Designing Your Branch Prototype: Creating a Future-Proof Banking Space

Categories:

• Banks
• Branch Transformation
• Credit Union

A space says more than a thousand words, and your credit union branch prototype says a lot. In the ever-evolving landscape of credit union retail banking, your branch serves as the physical embodiment of your institution’s identity. A well-designed branch not only attracts new members but also nurtures existing relationships. It’s a space where face-to-face interactions occur, complex transactions are handled, and solutions are provided.

In this digital age, the branch remains a critical avenue for delivering the human touch that digital channels simply cannot replicate. As you consider reinventing your brand and enhancing your member experience, one vital strategy is the creation of a new branch prototype.

The Role of a Credit Union Branch Prototype in Modern Banking

Your branch isn’t just a building; it’s a strategic asset that showcases your brand, culture, and commitment to member service. A well-executed prototype branch serves as the foundation for your entire network, ensuring consistency and efficiency across all locations.

At LEVEL5, as leaders in credit union branch design for over 20 years, we emphasize the significance of a new branch prototype. The majority of our projects center around this concept.

Identifying the Need for a Branch Prototype in a credit union

The decision to develop a retail branch prototype arises when you seek a comprehensive and uniform approach to optimizing your branch network. This extends beyond new market entries, encompassing your existing branches in need of rejuvenation.

Often, established credit unions and community banks find themselves with multiple locations that lack engagement and alignment with their brand. A prototype offers a solution, breathing new life into tired spaces and setting the stage for future growth.

This comprehensive approach ensures that every aspect of your prototype branch aligns seamlessly with your institution’s vision.

Embark on Your Branch Transformation Journey

The role of the branch cannot be underestimated as you contemplate your credit union or bank’s future. It’s not just a physical space; it’s a strategic touch point that connects your institution with its members. Embracing a branch prototype approach, backed by a team experienced in design and implementation, can reshape your institution’s identity, enhance member experiences, and set the stage for sustained success in the dynamic world of banking.

Don’t hesitate to reach out to our team to discuss how a new branch prototype could transform your institution. With decades of experience in implementing effective and visually stunning branch design templates, we’re ready to guide you on this exciting journey toward branch innovation and excellence.

How to Choose the Perfect Location for Your Credit Union or Bank Branch

Categories:

• Banks
• Branch Transformation
• Consulting
• Credit Union
• Data

a data-driven branch strategy approach

Selecting the ideal site for your credit union’s or bank’s next branch is a critical decision that can significantly impact your institution’s long-term success. Gone are the days of relying on intuition alone; today, financial institutions need to use data-driven strategies to make informed choices. 

At LEVEL5, we understand the importance of coupling data with our Branch Site Selection services to provide well-informed, actionable recommendations. In this article, we’ll explore why it’s crucial to let the data dictate the right location in your trade area and how partnering with a developer-minded firm like LEVEL5 can lead to the best results.

The Benefits of a Developer-Minded Branch Network Partner

Choosing a site is about understanding how the chosen location fits into your long-term plan. That’s why we think of ourselves as developers with your overarching plans as the goal, not mere brokers. Our approach involves a thorough assessment of the geographies and available options within a given trade area. 

Moreover, we overlay the Credit Union or Bank Branch Design types that best suit the specific location, directly aligning with your 10-Year Branch Pro forma developed during the Strategy phase. This approach ensures that the site chosen will indeed support your long-term objectives.

Location, Location, Data-Driven Action: Partner with LEVEL5 for the Perfect Credit Union or Bank Branch Site

Selecting the right site for your branch or headquarters is a critical process that requires more than just intuition or simple mapping. A data-driven approach, coupled with a clear strategy, is essential to making informed and actionable decisions to grow your branch network. 

At LEVEL5, we bring you the expertise of a developer, not a broker, as we assess geographies, identify suitable options, and align them with your long-term goals.

Let the data guide you to an optimal site and work with a partner who understands your unique needs. Contact LEVEL5 today to ensure that your financial institution makes the best location choices for sustainable growth and success.

