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Public Service Credit Union’s New Canvas

A New Brand is More Than a Logo it Includes the Branch

Denver, CO based Public Service Credit Union recently announced their new name change to Canvas Credit Union. The name change is part of the $2.3 billion credit union’s strategy to transform the experience of financial services for its members and community.

The Canvas team partnered with Atlanta-based LEVEL5 to help create and implement a long-term multi-site branching strategy to coincide with the re-brand and name change. The plan will establish new branches in key markets across their field of membership, and LEVEL5’s site selection team procured numerous sites for the roll out.

Todd Marksberry, President and CEO of Canvas Credit Union stated, “It is super exciting to see our long-term plan start to unfold. We believe brand is so much more than our name and logo. We are creating an experience for our members that feels like family. Our branches must bring that emotion to life. We have been working with LEVEL5 to develop the plan, procure real estate, and they will design-build the branches.”

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Above are renderings of the new prototype branch for Canvas Credit Union. The initial roll out calls for five freestanding branches, and two renovations to deploy the new brand. The new Canvas branches will join the growing trend in banking toward automation and optimizing the member experience. Instead of traditional teller lines, the new facilities will embrace pods in an open environment. The new branch function and experience is designed to allow staff to dive deeper into relationships with members.

Todd Marksberry continued, “We chose LEVEL5 as our partner because of the value they could bring to our plan. Few firms in the country can develop and implement multi-site branch roll outs like their team.”

For nearly two decades, LEVEL5’s integrated process has married site selection (consulting and real estate) with design-build (design and construction) to serve banks and credit unions across the country. Mike Colvin, EVP and Principal at LEVEL5 shared, “We have worked with Todd and the Canvas team tirelessly through this process. We consider it an honor to be a part of Canvas’s future and we look forward to the growth they will achieve through this roll out.”

Don’t let your branch suffer the same fate as the Titanic

Who doesn’t love that new bank smell?

The grand opening of any new bank or credit union is typically cause for celebration. Ribbon cuttings, community leaders posing for the local press, and free hot dogs for the kids. These images remind us of a simpler time, when simply opening a branch was the key to success.

But for all the time spent on decor, messaging and branding, and even what type of potted plant is most appropriate, it’s the not-so-glitzy stuff that really determines if the new location will be a success. That’s not to discount the importance of branding. Marketing communications and advertising help differentiate one bank from another. But in truth, design decisions represent only 10% and 15% of a new branch’s costs. Surprised?

The unseen iceberg

With much to-do about what’s going on above the surface, too many executives put emphasis on design, rather than projecting a realistic budget, determining schedule and controlling construction costs. These massive costs represent the iceberg. The 85% that can cause you to, yes, sink or swim.

If you don’t effectively impact the major centers of gravity for costs (size of the branch, building materials, time and quality) then branch performance will suffer.

What we found…

LEVEL5 looked back at historical spending by banks and credit unions on the total cost of projects. Here’s what we found:

First, branding is important, from the color schemes to retail merchandising to point-of-purchase displays. But, too much focus on this may not be the best use of creative energy for a component representing less than 5% of total dollar spend.

Second, store layout, furniture decisions, and even floor finishes matter. Materials can be expensive, and the need to create a space to fit your local community’s desires can result in costly considerations. Still, these costs are often just 7-10% of the entire spend.

Third, total cost projections of a branch should reference three data points:

  1. National cost databases
  2. Historical cost data
  3. Market pricing

Whenever client budgets run over, it’s almost always because whoever was estimating the project at the bank or credit union overlooked something crucial.

Market pricing and schedule

While clients and other design-build firms spend most of their time and energy on the visible 15%, LEVEL5 understands that the 85% below the water drives performance.

Determining what the credit union or bank is willing to spend and aligning that spend with design, and the supply chain is what we do well.  At LEVEL5 we specialize in solutions that go beyond design-build, by helping you decide what kind of branch solution works best for your markets and needs.

With our guidance and expertise in construction, the only fire you’ll need to attend to is the one cooking up the hamburgers and hot dogs. How do you start building a successful plan?

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Is Your Branch Strategy Keeping Up With the Jones’s?

