit union clients.  In a recent project with Camino Federal Credit Union, Momentum was tasked to create a branch prototype in 1,887 square feet of space, significantly smaller than the traditional branch model.  The location was perfect, but the size of the space was challenging, so operational functionality was essential. Two teller pods were implemented with privacy panes between each space for ease-of-use. Glass walls were implemented between all of the offices, in order to create the illusion of space, and marketing images were integrated throughout. Small details weren’t overlooked, such as back walls concealing a storage area making the best use of the facility’s size limitations. State-of-the-art technology was implemented, including an interactive kiosk, iPads for mobile use, and a print-on demand station.  All of this translates to a branch space that utilizes a small footprint to create a positive member experience, using a balance of technology, personalized service and effective design.

One thing is clear:  Branches will continue to evolve in an ever-changing banking environment based upon member needs, new technology and delivery channels. The future success of the credit union will depend upon their ability to identify and address these needs through their banking facilities and their ability to refine their brand and branching strategies.  They also have the opportunity to grow their existing branch network while decreasing operating expenses and reaching out to more members.

Michael Downs

Michael Downs

Michael Downs is the Vice President of Client Solutions at Momentum, a strategic design-build partner that takes a people centric approach to helping credit unions across the nation thrive. Web: www.momentumbuilds.com Details