Is the Fox Guarding the Hen House?
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- Branch Transformation
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“Very cool.” “Incredible!” “This doesn’t look like a bank.”
Showing the world that a traditional bank doesn’t have to feel like one, today’s financial institutions are finding new ways to wow customers. So much so, it seems like the “design” in most building plans should come first and foremost. To that we say, “slow your roll.”
How to build a better bank.
Actually, maybe the statement should be revised to “How to build a bank better.” In its simplest terms, every branch or main office project has an owner, a designer and a general contractor. From there are two models to compare:
- Design-Bid-Build (aka “Old School”) – This is the traditional model, where the architect and builder are separate. The architect creates a set of blueprints independent of the contractor. It’s on the owner to submit bids and determine who is right for the project.
- Design-Build (aka “New School”) – The more modern approach. This is where the owner hires one firm to be responsible for design and construction. This model maximizes value (Download White Paper) and eliminates the owner as the middle man.
Two kinds of Design-Builders
1 – In-House Design (Design Led) – Not all design-builders are the same. Some have design in-house and others don’t. Firms with in-house designers (on staff) lead with design, and not construction. For banks and credit unions this can introduce risk into the equation – especially when cost is king. Risk is not starting the project with a budget. Risk is using the same designers for all projects. Risk is more costly projects.
All firms charge their client overhead costs. Overhead of the business (indirect overhead), which would include costly designers, as well as direct overhead for the project (cost to do the work). These firms also charge a design fee. Sounds a lot like the Fox is now “in” the Hen House.
2 – Out-Source Design (Construction Led) – Design-builders who outsource design are construction led firms. Research shows less than 15% of the total cost of a branch is branding, furniture, fixtures and equipment. So, the key cost buckets are the non-sexy components that no one sees.
By outsourcing design, the cost of the project is lower. Only the cost of the designer (design fee) is assigned to the project. So, there is no double-dip on overhead and design fee. Moreover, by leading with construction, the budget for the project is preserved. The budget is the north star and is what defines what happens next. In this way, designers can be free (freed knowing the budget) to create “beginning with the end in mind”.
Beware of Wolves in Sheep’s Clothing
Jim Collins in his revolutionary book “Good to Great” characterized great companies as those that focus on their hedgehog concept. Few design-builders, who specialize in banks and credit unions, grew up in construction – it is not their hedgehog. Some of these firms grew up as bank equipment firms, others focus on branding, and nearly all lead with design aesthetic. These firms are not vanguards of budget and branch performance, because it is not in their DNA. They cannot offer what they don’t have.
At LEVEL5, we are a construction-led design-build firm who incorporates data, local market knowledge, and expert site selection to maximize your return on investment. We understand that lowering risk is in on the minds of banks and credit unions night and day.
This is not just our opinion, but the testimony of banks and credit unions across the country. What else is keeping them up at night? Listen to what they have to say in these videos and decide if we are the right fit for you:
Core Philosophy of LEVEL 5
- Branch Transformation
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Over the last 15 years we have partnered with hundreds of banks and credit unions to help them grow and improve performance. Our company is built on a continuum of five levels of service that exist in every financial facility project (Strategic Consulting, Real Estate, Design, Construction and Branding). The power of LEVEL5 is the integration of these services into one deliverable that eliminates information gaps and delivers projects…faster with the greatest return on investment..
Our complete design-build solution is broken down into two buckets: Site Selection and Design-Build to ensure the business case for a facility is quantified and implemented.
Site Selection: Consulting and Real Estate
Our site selection team establishes the business case for expansion by quantifying the loans and deposit opportunities in new markets and starts taking action. Our consultants analyze market demographics, competitive forces and customer segmentation to paint a clear picture of the local demand for loans and deposits as well as how the bank or credit union will connect with this opportunity in their physical environments.
Historically our projections for growth are over 92% accurate, producing $35 million in deposits per project.
Our real estate team works with our consultants to identify and procure property. A sound strategy is only good if it is implemented. Our site selection team brings plans to life by securing actionable sites on behalf of our clients. Our proprietary process routinely procures sites, facilities and leases that others cannot.
With a clear picture of the business case established through market analysis. And the where locked in by our real estate team. Then our design-build team has a solid footing on the kind of facility and the budget that makes the business work.
Design-Build: Design and Construction
Our design-build team uses the information in the market analysis to inform the design in regards to function, experience and technology. The team works to establish a facility design that maximizes efficiency, makes the clients stand out in a crowd, and adheres to the business case. Architecture establishes the physical identity of the bank or credit union to its community and to its customers. Branding moves people into action, educates and clearly communicates the company’s value proposition. And, technology serves to accelerate the business of today’s branch or main office.
At LEVEL5 we don’t want to just build you a great building (though that is the testimony of our clients), we want to partner with you to make sure your strategy comes to life. Therefore, with the design complete, our construction team builds facilities that adhere to time, budget and quality.