The Five Questions Every Banker Needs to Answer About Their Branch Strategy

The traditional banking business model of the past was built around a decentralized branch strategy. Find a heavily populated area, sprinkle a network of easily accessible branches around it, and watch the growth happen. Pretty simple, right?

It worked like magic.

The psychology behind putting branches everywhere was intriguing: more branches implied a bank was doing well, so one’s money was somehow more secure. It wasn’t necessarily true, but it still seemed that way. Then the Great Recession hit. The large banks initially took the greatest blow, shuttering branches left and right. Then regional players continued the trend, despite the economic recovery that followed years later. Banks chose to put their faith more in cost reduction than customer service.

Market density matters.

What could have kept some of these recently closed branches open? Why close so many, even in places where there wasn’t a lot of competition? Turns out, maybe the bank’s misunderstanding of market density came back to hurt them. Given these ever-changing times, what kind of density solution is required to be successful?

Banks, particularly the larger ones, often close branches, not because of a shift toward digital and mobile channels (it’s certainly a factor), but a failure to plan for them in the first place. Though customers demand omni-channel options, at times, they still desire face-to-face contact with their branch. The latest surveys show the branch is a key channel:

What happens when a branch closes?

Closing a branch is a short-term solution, that while saving money initially, has long term implications. Studies have shown that up to 40% of customers change banks if their branch leaves the area.

Before you build your next branch, consider the following questions:

  1. Does your branch need to be large or small?
  1. Should the branch be fully-automated, or mostly?
  1. How can the bank’s or credit union’s people be convenient to the customer?
  1. Does it have to be a freestanding facility?
  1. Is a branch even right for the particular area?

So what’s the answer?

Perhaps bigger banks have done a poor job identifying the opportunities in their markets. Branching today takes considerable planning and precision, and if not done well can lead to unprofitable locations.

Market densities matter and the deployment of the right density matters even more. Density solutions are important and they do not always result in freestanding branches, which can be short-term considering the expense and risk. It’s really about convenience for customers and their needs.

At LEVEL5 we do more than design-build for financial institutions. We incorporate data, local market knowledge, and expert site selection to maximize your return on investment.

Site Selection done well, can make a huge impact. Click Below to Read How

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As branch numbers go down, is the future of banking going with them?

If you’ve done any scanning of the financial headlines lately, you’d think the banking industry was in some sort of downturn.

Numbers back up the concern.

The Wall Street Journal recently reported 1,700 branches were closed in 2017 alone. That represents 2% of all the branches in the United States, bringing the total down to somewhere around 90,000. This headline grabbed a lot of attention.

We know that the rise of mobile banking has reduced the amount of foot traffic in many locations. Are we in the midst of another digitally-led upheaval? Have millennials decided they’d rather conduct their banking without having to look up from their phones and actually talk to someone in person? (We kid, we kid).

What’s the real story?

Big banks aren’t necessarily in trouble. They’re just pivoting. Each mobile interaction costs about 10 cents per customer, while an interaction with an actual human being is around $4 (see infographic below from Bain & Co.). It doesn’t take a CPA to realize the cost savings of closing a branch that’s not being utilized.

Another reason the numbers are skewed.

Another data point that makes the closures sound more alarming than they actually are, is that they are attributable to the top ten banks. When larger banks make cutbacks to save money, the numbers reflect it, and the market pays attention.

Do we even need the branch anymore?

All the studies say: Yes, absolutely.While consumers are certainly shifting their routine banking needs to their mobile devices, they still visit branches. Studies put the numbers as high as 90%  as noted below from Bain & Co. The need for customers to spend time speaking to their banker, either face-to-face or over the phone, is still important.

What happens when a branch closes?

When branches serving less populated areas decide it’s not financially feasible to keep a branch open, longtime customers are forced to drive miles and miles to their nearest branch.

Customers may love you, but do they love you that much? Studies have shown that 40% of the time, customers will switch to a different bank that has a branch nearby. All banks deal with “churn” to a degree, and closing a branch can be a self-inflicted pain that may cost the bank in the long run.

What does this mean?

