Walk into the glistening Pacific Continental Bank in downtown Vancouver’s new Hudson Building, and you’ll see one vision of banking’s future.
The branch bank is as comforting as a hotel lobby, with a wall fireplace framed by large windows with views of downtown streets. There’s a comfortable table and chairs for relaxation or business, a huge nine-screen “experience wall” that will display information about local nonprofit groups, and original artwork by local artists. There’s even a community meeting room large enough to accommodate 48 people.
Pacific Continental’s 7,200-square-foot branch at 101 E. Sixth St., which opens Monday, is a prototype for the Eugene, Ore.-based business bank. In terms of its physical design and amenities, it ups the ante on customer and employee comfort in banking. But Pacific Continental, like the rest of the money-changing industry, faces one big challenge as it sheds its historically stodgy image. These days, banking customers increasingly are tapping a few keys on their cellphones and other mobile devices to move money and pay bills rather than paying a visit to their local bank branch.
The change in banking habits is rapid and dramatic. Bankrate.com found in a recent survey that four of 10 Americans had not visited a bank branch in the past six months. Industry reports note that about half of banking transactions are performed online using computers or mobile devices.
As if to confirm the impact of that shift, Oregon-based Umpqua Bank announced plans to close its Vancouver Heights branch and 25 others in four states beginning this summer. The bank attributed the closures to “changes in customer behavior,” including increased online banking.
But if the financial industry faces an existential crisis about the future of branch banking, it isn’t acting like it.
Umpqua, which pioneered the customer-focused approach to branch services some 20 years ago, said it remains deeply committed to branch banking as one key piece of its retail-oriented approach. Columbia Credit Union, a dominant local player with some 59,000 Clark County families as members, boasts of its environmentally sensitive branches in Washougal and at Vancouver’s Grand Central retail center that have won LEED Gold certification. And Pacific Continental, a small bank with just 14 branches, sees the new Vancouver branch as one to provide both one-on-one assistance to business customers and to “make a statement that we are here to stay in Clark County,” said Pacific Continental’s Vancouver senior vice president Kristy Weaver.
While most industry officials and analysts agree that physical branches remain a vital component of banking services, they say that banks and credit unions must find new ways to make the most of their investment in physical locations. Industry executives recognize that, even with fewer customers doing face-to-face banking, “when someone has a need to go to a branch, it should be a good experience,” said Bill Bauer, vice president of The Element Group, a design firm that focuses on building bank and credit union buildings nationwide.
Bank and credit union buildings are vital to building a brand identity, said Bauer, who worked with Pacific Continental Bank on its Vancouver branch, which he calls “a showpiece for Pacific Continental and for us.” Although bank operations are expensive and the extra touches add to construction costs, Bauer said bankers “realize if they don’t have name recognition and presence, their market share is going to be diminished.”
‘A sense of place’
At Pacific Continental, Weaver and other bank officials planned from the start to create a company prototype in the Killian Pacific development firm’s Hudson Building as a replacement for the bank’s existing downtown branch. Weaver said she hoped to develop concepts that her bank could put into place at other locations, adding that she paid attention to the needs of employees as well as customers.
She and other bankers reached out to customers and community members for ideas and concluded that they needed to create a comfortable bank with “a sense of place,” Weaver said. Colors, building materials and nine pieces of local art reflect the bank’s location downtown and within the city’s arts district, she said.
The branch embraces the community in other ways. Its “experience wall” consists of nine connected flat-screen monitors that can be used by clients for presentations, nonprofit videos and even TED Talks, podcasts that focus on technology, entertainment and design. A community room, with its own entrance so it can be used at all hours, is available for use by nonprofit and business clients, and even the community at large.
The bank also taps the latest technology and efficiencies. Customers will be able to conduct transactions from an outside video teller kiosk that will connect to an employee inside the office. Non-operations staff will have flexibility to conduct transactions, and “cash recyclers” have flexibility to speed up cash transactions without forcing customers to wait for a teller with cash.
For employees, the new bank offers convertible desk systems and ergonomic chairs that allow workers to either stand or sit while working. The branch includes a serenity room, a small, quiet space with a chair, refrigerator and sink that offers a workday refuge that is ideally suited for nursing mothers.
Killian Pacific will seek LEED Gold certification from the U.S. Green Building Council for the Hudson Building, and the bank will apply for green certification from Clark County’s Green Business program.
“The sky’s the limit for taking what Kristy has done in Vancouver to other facilities,” said Michael Dunne, Pacific Continental Bank’s public information officer. “They can export this to their communities.”
Other branch models
While innovation is not universal in banking, it is well-established in some community and regional banks. Umpqua, which now has nearly 350 branches (it calls them stores) was just a small, local bank with big ambitions when it began to retool its branches as part of an overall recasting of its banking services.
The bank asked the question “if we are selling products and services, how do we do that in a way that’s more human-centered and more enjoyable?” said Lani Hayward, executive vice president of creative strategies at Umpqua.
“Banking had been the same for decades,” Hayward said. “It was so ripe to do something.”
That “something” was a redesign of branches to offer community rooms and local touches, such as a neighborhood history narrative, as well as a more inviting, casual common area and a community room.
But Umpqua went well beyond that.
Its approach has been well-documented and promoted by Umpqua’s charismatic CEO, Ray Davis. It moved back-room employees out of the customer service area to eliminate the frustration of waiting for service while some employees appeared unwilling to help. Remaining bank staff were cross-trained, so they could deal with savings transactions, as well as loans and other services. Calls were routed to a call center, so those branch employees could give walk-in customers their full attention.
And Umpqua provides a direct phone line at each branch to its CEO.
“We were lucky we landed on our model when we were relatively small,” said Eve Callahan, Umpqua’s executive vice president for corporate communications. “We were able to build a culture around empowering our associates to engage in the community and do what’s right with customers. We’ve grown up with that culture.”
Callahan said the recent announcement of closures doesn’t affect Umpqua’s commitment to strong retail-modeled banking.
“Smart companies are looking to integrate customer service across all of its touchpoints and at how they all work together,” she said.
Columbia Credit Union, with 12 branches, embraced a green building ethic with its Washougal and Grand Central branches built near the end of the last decade. Its more recent addition to its operations center also focused on energy efficiency and other environmentally sensitive improvements, said Steve Kenny, the credit union’s CEO. A survey of members found that 75 percent of respondences support the credit union’s commitment to green building construction.
A mistake some banks make is to invest in buildings while cutting service-level staff, he said.
“You could have biggest bank with everything gold leaf, but if you have nobody there (to serve customers), that’s where it’s going to create problems,” he said.
Kenny said branch traffic is steady and that Columbia could add new branches as the county’s population continues to grow. Members call on staff at branches for wealth management advice, loans and services.
“That’s just never going to go away,” he said.
On that point, he gets agreement from Bauer, the bank design consultant, who said branches will take on different forms and functions but never disappear entirely. “People gravitate toward relationships, and it’s tough to have a relationship through technology,” he said. “It’s really a people-to-people business still.”