The Customer Effect

Banks are turning branches into coworking spaces

  • As megabanks work on improving business banking by enabling things like digital onboarding and Zelle for business customers, small banks are turning branches into coworking spaces
  • Earlier this year, JPMorgan Chase said despite the continuing decline of bank branches it would open 400 new ones in new markets that would increase small-business lending
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Banks are turning branches into coworking spaces

Come for the teller, stay to get some work done.

As megabanks like JPMorgan Chase and Bank of America work on improving business banking by enabling things like digital onboarding and Zelle for business customers, small banks are working on branch innovation, mostly by turning them into coworking spaces.

Earlier this year, JPMorgan Chase said despite the continuing decline of bank branches it would open 400 new ones in new markets that would increase small-business lending 20 percent, or $4 billion, over three years.

That means it will probably invade regional and community banks’ domains, or at least try to, though it’s not clear how successful it will be. In the meantime, smaller banks are working with bank vendors like FIS and Diebold Nixdorf to remain competitive on the technology front, but they’re also trying to inject some energy into their branch experiences, maintaining that in smaller communities, in-person relationships are still key. A survey of small-business owners who bank with a community bank say they’re innovative, while 35 percent of small-business owners that bank with a megabank said the same, according to an Aite Group survey.

Here are three way business customers are changing bank branches.

Beneficial Bank 
Beneficial Bank in Philadelphia is focusing on in-person consultations with commercial and consumer customers. Its CEO, Gerry Cuddy, even makes house calls.

The bank has been running community centers as branches it calls campuses. It has bookshelves stocked with financial literacy resources, customers can use the space for work and community groups can reserve meeting rooms. Beneficial says it isn’t about the hard sales pitches but rather providing relaxed spaces for community members.

“We’re at a break point; we’re not naive that we’re being displaced — all community banks are,” said Cuddy. “Marcus [by Goldman Sachs] is going to take some of our savings business.”

Cuddy has overseen the bank’s shift toward more profitable business banking products over the past decade, including commercial insurance and loans for equipment and real estate. It typically targets businesses that generate between $5 million and $25 million in revenue.

Citizens Bank
Citizens has created open space in a Chestnut Hill, Massachusetts branch that business customers can use to conduct one-on-one meetings with bankers or with their own customers and business partners.

“We want to reduce the overall square footage in the branches and we want to take what was space dedicated to transactions and the remaining space should have more private rooms for conversation,” said CEO Bruce Van Saun.

Citizens is in the third year of a 10-year plan to reduce its 1,200-branch network, replacing paper pamphlets with digital tools like a digital retirement checkup platform customers can use while meeting with bankers. The bank also projects videos and other content onto the walls of a meeting room.

Citizens Bank of Edmond
Recently, Citizens in Edmond, Oklahoma decided to consolidate one of its two branches into a single location that it’s now turned it into a “business social” co-working environment for its small-business customers, called Vault 405, which includes wireless charging stations, conference rooms and a podcast studio.

“As a community banker I’m also a small-business owner,” CEO Jill Castilla told Tearsheet. “So when I’m talking and collaborating with them in this incubator type of space, we’re not just talking about what’s good for them; we’re talking about challenges we have in our small business and how we address them. … The office space will be just as beneficial to the bank beyond loans and depots; it’ll make us a better small business.”

Castilla and her team saw an opportunity to turn a liability it didn’t know what to do about into an earning asset and, she hopes, make people see Citizens as more than just a funder. Ideally, by creating an environment that would bring returns from customer and community relationships, the bank would also grow deposits and loan volume. Citizens currently charges monthly rates between $400 and $1,000 for offices and $175 to $275 for desks and shared spaces. It also offers day passes.

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