Inside Citizens Bank’s branch redesign strategy

Among small and mid-sized U.S. banks, talk about downsizing and repurposing branches has been just that -- talk, and little action. Banking giants like Citi and Capital One with much more money and resources at hand have been making branches look more like lounges, coffee shops or museums as they figure out what to do with them with less foot traffic, but in 2018, smaller institutions could start to make a move on their plans. "If customers are coming into branches less, we don't need eight teller lines -- we've started to think about how to evolve the [branch] network to enable colleagues to have more advice-based conversations with customers," said Beth Johnson, chief marketing officer and head of virtual channels at Citizens Bank. The Providence, Rhode Island bank is transforming its branches into digitally-connected community centers, Johnson said. That may once have been an unexpected outgrowth of the industry's digital overhaul, but banks like Citizens realize they still need them to cement a link to its customers, who want to reach out to bankers to talk about more complex or personal financial issues beyond their basic transactional products. To be set up for that, Citizens is reconfiguring the branches to be more inviting spaces where customers can spend longer periods of time to discuss their financial lives with their bankers. “It’s not about waiting for someone to come in and deposit a check to try to slog them a mortgage,” Forrester Principal Analyst Alyson Clarke told Tearsheet last month. “It’s a relationship game.” Citizens currently has 1,200 branches, and the bank is in the second year of a 10-year plan to reduce its branch footprint as lease expiries take effect. It's replacing paper pamphlets with digital tools, like a digital retirement checkup platform customers can use while meeting with bankers. The bank can also project digital content onto the walls of a meeting room -- a nod to the digital-first habits of some younger customers. Citizens is on an ambitious track to reduce its retail footprint by as much as 50 percent -- a "do more with less" approach that over the long term that will save occupancy costs, CEO Bruce Van Saun said in an earnings call last year. "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," Van Saun said. "We can also use the foyer, the entrance room for putting in some very sophisticated machines that people can do a lot of the banking that require tellers right on those machines." The bank isn't alone in employing this leaner approach, with others like Citi getting into digital branches and Umpqua Bank and Capital One rolling out "cafe-style branches" where customers -- particularly business clients -- can work while while they discuss their financial needs. The redesign also provides a way to reach business customers, Johnson said. In a Chestnut Hill, Massachusetts branch that opened last year, for example, Citizens has an open space for for one-on-one meetings with bankers, or to allow customers to hold their own meetings. Branch redesigns are more favorable for developing business relationships, which could bring even more revenue to traditional one-stop-shop family banking branches that institutions have rolled out for years, according to Ken Thomas, CEO of Miami-based Community Development Fund Advisers. "They're focusing on business banking because that's where the money is," he said. "The whole concept of commercial banking is going back to [banking's] original focus -- banks are realizing that's who they need to appeal to." Despite advances in digital tools for retail and business customers, offering a comfortable place to talk could encourage the customer to enter into a longer-term relationship with an institution. By fostering a relationship between the customer and the brand, banks are taking cues from the retail journey, with the enhanced likelihood that the customer will look to the bank for other products or make recommendations to friends. "When you have eye-to-eye contact with a customer and can fulfill their needs... It's not just a beneficial experience for the consumer," said Gene Pranger, founder and CEO of  POPin Video Banking Collaboration and who has worked on branch design for over 20 years. "But that consumer ends up talking to other people about that relationship and is willing to pay the price associated with it."