Branch Optimization: Choosing the Right Path for Long-Term Success

Categories:

• Branch Transformation
• Consulting
• Data

increase Growth and Profitability with curated branch network strategy

What is important in branch network strategy?

The Four options

Keep: Identifying High-Performing Branches 

Identifying branches worth keeping involves a comprehensive assessment that goes beyond immediate performance. It requires evaluating various factors such as financial benchmarks, forecasts, and environmental considerations.

By examining both internal and external data, financial institutions can determine branches that not only perform well in the present but also show promising long-term potential.

Branch Remodel: Breathing New Life into Branches 

Relocate: Unlocking Potential through Strategic Moves 

Work with Credit Union & Bank Growth Consulting Experts

Is the Fox Guarding the Hen House?

Categories:

• Announcements
• Branch Transformation

“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:

1. 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.

2. 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:

Business Case for Branching in a FinTech World

Categories:

• Announcements
• Branch Transformation

Consumers strongly desire branches. Doing it well drives performance.

Measuring is key for improvement.  In today’s consumer-centric world, change is constant. In fact, the only thing that doesn’t change is change. However, if we can quantify the change, then we can measure, and improve.

If you build it, they may not come. The world of branch banking has and is changing rapidly. FinTech and consumer behavior has disrupted banking as we know it. Therefore, financial institutions (FIs) have to continue to change, always quantifying performance, measuring performance, and managing change to improve performance. Competition is fierce for FIs, and pressure from non-traditional sources force all decisions to branch to be supported by a business case. The perception by some industry experts, and pundits is this has not always been the case. Remember when you could build it, and they would come? Me neither!

So, branching has always been about establishing a business case, connecting with the opportunity, and execution. Each part of the plan is integrated with the next to eliminate unknowns, loss of information, and speed up the return on investment (ROI).

Measuring Effectiveness and Performance

Over the last decade, LEVEL⁵ have partnered with over 150 FIs across the US. Each FI has embraced process integration to define a business case, connect/design with the opportunity and construct to that case. In the last four years, we have completed over 100 design-build projects: branch and main office transformations, denovo branching, main offices, and operation centers. And, we have another 50 projects flowing through the system. Therefore, measuring the effectiveness of the strategies we create, quantify, and implement through construction is huge in measuring performance – our clients and our own.

The Research and Results

Last month, we completed a thorough examination of our client’s branch performance. We went back to our clients to quantify, and measure the effectiveness of the implemented branching plans, so we can improve. Processing their data, here is what we found:

Our client’s branches are producing an average of $35 million in net new business 

Our business case projections were 92% accurate

Our clients are growing total assets – 10% annually, compared to the national average of 3.2% 

An integrated approach to branching. The results our clients have experienced speak to what’s possible when specific strategies, tactics and actions occur. It is the integration of these components, through a specific project approach, that yields great returns for FIs investing in branching.

Consumers strongly desire the branch for connection and relationship. Doing it well with a defined and executed business case drives performance for all the FIs stakeholders.

For a deeper dive into the thought pattern and science behind earning a great ROI for branching…

Ready, Fire, Aim! | Branch & Main Office Transformation

Categories:

• Branch Transformation

Expansion and loan growth lead to transformation.

The number one question we hear about branch and main office transformation is “What’s in it for us?”

This is an indirect way of asking about Return on Investment (ROI) for transforming their business. Discussions about loan growth, market expansion and the future of banking are about transforming the business to allow it to flourish and grow. All CEOs want to know what’s in it for their company if they invest in growth.

Question #1 – How do you calculate returns for transformation?

To solve ROI for transformation, we divide the Return by the Investment. So, the first variable to solve for is return that is the opportunity. Opportunity is what we get from a market for the investment. Therefore, return is defined by the loans and deposits (i.e. opportunity) resulting from a project. Historically, our consulting team can quantify loans and deposits with 92% accuracy. How do they do it? Well, read more about it here:

 

Question #2 – How do you define the investment? 

So with the opportunity quantified, the cost to acquire the business is a major variable yet to be solved. The white paper linked below addresses the investment portion of the equation. This article is quick page-turner that will help you lower the risk of developing your next branch or main office. We all want the return, so maximizing the investment can be a reality.