If the branch solution is built on a “If we build it they will come” mentality, perhaps the big banks closing branches did a poor job identifying the real opportunity in their markets. Otherwise, they they wouldn’t have to be closing the branch.

There is a precision to branching that can rear its ugly head later if not done well. At LEVEL5 we specialize in solutions that go beyond design-build, by helping you decide what kind of branch solution works best for your markets and needs.

What can we learn from big banks on what not to do?

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USE Credit Union | Branch Transformation

USE Credit Union “Extra-Ordinary” Branch Transformation in La Mesa

USE Credit Union engaged LEVEL5 to design-build the Credit Union’s newest branch in La Mesa, CA in 2017. The now completed branch follows the Credit Union’s continued commitment to provide an extra-ordinary experience to its membership and community.

“The face of member service continues to evolve, driving efficiency and engagement in the branch,” stated Jon Calvert, Regional Director for LEVEL5. “USE is embracing the next wave of branch automation utilizing Glory’s TellerInfinity technology. We are excited how this newest tool will benefit the Credit Union’s membership.”

The new La Mesa branch is located at 8200 Parkway Drive in the heart of La Mesa’s commercial district. The Credit Union occupied an end-cap and the branch is approximately 2,800 square feet. The branch experience is a function first approach layered with technology as an accelerator for the business.

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“While consumers have many options for how they do their banking, the branch still serves an important role.  At our La Mesa branch, we wanted to engage our members and the community by creating an extra-ordinary experience,“ said Billie Cardenas, Vice President, Retail & Marketing.  “We chose LEVEL5 for our La Mesa branch relocation because they understood our desire for relationship deepening, coupled with new automation tools. They are unrivaled experts at bringing together all components in the design-build of credit union facilities.”

USE decided to embrace TellerInfinity because this tool does not drive members away from the branch, but seeks to automate routine components of the branch experience. With the time-save efficiencies allowed through this technology, the Credit Union’s team can devote even more time solving problems, building relationships and investing in the lives of its membership.

Jim Harris, CEO of USE added, “New technology combined with a more inviting branch environment is changing financial services and improving the member experience. We’re excited to introduce this new concept in branch design and execution made possible through our partnership with LEVEL5.”

Guaranty Bank | Main Office Transformation

LEVEL5  Creates ‘Bank of the Future’ for Missouri’s Guaranty Bank

In 2017, Guaranty Bank chose LEVEL5 to design-build the Bank’s new main office and retail banking center in Springfield, MO. The Bank occupied 25,000 square-feet of space in the fifth, and final building of Farmers Park.

“Farmers Park is a vibrant, contemporary destination with an average of 8,000 weekly visitors and a lot of amenities that fit nicely with our image of the Guaranty Bank of the future,” said Shaun Burke, President & CEO of Guaranty Bank. “We were confident that LEVEL5 could design and build a facility that would enable us to maximize our investment and realize the full potential of this location.”

Video Story

The Bank’s new main office implements a new customer experience, attracts new employees, and serves it shareholders with maximum value. Some say a picture is worth a thousand words, well this video says even more of what Guaranty Bank and LEVEL5 accomplished – together. 

 

Business Case for Branching in a FinTech World

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…



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Close my branch? That’s fine, I’ll Choose Another!

Consumers are deciding the value of the branch.

When it comes to the longevity and value of branches, opinions really do vary. Depending on our own stories, experiences, communities and allegiances, the branch’s importance will ebb and flow. However, when we look at evidence, the opinions fade and the demands of consumers ring loud and clear. Especially, when their favorite branch might close.

Millennials and the Branch –  A recent Bain & Co. study of 137,000 consumers found that 90% of participants visited a branch in the last 3 months, including 86% of Millennials (25 to 34 years old). The same study revealed Millennials desire human interactions in a branch because mobile & web solutions provided by financial institutions (FIs) are inadequate to solve all their needs. Furthermore, the study found that Millennials are the most likely consumer to apply for and receive loans.

Bain also reports that mobile banking adoption is leveling off at 55% – growing from 52% a year earlier. And though digital solutions can provide tremendous scale to FIs – they have not closed the gap enough to provide a sustainable revenue source i.e. loans for FIs to outpace the need for branches.

