Should a Bank Be a Store?
Going retail is all the rage. But World Savings’ Marion Sandler says that good branch design can’t be quantified. It just is.
By Jacob Ward

Until just after World War II, bank architecture was fortress architecture. Back when the greatest challenge in bringing customers through one’s door was convincing them that a bank account was safer than stuffing cash in a mattress, architects worked to make banks look impregnable, venerable, and holy. But then, in 1954, on the northwest corner of 43rd street and Fifth avenue in Manhattan, a bank went up which changed everything. The building is small—a four story, glass-and-steel structure with the bland interior of a mid-century office. These days, one might walk by it without looking twice. But when it was built by architecture firm Skidmore, Owings & Merrill for the Manufacturers Trust Company in 1954, SOM threw its best young architects at the building, and the resulting intra-office competition created a new era in the design of bank branches.

The building looked more like a greenhouse than a fortress. It incorporated a glass curtain wall which revealed an open, light-filled space. The second story was set back from the windows to expand the sense of openness. All of this visibility served to exhibit the center of the scheme: an enormous polished-steel vault, gleaming and glittering in full view of passersby outside. Its rivets and bolts proclaimed the bank safe, while the surrounding building proclaimed the bank modern.

The vault, however, was fake—a piece of elaborate showmanship designed to advertise the bank’s reliability. And as such, the building represents the moment in the history of bank architecture when, as critic John Tauranac puts it, “the impregnable gives way to the inviting.” In that way, Manufacturers Hanover Trust was the first bank to go retail.

Marion Sandler, co-CEO and board chairman of Golden West Financial/World Savings, the number-two thrift after Washington Mutual, has been making a strategic investment in architecture and design at her branches across the country for 25 years. “My first job was in retail at Bloomingdale’s in New York,” she says. “In the executive training program we learned all about merchandise, textures, colors, and lighting, and that established a prism early on through which I now see everything.”

One of the earliest World Savings branches was a North Hollywood branch designed by Frank Gehry in 1979, long before the architect made a name for himself. Today, Sandler’s roster of architects includes some of America’s most notable design names, such as Eric Owen Moss and Steven Ehrlich. “Whether we’re servicing customers or making high-quality loans or building branches, we want to be the best,” she says.

But Sandler doesn’t see the design of her branches as a way of cross-selling multiple products, or of drawing new customers in. “You simply can’t quantify it,” she says. “If you ask me why customers come to us, it’s more product than anything else, and they stay with us because of our customer service. I wish I could say the buildings make a big difference. But people are most concerned with their pocketbook. We serve coffee and cookies, the lounge area in each branch is quite private, and all of that is part of our presentation, which helps to build loyalty. But other than that, it’s really quite soft.”

Despite a lack of quantitative evidence linking design with branch profitability, there is a strong push by players to go retail. The word “retail” is being used to describe branches from coast to coast, and many banks seem to feel that hanging on to their customers—especially young customers—is as much a matter of image as it is of offering them better products. How else to radically change one’s image than to change the style of one’s branches? “A client recently told me, ‘We’re Bob Dole right now, and we want to be Tiger Woods,’” says one architect.

In this hunt for a new brand identity, branches are beginning to incorporate design concepts adopted directly from retail models like clothing stores and car dealerships. The most obvious, and the most dramatic departure from the lockbox style of the pre-war era, is being able to see the inside of a bank from the outside. The desire to exhibit friendly tellers and colorful advertisements to anyone walking past has given rise to high ceilings and extensive use of exterior glass in place of stone.

Many banks now place the manager at the front of the lobby, rather than in a remote office at its rear, to serve as a sort of concierge for customers walking in. Dialogue tellers (sometimes called kiosk tellers) have replaced the traditional wall of tellers, who sat behind bars or panes of bullet-proof glass, and received a clearly defined line of customers. Dialogue tellers are positioned behind freestanding kiosks arranged in a circle or a semi-circle, to afford customers time to speak at leisure, without feeling the pressure of the line behind them. In some banks, although the wall of tellers remain, a warmer set of materials and lighting (such as spotlit wood), makes their position feel more akin to a hotel reception desk than a bank.

Display graphics have become de rigeur, with colorful video screens advertising banking products and services in between weather reports, sports scores, and news updates. Banks are incorporating children’s play areas, coffee and snack bars, comfortable reading chairs, and tables of books and magazines. Some banks even feature retail displays in the tradition of an amusement park, where, after checking the score, chatting with a teller, and reading the paper, customers can buy piggy banks, t-shirts, and other banking souvenirs.

HBE Financial Facilities is a designer of bank branches. The company is a design-build firm, which means they complete every aspect of architecture and construction, and their specialty is community banks—such as Dubuque Bank & Trust in Dubuque, IA, and First Security Bank of Batesville, MS—with fewer than $4 billion in assets. According to Paul Barrath, evp of HBE, the company spends as much time on research as it does on design and construction. Depending on the income level of the average customer, the average balance of an account, and the cash value of customer insurance policies, HBE makes a wide range of recommendations to clients. If the bank is to be in a low-income, low-technology area, Barrath might recommend a “high-touch” branch, with fewer touchscreens and more staff. In a more affluent, tech-savvy area, HBE recommends a high-tech branch, with video tellers and a wider variety of services. The point of the retail model, Barrath says, is the potential for cross-sales. “There’s nothing better for articulating new services than a one-on-one communication, whether through a dialogue tower or a video teller,” he explains. “That’s my best advertising and sales window to the customer.”