Click on the target below to download the white paper…you won’t regret it.

Return on Investment for Branching

Categories:

• Announcements
• Branch Transformation

Is the deck stacked against the physical branch?

Priorities, priorities. A recent study released by the Financial Brand revealed the top priorities for financial institution (FI) marketers. In order of priority: 1) Increase Wallet Share, 2) Increase Loan Growth and 3) Acquire New Customers. Given the branch has historically been a dominant tool in the FI tool belt, it would appear that these goals are challenged.

Too many branches? In an increasingly omni-channel consumer society where branch visits are down, and population per branch is low (thanks to the proliferation of branches), it would appear the deck is stacked against FIs trying to get a return on investment (ROI) from branching, while reaching its goals. This is especially true when we consider how branch use has changed. No longer is the branch the primary channel of choice for consumer transactions. Consumers today use branches for different things than they did even 10 years ago (see graph below). Branch use for depositing, withdrawing, and transferring funds is a shadow of its former self. However, when we consider what the branch IS for today…there is more than a little light at the end of the tunnel.

Survey says… According to an Ernst & Young survey, 65% of sales occur in a physical environment i.e. the branch. So for FIs looking for a ROI for branching look no further than sales and service for your key driver of success. With this shift in mindset comes the opportunity for a new result.

Great brands think alike. Marketers of brands like Apple and Disney keenly identify that brands change over time – they evolve. Furthermore, they know that the brand and the business are intertwined as they seek to make emotional connections with their customers to drive sales. A good example is Coca-Cola. Coke’s market cap is attributable not just to the commodity of soft drinks, but also to Coke’s iconic bottle, a physical embodiment of the brand. In fact, without the Coke brand, its value is half.

FIs can learn from other retailers and develop specific strategies to get a ROI for their efforts to market their company’s brand in its primary channel, the branch.

HOW TO DO IT

Is opportunity knocking? The journey begins with market research and analysis that drives to a business case for or against branch investment. Understanding the loan and deposit potential in a market can quickly start an effective narrative for branching by defining goals and expectations based on facts. Those facts frame our investment in land, building and people so we can predict with greater certainty what the future holds.

Execution is everything. Then based on these facts, we build a plan to connect with the opportunity. Our engagement begins by tailoring the interior space to the culture and desired customer experience.  The focus is on enabling “bankers” to easily connect with their clients.  The physical identity (architecture) and signage of the branch is an extension of the culture and makes a statement to the market at large, so the market knows we are different.  This means we don’t run the same play every time and in every community. Specifically, we don’t always use teller lines, or pods, or self-service, but look at each market’s components and then tailor our connection.

Make your intentions clear. As we build the connective environment, we are intentional to communicate our brand message in graphics, colors and materials. Our value to the community and customer cannot be guesswork because these components drive action – action taken by our employees to use these materials to cross sell, and action by the customers who are now educated on what we can offer.

What we can learn from the major players. Bigger banks have taken these components to heart and are leading the way on branch experience, and getting great returns. Earlier this year, JD Power revealed that customer satisfaction at big banks is at an all time high, which is remarkable given the attitude of the marketplace toward big banks after the financial crisis. Big banks have learned that customer engagement in the branch is powerful, and they have learned how to clearly communicate value proposition.

ROI in action. The great news is we can quantify the ROI for branching using the tools mentioned above. For example, a FI in Michigan wanted to create a new customer engagement model in its community to achieve more loan opportunities. The plan included relocating a branch and remodeling a second facility with a new way of connecting, and the glue that held it together was training. The FI changed the engagement model to focus on asking questions and relationship building. They also changed their branch environment, and moved away from teller lines and used technology to automate routine activities. When the brand message became specific to the community, and the FI’s mission, then the culture changed. Within the first two years, the FI has grown its loan to deposit ratio from 88% to 92%.

More proof. Furthermore, a FI in the Southwest grew from $1.0 Billion to $3.5 Billion in 5 years through a similar shift. The shift included a new engagement model in the branch, and messaging throughout the customer experience. The exterior also changed, which was important; it helped the community identify with the change. By the way, the bank quantified the business case through research before each move.