Sales and Humans – According to a study produced by Ernst & Young (not PWC for all you Oscar fans last year) over 65% of consumer sales occur in a branch and over 72% occur with a human interaction. When it comes to the financial engine for banks and credit unions,  sales = loans.

Branch Preference – A 2016 TimeTrade report found that nearly 57% of consumers prefer the branch as their primary way to interact with their bank or credit union. Furthermore, a recent FiServ study said 44% of consumers still prefer the branch as their primary connection point to their FI. JD Power reports that 77% of all new accounts for banks and credit unions walk through the front door,  compared to 82% five years ago. Today, 19% of accounts come through mobile channels, compared to 14% five years ago. Obviously digital is closing the gap, but very slowly, and many consumers prefer the branch…especially in the community-scaled model.

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Are Community FIs Closing Branches? Consumer-based banking has been primed for disruption for a decade. However, less than 3% of all community bank branches have closed during that period. This is in large part because for the community bank, consumer banking is not their primary customer. Yet, Credit Unions who by nature serve the underserved, and are all consumer – are not closing branches either.

The Bain study also discovered that nearly 40% of consumers will switch to a competitor, if their local branch closes. No wonder FIs don’t close branches.

It would seem that much of the fuel for closing branches is aimed at the Mega Banks. After all, they have closed about 10% of their branches in the last decade.  But even after all this churn, there are still over 90,000 branches in circulation. Much of this because Mega Banks keep opening branches too. Bank of America recently announced they are opening 60 more in 2017 – double what they opened last year.

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The Case for the Branch – The ongoing case for the branch lies with the value that consumers place on the human interaction. That interaction at present drives lending, which continues to be another human interaction. And lending drives the financial engine of banks and credit unions.

Therefore, value is decided by the market and consumers. And today consumers value, the branch.

The Business Case for the Branch in a FinTech World is no longer a mystery. New research shows the ROI for branching.

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Bear State Bank Enters with a Roar

Bear State Bank enters with a Roar | $25 Million in Loans in the first year!

Bear State Bank headquartered in Little Rock, Arkansas, opened its first branch in Conway, AR with a big bear roar! The Bank acquired a vacated branch at the corner of Prince Street and Salem Road and worked with our LEVEL5 team to transform the branch from a traditional, stuffy environment into an open, modern and welcoming environment that is designed to transform the banking experience for its consumers.

The branch offers high-touch, personalized banking service to its consumers that includes a dialog tower (a kiosk/pod to replace the teller line), a waiting area with refreshment bar, flat screen HD monitors, technology bar and a “Community Wall” to highlight local events, activities and businesses. The design-build team at LEVEL5 also incorporated a Bear State Bank gumball machine into lobby design and customer experience.

The new Bear State Bank customer experience begins even before the customer enters the facility. The branch has a prime location, so the Bank’s team and LEVEL5 wanted to create a unique exterior element that would make a big impact in the Conway market. The Bear State Bank logo was a perfect solution that put the Bear State Bank ‘stamp’ on the renovated exterior of the branch.

“The feedback from the public has been very positive this past year.  The friendly and inviting environment has people staying inside the doors a longer period of time, giving our team the opportunity for further conversations, and getting to know one another on a more personal level.” said Chad Russell, Conway Market President of Bear State Bank.

Shelly Loftin, Chief Marketing Officer of Bear State Bank stated, “Conway is a young and vibrant city with 3 universities. We wanted to make a splash in this market with our first location. LEVEL5’s experience in designing and building branches helped us create an atmosphere that allows our bankers to deliver a high level of personal service to our customers. LEVEL5 has been great to work with. They understand how to integrate new technology, and methods of constructing banking services in more open, contemporary and unique environments.”

The Branch opened last year and has $12 Million in Deposits and a $25 Million loan portfolio! 

 To view more images of this project click, HERE!

Branch transformation is an omni-channel experience because the focus is density. Density of the right kind of branches, automation and virtual channels. One of the newest kinds of branches is the Micro Branch.

What is a Micro Branch? Maybe this will help.

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

 Click 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.


Bulls Eye

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