Ask a banker to name a big retail push, and the firm that most often comes up is Washington Mutual. The country’s largest thrift and eighth-largest bank has rolled aggressively into markets on both coasts over the past two years, and at the same time is investing heavily in the branch-as-retail-store concept. Washington Mutual dubbed its new branch design “Occasio,” and of roughly 1800 facilities around the country, 800 of them are now Occasio designs. The firm opened 260 Occasio branches in 2003, and plans to open another 250 this year.

Washington Mutual’s overall strategy of appealing to a broad middle market through populist imagery is immediately visible in its Occasio branches. The Washington Mutual branch on 5th and Union, in downtown Seattle, is a prototypical Occasio design. Customers walk into the cream-tiled ATM lobby and immediately encounter supergraphics on the opposite wall, advertising loan products in bold, friendly lettering. A short walk down a ramp (past a wall of “Mr. Coin” T-shirts and other children’s items), and one arrives at the round concierge desk, staffed by the branch manager, Vanessa, dressed in a black sweater and khakis. A coffee and chocolate stand—a marketing trial, Vanessa says—sells handmade confections and Seattle’s trademark lattes. There is no wall of tellers—instead, a half-dozen freestanding kiosks stand at the far end of the branch. Four people wait along a line of grey tiles that gently suggests the queue on an otherwise cream-colored floor. On either side of the line, wall displays emblazoned with upbeat messages about financial planning and the joys of a home loan offer dozens of pamphlets. A video monitor to the left of the line has two of the waiting customers distracted by news headlines. “We’ve found that a customer’s perception of the amount of time they had in line changes significantly if they have a video display to watch,” says Kendall Bateman, Wamu’s vice president of facilities.

Vanessa shows off the kiosk. It consists of a computer, a stack of blank envelopes, and an automated cash dispenser. Employees are not assigned a cash box. They can log on and off any station at any time, so adding and removing staff in relation to the midday and 6 o’clock crush is a simple matter. Customers can view the computer screen with their teller, discuss their account, and receive cash at waist level without having to show their deposit to the rest of the room. Deposits are inserted into an envelope, and dropped through a Las-Vegas-type slot.

The kiosk doesn’t necessarily save time per transaction, Vanessa says. The opportunity to talk about one’s balance while viewing it onscreen slows things down. And your average bank teller can rocket through a cash transaction faster than the machine does: the machine is designed to dispense cash slowly, so the customer can count along with it. “But it improves my rapport with the customer,” she says. “In a traditional branch you’re taught to count the money three times—once from the drawer, once to yourself, and once for the customer. That leaves you no chance to talk.” The kiosk makes casual conversation possible, leaving open the possibility that a small topic like one’s account balance can perhaps balloon into a larger conversation about a savings account, or, better yet, a loan.

Although Washington Mutual has the widest implementation of the retail model, it’s far from the only bank making big strides in the area.

Gensler architects recently completed a retail prototype for straight-laced Wachovia. PNC, Fidelity, and JPMorgan Chase, along with dozens of other banks, have all been experimenting with a retail approach.

Perhaps nowhere in the country does a bank feel more like a store than in Portland, Oregon’s fashionable Pearl District, where, on 12th and Lovejoy, Umpqua Holdings has opened perhaps the most retail of retail branches. The sleek bank fits right in among its neighbors: high-design furniture stores, trendy bars, and galleries. David Hawkins, vice president and brand manager for Umpqua, worked on the Pearl branch as part of Ziba Design International, a Portland branding firm, and the branch did so well Umpqua hired him on full-time.

“Instead of hurrying people out of the bank, as ATMs were designed to do, you create an environment in which they want to stay,” Hawkins says. At the rear of the bank, a backlit wall of shelves beneath enormous abstract photography bears design objects printed with information on purchasing bank products like gift cards and interest-bearing CDs. “In our branch, you can shop product off the wall,” Hawkins explains. Customers walk up and inspect the objects as they might a fancy pair of shoes. The bank conforms to traditional wisdom about retail design: put the most attractive items (in this case, the glowing shelves of products) at the back of the building, so customers have to shop their way through the rest of the store to get there. The staff members, each of whom complete a Ritz-Carlton customer service program, roam the branch asking customers “Hi, can I help you find something?” and recommending mortgage and loan products as one might recommend a pair of slacks.

The branch features a reading area, with business books recommended by local bookstore Powell’s, a coffee bar, which serves a signature “Umpqua blend,” and wireless Internet access for any laptop-bearing person who wishes to have a seat. In the evenings, the bank hosts community events, such as a yoga class, a knitting seminar, and a lecture on the history of modern design.

“At first, we figured the branch would do $10 million in deposits,” Hawkins says. “Then, as customers started showing up, the goals rose to $30 million. Ultimately, the bank did $50 million, and it’s just completing its first year of operation. We can’t say that’s completely a result of the design, but it helps.”

That’s the unanswered question about retail branches. To what extent do they attract and retain customers?

No one can say for sure. Washington Mutual would like to, as the company has made itself into the poster child for store-branches. Bateman cites research which found that 65 percent of Wamu customers prefer Occasio branches to traditional branches, and that customers are particularly fond of the concierge desk at the front of each branch, but the bank, like every firm interviewed for this article, won’t share more details.

Lance Boge, lead designer for Gensler architects on a prototype for Wachovia, and a designer on a half-dozen bank projects, says that he’s never seen conclusive evidence to support the idea that good design improves customer satisfaction. “We have anecdotal information that it works better,” Boge says, “but we never know for sure that there was, say, a 15 percent increase in satisfaction.” But he’s sure about one thing. “If these new designs aren’t working,” Boge says, “then there are a hell of a lot of banks spending enormous amounts of money on something that’s not working.”