To recap. In review, FIs can reach their goals of increased wallet share, loans, and customer growth in the branch. Here are the steps:

1. We are clear on what we want and whom we serve. Our customers are diverse and changing, so our channels must appeal to all generations.
2. We tailor the message of the branch to the market. This includes doing our research and quantifying the loan and deposit opportunity – upfront. Then we focus the branch experience on the opportunity.
3. Our goal is to establish an emotional connection with our customers and community to drive results. Our focus is on engagement and inviting the community in, so we listen more and talk less.

ROI for branches can be justified by clearly defining the role of the bank and its value to customers.

Engagement in the branch takes a new kind of banker…welcome to the age of the universal banker!

Millennials and the Branch: Strange Bedfellows

Categories:

• Announcements
• Branch Transformation

How do financial institutions connect with Millennials? Answer: A marriage of Science and Art

Earlier this year, shock waves were sent through the financial industry as study after study echoed the same message – Millennials highly value the branch. Though millennials and all consumers look digital-first for connection from their bank and credit union of choice, the branch is equally as important to consumers.

Human Connection. The research by Bain and Fiserv point to an inherently human response during the banking process, establishing trust and demonstrating value through relationship. Relationship is the heartbeat of the financial services industry and relationships are established over time.

Branching is about relationship. Banks and credit unions all offer similar products and services (perhaps at slightly different rates), but the motivation to buy (a loan) from one company over the other comes down to relationships. And consumers of all demographies are coming to the branch for that connection. In fact, the Fiserv study found that Millennials are the most likely demographic segment to visit the branch, and they are the most-likely to apply for and receive a loan through the branch.

Therefore, a key question for all banks and credit unions should ask is: How can we better connect with a demographic that wants what we have?

Science and Art. When it comes to branching there are no silver bullets or secret sauces to success. However, there are guiding principles, call them natural laws that govern victory, and it’s a marriage of Science and Art.

Science of branching. If there is one step we witness financial institutions (FIs) skip over in their pursuit of connection with consumers through the branch is developing a business case. In our industry, we have data at our fingertips and its plentiful. But, the science of branching is not about the data, it is the interpretation of the data for a specific outcome.

Market conditions. Collecting specific data about the local market conditions around your existing branches, or proposed new ones reveals more than you could imagine. It reveals the preponderance of consumers who desire what you have – loans. It shows how they want to connect with you (mobile, automated, and the branch), and it reveals the specific products and services we should offer in branches.

The index data above is much more than good local information about product and service demand. With this data in-hand we can go to the next level to establish the total headcount, and the function of the branch. So instead of staffing branches “how we always do” we can staff for a specific outcome based on what local consumers want today, and what they will need, tomorrow.

Loans and Deposits. Furthermore, all data collection for branching should result in a specific loan & deposit forecast for that opportunity. Only with this information can we build a business case that will allow for measurements of return on investment. Historical experience has proven that a freestanding branch’s profitability comes into focus at $25 Million (deposits & loans). Nevertheless, as branches get smaller and more flexible perhaps lower opportunity can be feasible. In any case, understanding opportunity and starting to develop a detailed plan – if it’s a 70% one – will create a greater likelihood for a predictable outcome.

 

Art of branching. Certainly, much of the business case for the branch is art as we interpret the data; however, the art also flows into design. The function and headcount of the facility are finite components so that is science, but how we integrate those into our consumer experience is unique to the local community we serve, and your business, and that is an art.

A unique consumer experience. Connecting with the local demography, the community and your consumers is unique to your business. The experience should be well planned and purposeful, always remembering your personality and value proposition are unique to you. A consumer experience that begins before the consumer walks through the door, and continues through the branch environment. And the beauty is though again we have guiding principles that govern victory, we have freedom of creativity to build connection, so the branch experience it takes on different personalities in each community we serve.

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Training drives performance. And the glue that holds all of it together is your human capital – your people. Nothing in branching drives success better than training your staff to learn how to connect with people and opportunities. For many FIs, this means adopting the Universal Banker model for their business. This means we combine skills training to optimize each opportunity our staff has to connect with consumers. To shift the employee mindset and branch purpose from order-taker to advisor, teacher, council and guide through the consumer’s financial journey. Every consumer is at a different stage, and they look to their bank or credit union for help. Your success depends on your ability to capitalize on those opportunities.

So, what’s next? That’s really up to you. The process outlined above is but an overview, a 30,000-foot glimpse into a portion of the process of connecting with consumers who want what you have in the branch.  So, a good question follow-up question might be:

What is the Business Case for the Branch in a Fintech World?

 

No Shortcuts to Transformation

Categories:

• Announcements

Re-thinking the branch, re-training the banker for transformation

Change is inevitable. The world we live in and the people we know change constantly. Businesses are changing as competition intensifies, technology accelerates and information moves at the speed of light. The world has transformed into a global economy, no longer bound by walls, geography or time. We are in an age where busyness is the norm, and we dictate our own realities by the choices we make…daily.

Who needs a branch anymore? For the community-based financial institution (FI), “the times” have changed them too. No longer can FIs rely on just branches, or just service to meet consumer demands. Today, we live in a world where consumers demand an Omni-Channel approach. Consumers demand automated channels, virtual channels and physical branches to meet their needs.

Branches are no longer one-size-fits-all. Branches today are still about convenience and market density, but each branch can and does fit a different purpose. Starting with the largest of all facilities, the cornerstone branch, which includes main offices, these large format facilities play a different role than others.

Where Community meets Technology. Today’s main office sets the tone for the company’s culture and identity. Furthermore, the rapid loan growth being enjoyed by FI’s across the country is causing ripple effects throughout the main office.  Call centers in these facilities are changing. With the advent of Interactive Teller Machines (ITMs), community-FIs can serve their consumers 24-7-365, which means the call center is in the midst of transformation, now staffed with Universal Bankers who can be a one-stop-shop for the customer’s needs.

Engaging consumers. After all, building relationships are at the heartbeat of the Universal Banker model. Surveys show that 65% of sales occur in a physical branch, so the days of relying on a relationship built across three feet of mahogany are over. Today, banks are challenged with differentiating themselves and some are more aggressive than others in their use of technology, retail concepts and design to facilitate a more engaged consumer experience.

The people have spoken. Market research, customer concentrations and analytics now dictate how FIs should design their branches to relate to their markets.  If the model is best supported by a teller line, then stick to that plan. If a more engaging environment, powered by technology is indicated, boldly adopt that plan. In all cases, the transformation of the branch is crucial to reach consumers.

When a big branch doesn’t make sense. The cost and time to implement branches has also given rise to the Micro Branch. Micro branches today still include storefronts and in-store branches, but can now also include mobile branches, freestanding facilities, and “pop-up” branches. The key component of Micro Branches are their size and flexibility as well as their cost.

How best to serve? In the end, banks and credit unions are faced constantly with decisions on how to serve their consumers, communities, and employees. Change is inevitable just for relevancy, but the FIs that are changing with a plan achieve specific results.

Proof that change can work. Based on FDIC data, one Southeast Bank grew organically from $1 Billion to over $3.5 Billion in the last five years by making branching decisions around a business case. Another FI grew its assets by 37% in the Carolinas over a seven-year period embracing technology and universal bankers.  Still another near the Great Lakes moved its loan to deposit ratio from 88% to 92% in less than two years by implementing a more engaged branch culture.

The bottom line is the bottom line – transformation, driven by a well-devised plan and business case, succeed.

Improving your performance. In today’s ever-changing environment, financial institutions are faced with two opportunities for performance improvement:

1. Their existing footprint
2. Moving into new markets

The FIs that flourish, marry business planning and execution into a seamless model driven by a business case to maximize their investment and gain optimal returns for their stakeholders. Predictability, timing, risk management and engagement can all be folded together so the business, consumers and community win!

So, as you face the future, start making decisions and then take bold action. Over time, those actions lead to transformation…there are no shortcuts.

Financial institutions who do their homework are the ones best positioned to succeed in a brand new playing field.